no interest on pre-order antidumping duty deposits
How later courts described this case
- no interest on pre-order antidumping duty deposits
Written by the judges who cited it.
The opinion
Slip Op. 00-171
UNITED STATES COURT OF INTERNATIONAL TRADE
___________________________________
:
HARTOG FOODS INTERNATIONAL, INC., :
: Court No. 99-03-00146
Plaintiff, :
:
v. :
:
THE UNITED STATES, :
:
Defendant. :
___________________________________:
[Judgment for defendant.]
Dated: December 28, 2000
Barnes, Richardson & Colburn (Rufus E. Jarman, Jr.) for
plaintiff.
David W. Ogden, Assistant Attorney General, Joseph I.
Liebman, Attorney in Charge, International Trade Field Office,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (James A. Curley), Chi S. Choy, Office of
Assistant Chief Counsel, United States Customs Service, of
counsel, for defendant.
OPINION
RESTANI, Judge: This matter is before the court on cross-
motions for summary judgment. Plaintiff seeks interest on refund
of duties. Defendant argues that the refunds are not of “excess
moneys deposited” on entries of imported merchandise and that,
therefore, interest is not owed under 19 U.S.C. § 1505(c) (1994).
COURT NO. 99-03-00146 PAGE 2
Facts
Plaintiff, Hartog Foods International, Inc. (“Hartog”), is
the importer of record and consignee of the merchandise at issue,
strawberry and cranberry juice concentrate or essence
(1) imported via entry 614-27220403-9, dated April 19, 1990, and
exported under drawback entry 614-0000275-6, dated May 6, 1992,
and (2) imported via entry 614-0082291-04, dated February 6,
1992, part of which was exported under drawback entry 614-
0000287-1, dated September 17, 1992. Plaintiff initially
deposited $249.44 in fees or duties for the first entry, which
was liquidated on August 10, 1990. On October 23, 1992,
plaintiff received $42.55 in drawback on this entry. Plaintiff
initially deposited $1,512.56 as fees or duties on the second
entry, which was liquidated on June 12, 1992. On or about
February 26, 1993, plaintiff received $1,074.68 in drawback on
the second entry.
Meanwhile, on September 11, 1992, plaintiff had made
additional duty payments on the two entries for merchandise
classifiable under HTSUS subheading 9903.23.30 requiring 100% ad
valorem duty.1 The payments totaled $98,659.20 on the first
1
Apparently the 100% duty rate applied to goods of EC
origin and Hartog could not prove the non-EC origin of the
merchandise. Hartog made the payment along with a voluntary
(continued...)
COURT NO. 99-03-00146 PAGE 3
entry and $232,771.50 on the second. In October 1992, plaintiff
made a refund request on the basis that it was entitled to
drawback on the additional amounts of duty paid on September 11,
1992, based on the exportation of the goods reflected in the
drawback entries of May and September, 1992. It appeared to make
its request under 19 U.S.C. § 1520(a)(2) (erroneous or
excessively collected fees, charges, or exactions). It sought
return of 99% of the additional amount paid on the first entry
and 99% of $166,988.25 paid on the second entry (representing
duties paid on the portion of the covered merchandise which was
exported). Plaintiff later clearly characterized its claim as
one for drawback under 19 U.S.C. § 1313 of lawful duties paid.
Customs initially took the position that because the additional
duty payment was voluntarily made more than 90 days after
liquidation, that the claim for refund could be made only under
1
(...continued)
disclosure to limit 19 U.S.C. § 1592 liability. See 19 U.S.C.
§ 1592(c)(4).
COURT NO. 99-03-00146 PAGE 4
19 U.S.C. § 1520(a)(2),2 and would not be treated as a drawback
claim.
On April 20, 1993 plaintiff protested the original drawback
decisions of October 23, 1992, and February 26, 1993. In
response to the Customs Modernization portion (Title VI) of the
North American Free Trade Agreement Implementation Act, Pub. L.
No. 103-182, 107 Stat. 2057 (1993), Customs promulgated
regulations, effective April 6, 1998, allowing for drawback on
post-liquidation voluntary tenders of duties where the drawback
issue is open. See 19 C.F.R. §§ 191.3(a)(1)(iii),3 191.81(c).
As the drawback issue on the first entry had remained open
pursuant to the October, 1992, request for refund (and apparently
because the February drawback determination was protested
2
19 U.S.C. § 1520(a)(2) provides:
(a) Cases in which refunds authorized
* * *
(2) Fees, charges, and exactions
Whenever it is determined in the manner
required by law that any fees, charges, or
exactions, other than duties and taxes, have
been erroneously or excessively collected . .
. .
3
Under the prior version of 19 C.F.R. § 191.3, drawback
was allowed only on “ordinary” and “marking” duties, which
Customs interpreted not to include tenders under 19 U.S.C.
§ 1592(c). 19 C.F.R. § 191.3 (1993).
