CIT Again Rules Drawback Claims Must Include Full Amount, Including Taxes and Fees
The Court of International Trade on Sept. 6 ruled against several petroleum importers seeking drawback on taxes and fees, finding CBP correctly denied the claims because the importers did not include amounts for merchandise processing fee, harbor maintenance tax and excise taxes. Following precedent set by the Federal Circuit over the past 20 years, CIT said the importers were required to file a complete claim within the three years after export, and that the complete claim must include the full amount of drawback requested.
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Flint Hills Resources (formerly Koch Petroleum Group), Texaco, Shell and Citgo had filed drawback claims in the mid-1990s and early 2000s seeking drawback on imported petroleum products later exported after refining. Their claims sought drawback on duties paid but not any taxes or fees. CBP approved refunds of 99 percent of duties paid. Following liquidation of the claims, the petroleum companies had filed protests seeking drawback for MPF, HMT and excise taxes.
The question of whether drawback applied to taxes and fees had remained in flux during the period. A Federal Circuit decision in 1999 had found HMT ineligible for drawback because the relevant statute allowed refunds on taxes and fees imposed “because of importation.” HMT didn’t qualify because it is paid based on use of ports, including for exports and other shipments. A subsequent decision applied that logic to excise taxes. Congress passed a law in 2004 that amended that statutory language to taxes and fees imposed “upon entry or importation,” clarifying HMT and excise taxes are eligible for drawback.
A series of court cases followed from importers that filed drawback claims during the period. In one, the Federal Circuit denied the claims from a company named Aectra because, like the importers here, Aectra had only requested drawback for fees and taxes in protests that came after the three-year deadline following exportation for drawback. The decision said the customs laws require a complete claim to be filed by the deadline, and a complete claim must include the full amount of duties, taxes and fees for which the claimant seeks a refund. The Federal Circuit affirmed that logic in a second case involving Shell (see 11062920 and 12081502).
CIT found it was bound by those cases and ruled CBP correctly denied the petroleum importers’ claims. “Federal Circuit precedent makes the correct calculation requirement clear,” it said. “With respect to drawback claims subject to Customs’ regulations, the Federal Circuit has held that ‘a ‘complete’ claim for purposes of the three-year limit … must include a correct calculation of the amount of drawback due,’” CIT said. “Accordingly, because plaintiffs failed to include a correct calculation of the amount of taxes and fees sought within the three-year limit, the court sustains Customs’ denial of plaintiffs’ protests.”