LIQ-9-01/PRO-2-02 RR:CR:DR 227841 CB
Port Director
U.S. Customs Service
Num. 1 Puntilla Street
San Juan, PR 00901
ATTN.: Protest Officer
Hampton Carter
RE: Protest and Application for Further Review No. 4909-97-100058; Harbor Maintenance Fee;
Exemption; 26 U.S.C. 4462(b)(1)(B) and (C); Mistake of
Fact; 19 U.S.C. 1520(c)
Dear Sir/Madam:
The above-referenced protest was forwarded to this office
for a determination. We have considered the points raised and a
decision follows.
FACTS:
The subject protest covers sixteen (16) entries liquidated
between June 21, 1996, and February 28, 1997. The entries cover
shipments of petroleum products shipped from St. Croix, U.S.
Virgin Islands and unloaded for consumption in San Juan, Puerto
Rico. The entries were liquidated with the assessment of the
harbor maintenance fee (HMF).
According to the record, protestant filed a 19 U.S.C.
1520(c)(1) petition with your office on June 13, 1997 seeking a
refund of the HMF. You denied the petition on October 22, 1997.
Your denial was based on the grounds that assessment of the HMF
was a mistake of law not correctable under this statutory
provision. The subject protest was filed on November 18, 1997.
Protestant is seeking a refund of the HMF based on the
exemption provided for in 26 U.S.C. 4462. Protestant is
alleging that it followed the "erroneous implementation and
enforcement of the Harbor Maintenance Tax law as implemented and
enforced by Customs via ABI and customs liquidators." Protestant
further contends that it made no error in the construction of the
law. Protestant alleges the erroneous deposits were made because
the ABI program was erroneous, Customs liquidators followed the
erroneous ABI program and the Customs Regulations do not address
the possession-to-possession movements of merchandise.
ISSUE:
Should the subject protest be granted?
LAW AND ANALYSIS:
Initially, we note that the protest, with application for
further review, was timely filed under the statutory and
regulatory provisions for protests (see 19 U.S.C. 1514 and 19
CFR Part
174) and that the decision protested, assessment of the harbor
maintenance fees, is a protestable decision (see 19 U.S.C.
1514(a)(5) and 26 U.S.C. 4462(f)). We also note that refusal
to reliquidate an entry under section 1520(c) is a protestable
decision under section 1514 (19 U.S.C. 1514(a)(7)).
Protestant contends that the erroneous deposits of the HMF
were made because the ABI program was erroneous. It appears that
protestant is misinformed as to the nature of the ABI filing
process. The software program used by ABI filers is not provided
by Customs; rather, the software is sold by private vendors.
Thus, protestant is incorrect when it alleges that Customs
required the payment of the HMF through the ABI program. The
onus is on the ABI filer to know when it is appropriate to pay
the HMF. If the software program being used by the filer
requires that the HMF be calculated then it is up to the filer to
discuss this problem with the software vendor. Contrary to
protestant's assertion, the Customs Service did not erroneously
implement and enforce collection of the HMF through ABI. Thus,
the subject protest fails on this ground.
Regarding the alleged mistake of fact, the statutory
authority for the harbor maintenance fee is found in the Water
Resources Development Act of 1986 (Pub. L. 99-662; 100 Stat.
4082, 4266; 26 U.S.C. 4461 et seq.) Under this statute, a fee
is imposed for the use of a port, defined as any channel or
harbor or component thereof in the United States which is not an
inland waterway, is open to public navigation, and at which
Federal funds have been used since 1977 for construction,
maintenance, or operation. Pursuant to 26 U.S.C. 4462(b), no
tax shall be imposed with respect to--
. . .
(B) cargo loaded on a vessel in Alaska,
Hawaii, or any possession of the United
States for transportation to the United
States mainland, Alaska, Hawaii, or such a
possession for ultimate use or consumption
in the United States mainland, Alaska,
Hawaii, or such a possession,
(C) the unloading of cargo described in
subparagraph (A) or (B) in Alaska, Hawaii,
or any possession of the United States, or
in the United States mainland, respectively,
or . . .
The Customs Regulations implementing this provision are found at
19 CFR Part 24. The applicable regulation provides that
"possessions" of the United States include Puerto Rico and the
U.S. Virgin Islands. See 19 CFR 24.24(c)(4)(ii)(C).
As indicated in the FACTS portion of this ruling, the
consumption entries under protest covered merchandise loaded on a
vessel in the U.S. Virgin Islands and unloaded in San Juan,
Puerto Rico. Thus, both movements (i.e., the loading and
unloading) are exempt from the HMF pursuant to 26 U.S.C.
4462(b).
According to information provided by your office, the port
determined that such movements between insular possessions were
subject to the HMF based on your reading of the applicable
regulation and required that the HMF be paid. The regulation (19
CFR 24.24(c)(4)(i)(B)) was not amended to conform to the 1988
statutory change which exempts such movements from the HMF. A
regulatory provision does not override statutory language. An
agency regulation depends on the underlying statute. A
regulation does not stand on its own and it has the force of law
only if the regulation is not inconsistent with that underlying
statute. See Writing Instrument Mfrs. Ass'n v. United States
DOC, CIT Slip Op. 97-151, reprinted 31 Cust. Cull. No. 50, pg.
56, 65 (Nov. 13, 1997). Thus, the fact that the regulation has
not been amended to include movements for ultimate consumption in
an insular possession does not negate the fact that statutorily
these movements are exempt from
the HMF.
We disagree with protestant's contention that the Customs
officer's failure to follow 26 U.S.C. 4662(b) is not a mistake
of law. The courts have defined mistake of law as mistakes which
occur "... where the facts are known, but their legal
consequences are not known or are believed to be different than
they really are" (Executone Information Systems v. United States,
96 F. 3d 1383, 1386 (Fed. Cir. 1996) (emphasis in original),
citing Hambro Automotive Corporation v. United States, 66 CCPA
113, 118, C.A.D. 1231, 603 F. 2d 850 (1979); see also, Degussa
Canada Ltd. v. United States, 87 F. 3d 1301 (Fed. Cir. 1996)).
The instant protest falls squarely within that definition.
Customs in San Juan was aware that the entries covered movements
between two insular possessions but incorrectly believed that
these movements were subject to the HMF. This is a mistake of
law which is not correctable under 19 U.S.C. 1520(c)(1).
HOLDING:
The subject protest against the denial of a 19 U.S.C.
1520(c)(1) petition should be DENIED. The petition involves a
mistake of law which is outside the scope of the statute.
In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office, with
the Customs Form 19, to the protestant no later than 60 days from
the date of this letter. Any reliquidation of the entry in
accordance with the decision must be accomplished prior to
mailing of the decision. Sixty days from the date of the
decision the Office of Regulations and Rulings will take steps to
make the decision available to Customs
personnel via the Customs Rulings Module in ACS and the public
via the Diskette Subscription Service, Freedom of Information
Act, and other public access channels.
Sincerely,
John A. Durant, Director
Commercial Rulings Division