On December 15, 2009, the US Court of International Trade (CIT) issued its decision in Delphi Petroleum, Inc. v. United States in a dispute involving Delphi Petroleum, Inc.’s (Delphi’s) claims for drawback of Harbor Maintenance Taxes (HMT) and Merchandise Processing Fees (MPF). When Delphi filed its drawback claims, CBP regulations expressly prohibited HMT and MPF drawback. Delphi did not include HMT or MPF drawback in its original claims, relying on the advice of a CBP official that it could file a protest following any court decision or legislation allowing drawback on these taxes and fees. When CBP denied Delphi’s subsequent protest—despite 2004 legislation clarifying that HMT and MPF are eligible for drawback—Delphi challenged CBP’s decision in the instant action.
An importer may file drawback claims for the refund in full, less one percent, of duties paid on imports used in the manufacture or production of “commercially interchangeable” merchandise that is subsequently exported from the United States or destroyed.
A claimant has three years from the date of exportation or destruction of the merchandise to file a drawback claim. The three-year filing deadline may be extended only if it is established that CBP is responsible for an untimely filing. Here, CBP argued that Delphi’s claims for HMT and MPF drawback set forth in its 2003 protest were outside of the three-year statutory limit.
The CIT rejected Delphi’s first claim that prior correspondence with CBP—which did not include calculations for HMT and MPF drawback—included in its original drawback claims was sufficient to protect its HMT and MPF claims. The CIT reasoned that an effective protective claim “must be complete (i.e., must include calculations) and timely submitted, despite the fact that Customs would have rejected it.” Accordingly, the CIT further rejected Delphi’s second claim that its drawback claims were timely because the protest merely perfected the original “complete” claims. The CIT was convinced, however, by Delphi’s third and final claim that its delay in filing complete claims for HMT and MPF drawback was the result of incorrect advice from CBP to request HMT and MPF drawback by filing a protest after liquidation, rather than including a claim for such taxes and fees in its initial claims.