COURT NO. 99-03-00146 PAGE 5
timely), on March 18, 1998 Customs determined to grant the
protest of the original adverse drawback decisions for both
entries. Ex. 1, Plaintiff’s Motion. Accordingly, on August 14,
1998, Customs reliquidated the two entries and refunded a total
of $262.990.98. On October 20, 1998, plaintiff protested the
lack of interest. Plaintiff’s protest has been denied by
operation of law. It filed a timely summons and the court has
jurisdiction pursuant to 28 U.S.C. § 1581(a).
Discussion
19 U.S.C. § 1505(c) reads, in pertinent part, as follows:
(c) Interest
Interest assessed due to an underpayment of duties,
fees, or interest shall accrue, at a rate determined by
the Secretary, from the date the importer of record is
required to deposit estimated duties, fees, and
interest to the date of liquidation or reliquidation of
the applicable entry or reconciliation. Interest on
excess moneys deposited shall accrue, at a rate
determined by the Secretary, from the date the importer
of record deposits estimated duties, fees, and interest
or, in a case in which a claim is made under section
1520(d) of this title, from the date on which such
claim is made, to the date of liquidation or
reliquidation of the applicable entry or
reconciliation.4
4
The current version of 19 U.S.C. § 1520(d) refers only to
“Goods qualifying under NAFTA rules of origin.”
COURT NO. 99-03-00146 PAGE 6
It appears to the court that this statute was not drafted
with drawback of duties in mind. 19 U.S.C. § 1505(c) provides
that interest shall be paid on excess moneys deposited from date
of payment. In the ordinary course, drawback on duties properly
paid is not owed until goods are exported under 19 U.S.C. § 13135
and a drawback entry is filed with Customs. See 19 C.F.R.
§ 191.51. Customs then would require a certain amount of time to
process the claim and to make payment. Because the duties owing
that are paid on entry or liquidation are not erroneously or
excessively paid just because drawback may be claimed, it is
difficult to call any part of such payments “excess moneys
deposited.” Surely, if Congress wished ordinary drawback refunds
to bear interest it would have said from which date interest
should run, that is, the date of exportation, the date of
drawback entry, some other date representing the normal date on
which drawback refund should occur, or even the date of payment
of the original duty.
Thus, plaintiff’s argument that the duties properly paid may
become “excessive” at some later date does not control whether
interest may be paid on drawback refunds. It is excessive
5
Drawback may involve simple re-exportation as here or re-
exportation after manufacture, or a number of other matters
unrelated to the amount of duty owed on entry.
COURT NO. 99-03-00146 PAGE 7
payments that bear interest from the date of payment and these
duty payments were not excessive. Determination of drawback is a
process separate from a determination of whether the duties on
the merchandise as entered were proper. The court does not go so
far as to hold that the interest provision must use the word
“drawback” in order for interest to be owing, but delayed
drawback refunds have to fit the words of the interest statute in
order to bear interest.6 The court cannot fit the drawback
pattern into the statute as written. Even though Congress may
have wished to equalize interest treatment between the Government
and importers,7 it is clear that the court cannot assist Congress
in the drafting of interest provisions. They must be clear in
order to waive sovereign immunity. See IBM Corp. v. United
States, 201 F.3d 1367, 1374 (Fed. Cir. 2000) (no interest on
refunds of harbor maintenance tax under § 1505(c) or 28 U.S.C.
6
Novacor Chems., Inc. v. United States, 171 F.3d 1376,
1381 (Fed. Cir. 1999), however, does seem to rest denial of
interest on the fact that “drawback” is not mentioned in the
applicable interest statute. Novacor may be understood as
standing for the narrower proposition that “increased or
additional” duties had a limited meaning under prior law, 19
U.S.C. § 1520(d) (1988), which did not include reclaimed drawback
of duties.
7
See H.R. Rep. No. 103-361(I), at 140 (1993), reprinted in
1993 U.S.C.C.A.N. 2552, 2690. Of course, as drawback is a
separate privilege of the importer, it is difficult to say what
would be equal treatment.
COURT NO. 99-03-00146 PAGE 8
§ 2411), petition for cert. filed, 69 U.S.L.W. 3259 (Sept. 28,
2000); Novacor, 171 F.3d 1376, 1381-82 (under former 19 U.S.C. §
1520(d) and previous version of § 1505, no interest on refund of
duty drawback erroneously reclaimed by government); Kalan, Inc.
v. United States, 944 F.2d 847, 850-52 (Fed. Cir. 1991) (under
former 19 U.S.C. § 1520(d) and previous version of § 1505, no
interest on refunds of deposits made for estimated duties
deposited at the time of merchandise’s entry), cert. denied, 503
U.S. 906 (1992); Dynacraft Indus., Inc. v. United States, No. 99-
03-00125, Slip Op. 00-119, at 17-18 (Ct. Int’l Trade Sept. 8,
2000) (no interest on pre-order antidumping duty deposits).
