Tuesday, May 19, 2009
No Going Back for HMT, MPF Drawback
This is sort of a follow up to the American Petroleum Institute meeting at which I covered case law developments of note to the industry. At the meeting Bobby (and you all know Bobby who) talked about the then-pending in the Federal Circuit case Aectra Refining & Marketing v. U.S. For those of you who might be wondering, the news is unfortunately not good.
The issue involved a somewhat unique set of facts. The plaintiff had made drawback claims at the time when most people thought that Merchandise Processing Fee and Harbor Maintenance Tax were not subject to drawback. So Aectra did not seek a refund of it. But, unfortunately for Aecrta, some companies were pursuing court cases that eventually led to a court decision confirming that MPF was subject to drawback but HMT was not. That decision, resulted in congressional action making HMT recoverable under drawback.
Great, thought Aectra, we'll go back and get MPF and HMT on our old claims. The problem for the plaintiff was that it was past the time to make a claim. To get past that issue, Aectra made a few arguments.
First, Aectra argued that the amendment was retroactive and permitted it assert the otherwise time-barred claim. Construing the language, the Federal Circuit held that the amendment only applied to claims made within the normal three-year period. The effect of this is to limit the amendment's retroactive application to non-finalized claims made before or after the effective date of the amendment and on which a claim for HMT had been included.
The second issue was whether Aectra had asserted a complete claim as required by the regulations (§ 191.51). According to Customs and Border Protection, and ultimately the Federal Circuit, a complete claim requires a calculation of the full amount requested. Because Aectra had not included MPF and HMT were not subject to drawback at the time of the original claim, Aectra argued that omitting them did not render the claim incomplete. According to the Court, the inavailability of drawback on MPF and HMT does not mean that a claimant hoping to recover those amounts should not have included them in the claim.
That decision flows into the next argument, which is that to have made the claims would have been futile. Often, futility is a perfectly legal excuse for not taking some otherwise required action. Why bother going to the trouble of making a claim that will surely be denied? In this case, however, the Court held that a complete claim must be filed to allow Customs to see and evaluate what the claimant is seeking without a searching and independent analysis of the amount to which the claimant might be entitled.
Thus, Aectra had not made a timely claim for the recovery of HMT and MPF and the timely claim it had made did not include those amounts. Which, given the factual context of claims having been made when HMT and MPF were generally not believed to be subject to drawback, is a tough result to swallow.