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CIT Rules Shell Oil Didn't Timely File HMT & ET Drawback Claims

The Court of International Trade has ruled1 that U.S. Customs and Border Protection did not err in denying Shell's 1997 protests seeking drawback of Harbor Maintenance Tax (HMT) and Environmental Tax (ET) payments associated with certain petroleum products that it imported and substitute petroleum derivatives it exported in 1993 and 1994. The CIT agreed with CBP that Shell is not entitled to drawback as its protests were untimely.

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(Shell had timely filed drawback claims in 1995 and 1996 for the import duties it had paid, of which CBP refunded 99%. Shell did not claim HMT or ET in the "net claim" figure that it provided on each of the drawback entry forms it filed with CBP. The first time Shell made claims on drawback for HMT and ET was in protests it filed in 1997, after the statutory three-year period for filing drawback claims had expired.2)

Shell Argues 1999 & 2004 Amendments were Retroactive as to Drawback Claims

Shell asserted that at the time it filed its claims for drawback of import duties, the Customs regulations then in force did not require that a complete claim include a claimant’s calculation of the amount of drawback due, or that such calculation include amounts other than those for import duties. Shell thus maintained that its drawback claims were, as filed, completed within three years from exportation. Shell also asserted that Congress intended the 1999 and 2004 amendments not only to remove all doubt as to the drawback eligibility of taxes and fees such as HMT and ET, but also to be retroactive as to claims like Shell's, which it argues were preserved by way of timely protest.

CIT Rules CBP Didn't Err in Denying Protest as Shell's Claims were Untimely

The CIT found Shell's arguments had no merit and ruled that CBP did not err in denying Shell's protests. The CIT stated that Shell is not entitled to recover on drawback claims that it never made, as CBP was never presented with a claim for HMT and ET during the statutory three-year period, and therefore never could have considered it. The CIT stated that Shell was not without recourse. The 1999 amendments were designed to provide a grace period for drawback claimants who had claims that were otherwise untimely. However, Shell failed to take the steps necessary to assert claims for drawback on HMT and ET in a timely fashion.

2004 Amendments were Intended to Preclude Drawback for Untimely Claims

The CIT stated that Congress only made the 1999 amendments retroactive by authorizing the filing of claims outside the normal three-year limit and that there was nothing in the text of the 2004 amendments to suggest that they were intended to waive the normal three-year limit on the filing of drawback claims. The CIT explained that Congress' decision not to include a grace period in the 2004 amendments evinced a clear intent to preclude drawback of such fees and taxes by those importers who did not claim such drawback within the regular statutory three-year period and then also failed to file such claims in the six-month grace period following the 1999 amendments.

1In Shell Oil Company, c/o Gulf Coast Drawback Services, Inc. v. U.S.

2According to the CIT, the drawback statute (19 USC 1313) requires all drawback claims to be filed within three years of the date of exportation of the substitute merchandise. However, in 1999, Congress amended the statute's language to expand the scope of drawback available to include any duty, tax, or fee imposed "because of importation." The amendments also suspended the statutory three-year period for filing drawback claims to allow otherwise untimely claims to be filed within six months after the date of the enactment of the 1999 amendments.

In 2004, Congress again amended the language of the statute to clarify what taxes and fees were eligible for drawback. These amendments made eligible for drawback, any duty, tax, or fee imposed "upon entry or importation," making HMT and ET indisputably eligible for drawback. The 2004 amendments, however, only applied to drawback claims filed on or after the amendments’ enactment, and to drawback entry filed before that date if the liquidation of the entry was not final on that date.

(Slip Op. 11-70, dated 06/20/11)