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LEGAL TRANSPORTATION NEWSCOMPLIMENTS OF THE LAW OFFICES OF BRUSANOWSKI & VEIGEL
COPYRIGHT © 1996, CHARLES H. VEIGEL, ALL RIGHTS RESERVED NEWS BULLETIN VOL 1
Harbor Maintenance Fee Held Unconstitutional - How to Claim a Refund
Only last October, a three judge panel of the United States Court of International Trade held, in U.S. Shoe Corp. v. United States, ____ CIT ____, Slip Op. 95-173 (Oct. 25, 1995), that the Harbor Maintenance Fee as it applies to exports is unconstitutional.
The purpose of this news bulletin is: (1) to provide our law firm's suggestions on how to claim refunds for payments made in the past and in the future; (2) to explain the ruling; and (3) give you some information on the U.S. Court of International Trade. Since most of you are interested in how to claim a refund, I shall begin by reviewing our firm's suggestions.
A. OUR SUGGESTIONS
After reviewing this decision, our firm recommends the following action:
(1) The shipper or exporter should apply for a refund pursuant to 19 C.F.R. § 24.24 (e).
(2) The shipper or exporter should file a protest with U.S. Customs pursuant to 19 C.F.R. § 174 et seq.
(3) If U.S. Customs denies the protest or denies the refund, further appeal should be instituted.
(4) The shipper or exporter must file a civil suit with the U.S. Court of International Trade. This involves the drafting of a complaint and summons with the Court of International Trade.
B. THE DECISION
The Court of International Trade held the Harbor Maintenance Tax on merchandise exported from the United States unconstitutional per Article I, Section 9, Clause 5 of the United States Constitution. The clause provides "no Tax or Duty shall be laid on Articles exported from any State." The Court further ordered that the United States Customs Service be enjoined from the assessment and collection of the Harbor Maintenance Tax in connection with merchandise exported from the United States. The Government argued that the Commerce clause permitted Congress the power to regulate foreign and interstate commerce and therefore override the language of Article I, Section 9, Clause 5. However, the CIT rejected the Government's position and held that the Government could not rely on one clause of the constitution to override another. Moreover the Court held that the primary purpose of the Harbor Maintenance Tax was to raise revenue and collect fees and not to maintain the Harbor .
One of the most important questions facing the was whether it even had the jurisdiction to render an opinion in the case. Congress granted the Court of International Trade exclusive jurisdiction over civil suits against the U.S. Government with respect to federal laws governing imports. Congress directed that the tax be treated as a customs duty for purposes of jurisdiction. The Court eventually held that it had jurisdiction based on 28 U.S.C. § 1581 (i). This jurisdictional section specifies a two year statute of limitation. Consequently, even if the case is upheld, it is still unknown whether or not a shipper or exporter would succeed in collecting a refund for fees paid past the statute of limitations. To fully protect your rights, your attorney should attempt to collect a refund beyond the two-year statute of limitations.
NEWS BULLETIN - HARBOR MAINTENANCE FEE HELD UNCONSTITUTIONAL!
The concurring opinion in theShoe case should be helpful. One Judge thought that a shipper should receive a refund from 1987.
At the time of printing, the United States had yet to file for an appeal. However, it is our understanding that the U.S. Government intends to appeal the decision. The appeal alone may take years - it may even be appealed to the U.S. Supreme Court. If the case is upheld on appeal, the U.S. Government may permit a refund dating only two years back from the appellate court's decision. To properly preserve your right to a refund, we suggest filing a civil suit to recover payments made at least two years from the filing of the suit.
If you are interested in claiming a refund and preserving your rights in this area, please consult an attorney. BRUSANOWSKI & VEIGEL would be pleased to represent any claimant.
CHARLES VEIGEL is admitted to practice in the United States Court of International Trade, the Federal District Court for the Western District of Washington and the State of Washington. His family has been in the transportation business for 40 years. Charles worked in the transportation industry as an import/export traffic manager before attending law school and specializing in transportation law.
C. HISTORY
Now, a little history on the Harbor Maintenance Tax. The U.S. Congress established the Harbor Maintenance Tax as part of an Act entitled the Water Resources Development Act of 1986, Pub.L. No. 99-662, 100 Stat. 4082. The Tax was designed to assess an ad valorem tax on any "port use" and applied to exports and imports. The Tax is currently .125% of the value of the commercial cargo involved. If passengers are involved rather than cargo, the value is based on the charges paid for transportation. There are exemptions to the Harbor Maintenance Tax.
The Tax is administered by U.S. Customs. Monies collected are transferred to the Harbor Maintenance Trust Fund and then disbursed. The largest beneficiary is the Army Corps of Engineers but there are other beneficiaries of the Tax as well, such as the Department of Treasury and the Department of Commerce. Another beneficiary is the National Oceanic and Atmospheric Administration.
There has been a surplus in the Trust Fund in the last few years.
D. THE UNITED STATES COURT OF INTERNATIONAL TRADE
The United States Court of International Trade was formerly called the United States Customs Court. The name was changed pursuant to the Customs Courts Act of 1980 to the Court of International Trade. The name was designed to more accurately reflect the Court's expanded jurisdiction and judicial functions with respect to International Trade. The Court's primary jurisdiction exists with import transactions.
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