Plaintiff argues that in Novacor the Federal Circuit
implicitly accepted that under the present version of § 1505(c),8
that drawback claims bear interest. See Plaintiff’s Initial
Brief at 15. It was necessary for the appellate court in Novacor
to reach the issue of whether the new statute applied. Having
found that it did not, there was no need to say what would occur
if it did apply. Thus, Novacor does not control. Furthermore,
Novacor is distinguishable. There Customs wrongfully reclaimed
drawback previously paid. See Novacor, 171 F.3d at 1379. To
8
The Customs Modernization Act of 1993 added the second
sentence of 19 U.S.C. § 1505(c). Prior to that time interest was
owed on refunds only on additional or increased duties under 19
U.S.C. § 1520(d) (1988).
COURT NO. 99-03-00146 PAGE 9
this court those facts appeared to signify an increased payment
of duties, or, for argument’s sake, excess payment of duties.
Novacor Chems., Inc. v. United States, 980 F. Supp. 1288, 1292,
21 CIT 1102, 1106 (1997), rev’d in part and aff’d in part, 171
F.3d 1376 (1999). The Court of Appeals did not accept, however,
that duties drawn back by the importer and then reclaimed by
Customs are “increased duties.” Novacor, 171 F.3d at 1381.
Novacor would seem to be of little help to plaintiff because of
the differing factual pattern and the limited holdings involved.
Having concluded that 19 U.S.C. § 1505(c) does not apply to
ordinary drawback claims, the issue becomes whether this unusual
factual pattern comes within the plain words of the statute or
simply represents an ordinary drawback claim for which interest
is not owed. In this case duties were owed and they were paid on
September 11, 1992. As with ordinary drawback, on the second
import entry, exportation and drawback entry were made on a date
after payment of duties on September 17, 1992. The undergranting
of drawback on February 26, 1993 was protested and eventually
resolved, but as indicated there is no provision in 19 U.S.C.
§ 1505 for interest in such a situation.
Payment of duty on the first entry appears somewhat out of
the ordinary. An additional duty payment was made after the
COURT NO. 99-03-00146 PAGE 10
goods were exported. To properly qualify for drawback, however,
duty must be paid. See 19 C.F.R. § 191.3(a); 19 C.F.R.
§ 191.81(c) & (d). Thus, the voluntary tender of duties by
plaintiff on September 11, 1992, was not an erroneous or
excessive deposit of duties even though it was made after export,
and like the additional duty payment on the second entry,
plaintiff was not entitled to drawback on the first entry until
it made payment and asserted its claim. That claim could not
have been made properly in the original drawback entry because
the duties had not yet been paid. Instead, the claim was made in
the October 29, 1992, letter explaining to Customs why Hartog was
entitled to greater drawback payments. As indicated, under
§ 1505(c) interest is owed from date of payment; here
September 11, 1992, would be the applicable date, but Customs
could not have owed the money until October 29, 1992, when
plaintiff asked for a refund, or thereafter. See infra. If,
indeed, there is to be some “relation back” principle so that the
original drawback entry has application and the later payment of
duties is to be considered “excess moneys,” Congress must make
this clear. Congress did, indeed, provide in 19 U.S.C. § 1505(c)
for interest to run from the date of claim for claims made under
19 U.S.C. § 1520(d) (not applicable here), which indicates that
COURT NO. 99-03-00146 PAGE 11
the date for commencement of interest is not insignificant, and
Congress has expressly provided for special circumstances when it
has decided to do so.
In any case, plaintiff does not ask for interest from the
date of claim. It asserts that interest is owed from the date of
payment or the dates of original liquidation of the drawback
entries. Plaintiff’s Reply at 5. In accordance with its
understanding of Customs’ prior practice of refunding drawback
on a voluntary tender made more than 90 days after liquidation
(time for protest), under 19 U.S.C. § 1520(a)(2), plaintiff
apparently made a claim for refund under that provision. See
Customs’ letter of February 11, 1993, Ex. 2, Plaintiff’s Reply.
This claim is referred to in Treasury’s decision of March 18,
1998, see HQ 225406, Ex. 1, Plaintiff’s Motion, and Plaintiff’s
Letter of April 26, 1995, submitted by defendant. See Ex. B,
Defendant’s Motion. The October 29 letter appears to be the
reason drawback on the first entry was considered still open at
the time of the April 20, 1993 protest. As indicated, however,
there is no provision for payment of interest on such a refund
from date of claim, date of payment, or date of liquidation.
Thus, even as to the first entry where payment of duties was made
after exportation, there would seem to be no interest payable.
COURT NO. 99-03-00146 PAGE 12
Accordingly, judgment shall enter for defendant.
___________________________
Jane A. Restani
JUDGE
Dated: New York, New York
This 28th day of December, 2000.