CAFC Affirms CIT Ruling; Ford Documentation Insufficient for HMT Export Refund; Judge Dissents
The Court of Appeals for the Federal Circuit affirmed the Court of International Trade’s denial of plaintiff Ford Motor Company, Inc.’s claims of a refund of $2.65M in Harbor Maintenance Tax (HMT) paid on exports. CAFC agreed with CIT that Ford did not submit the proof of payment of export taxes required by the regulations for either pre- or post-July 1, 1990, refunds of HMT paid on exports. A dissenting judge said CIT improperly entered summary judgment in favor of CBP, and that the case should have gone to trial.
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(In 1986, Congress enacted the HMT, which required all shippers to pay an ad valorem tax on commercial cargo shipped through U.S. posts, including exports, imports, and domestic shipments. The Supreme Court held in 1998 that the HMT was unconstitutional as it applied to exports. After that decision, U.S. Customs and Border Protection developed a process to refund the portion of the HMT collected on exports, but found widespread errors in its stand-alone HMT database that was used for this purpose.. As paper documentation existed for post-July 1, 1990, shipments, CBP was able to correct the database for that later time period. No correction was possible for pre-July 1, 1990, shipments, however. Therefore, CBP’s regulations provided that the exporter could not rely on the database alone for this earlier period, but was required to submit “supporting documentation” for any refund.)
CAFC Affirms CIT’s Rejection of Ford Docs for Claims Before July 1990
Ford argued that it established entitlement to a refund under 19 CFR 24.24(e)(4)(iv)(C) with respect to its pre-July 1, 1990, claims by submitting a report drawn from CBP’s ACS database, as well as two declarations and an affidavit establishing the regularity and level of detail in the HMT export documentation submitted by Ford.
CAFC disagreed, and affirmed CIT’s decision with respect to the pre-July 1, 1990, claims. CAFC said that, as the HMT database was taken directly from the ACS database, the ACS report Ford submitted was just as inaccurate. CAFC also agreed with CIT’s rejection of Ford’s declarations and affidavit of accurate preparation, because many of the errors in the HMT database were caused by employees at the First Chicago Bank originally charged by CBP with receiving the documentation. Therefore, even if Ford had committed no errors, there was still a high potential for error.
CAFC Says Additional Declaration Required for Claims After July 1990, Affirms CIT
CAFC affirmed CIT’s decision in favor of CBP with respect to the post-July 1, 1990, claims, saying Ford’s submission of 20 Export Vessel Movement Summary Sheets (EVMSS) only shows that the EVMSS were in Ford’s files. Without additional evidence, said CAFC, by declaration or otherwise, that these particular documents were 'accepted' by CBP, or that their presence in a particular file demonstrated submission, Ford’s possession of the EVMSS was immaterial.
Dissenting Judge Says CIT Improperly Entered Summary Judgment; Trial Appropriate
Judge O’Malley dissented from the CAFC’s affirmance of CIT’s decision. O’Malley said he would remand the action to CIT for further fact finding, because Ford’s arguments did not need to resolve all possible doubts regarding inaccuracies in the CBP HMT database, but simply demonstrate that a reasonable fact finder could conclude that Ford’s proof shows that its payments were remitted for exports. O'Malley said Ford is entitled to have its witnesses heard and its evidence considered at trial.