United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1993 HQ Rulings > HQ 0223198 - HQ 0223539 > HQ 0223371

Previous Ruling Next Ruling

HQ 223371

February 14, 1992

ENT-1-03-CO:R:C:E 223371 CB


District Director
U.S. Customs Service
300 S. Ferry Street
Terminal Island
San Pedro, CA 90731

RE: Application for further review of Protest No. 2704-91- 102516; 26 U.S.C. 4461; Harbor Maintenance Fee; 19 U.S.C. 1309(a); bonded jet fuel

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the points raised and our decision follows.


This protest is against the assessment of the Harbor Maintenance Fee (HMF on an importation of jet fuel that was entered on June 5, 1990. The entry was liquidated on March 15, 1991 and the protest was filed on May 8, 1991. The jet fuel was entered into a Customs bonded warehouse. Most of that fuel was withdrawn from the warehouse for exportation as aircraft supplies.

It is protestant's contention that pursuant to 19 U.S.C. 1309(a) and 26 U.S.C. 4462(d)(1), jet aircraft fuel withdrawn from a bonded warehouse for use as aircraft supplies on an aircraft leaving the United States for a foreign country is not subject to the Harbor Maintenance Fee.


Whether bonded merchandise which is exported is subject to the Harbor Maintenance Fee?


The protest apparently is asserted under 19 U.S.C. 1514 (a)(5), questioning the legality of the respective liquidations of the entries. The protest appears to have been filed within the statutory 90-day period from liquidation.

Under 26 U.S.C. 4462(f), the administrative and enforcement provisions of the Customs laws apply to the HMF. The HMF is imposed on importations at the time of unloading in an applicable port under 26 U.S.C. 4461(c)(2)(A). The HMF does not apply to bonded commercial cargo entering the United States for transportation and direct exportation under 26 U.S.C. 4462(d). The provisions of 19 U.S.C. 1553 control transportation and exportation movements. Inasmuch as both protests involve jet fuel that was entered for warehouse under 19 U.S.C. 1557, rather than a movement through the United States under 19 U.S.C. 1553, the evidence does not support the claim that the exemption provided by 26 U.S.C. 4462(d) applies to the protest.

The alternative claim is that the HMF is a duty or internal revenue tax on the jet fuel when the jet fuel is entered for warehouse. Under 19 U.S.C. 1309 merchandise in a Customs bonded warehouse may be withdrawn free of duty or internal revenue tax. Under General Note 1, Harmonized Tariff Schedule of the United States (HTSUS) (19 U.S.C. 1202) goods imported into the United States are made subject to duty under General Notes 3 and 4, HTSUS. The duty is imposed by reason of importation. 19 CFR 141.1(a). The HMF is imposed by reason of port use under 26 U.S.C. 4461(a), and in this situation, the HMF becomes due at the time of unloading from a vessel in an applicable port. The language in 26 U.S.C. 4462(f) making all administrative and enforcement provisions of the Customs laws and regulations applicable to the HMF as if the HMF were a Customs duty does not transform the HMF into a Customs duty. See also S. Rept. 99-126 (August 1, 1985) page 7, reprinted in U.S. Code Cong. & Ad. News at 6644 (1986). There it is stated that the tax and fees were imposed for the purpose of repayment of costs related to servicing of commerce and not for the purpose of raising revenue. In H. Rept. 99-228 (Jan. 8, 1986) page 3, reprinted in U.S. Code Cong. & Ad. News at 6707 (1986), the purpose of having the Customs Service administer the collection of the HMF was not to create any new substantive rights but rather for reason of administrative and judicial procedures. The stated reason for using the Customs Service was simply because the Customs Service was present at ports. H. Rept. 99-228 (Jan. 8, 1986) page 10, reprinted in U.S. Code Cong. & Ad. News at 6714-6715 (1986).

The next issue is whether the HMF, when imposed on imported merchandise in a Customs bonded warehouse, after that merchandise was unloaded at an applicable port, is an internal revenue tax within the meaning of 19 U.S.C. 1309. There is no one meaning of the term "internal revenue tax". In the case of United States v. Leeb, 20 F.2d 335 (2d Cir. 1927), Judge Swan noted that point. -3-

He observed that legislative intent may be defeated by an invariable definition, and that the same word may be used with different meanings in different statutes. The purpose of statutory construction has been developed by the courts to ascertain legislative intent.

The provisions of 19 U.S.C. 1309 had its genesis in the Act of June 24, 1884, 23 Stat. 57. Section 16 of that Act allowed articles of foreign production withdrawn from bonded warehouses for vessel supplies to be withdrawn free of duty. See also R.S. 2982 (1874). Under the Act of July 20, 1868, an excise tax was imposed on the manufacture of various articles. That Act provided for drawback if the articles were exported. See also R.S. 3330 and 3385. Under T.D. 13250 (1892), the Secretary of the Treasury ruled that R.S. 2982 applied only to duty on imported goods and that the provisions of R.S. 3330 and 3385 did not apply to vessel supplies since there was no exportation.

By section 14 of the Tariff Act of 1897, Act of July 24, 1897, Section 16 of the Act of June 24, 1884 was amended to allow the withdrawal of foreign and domestic goods free of duty or internal revenue tax, as the case may be, for vessel supplies. The stated purpose of the Act of July 24, 1897 was to provide revenue for the Government and to encourage the industries of the United States. It seems clear that the words "internal revenue tax" refers to tax collected for revenue purposes or for the protection of American industries from foreign competition. The HMF, on the other hand, was expressly stated to not be collected for revenue purposes but to repay the costs expended on harbor maintenance. Further, having expressly provided for certain exemptions in 26 U.S.C. 4462, it would be anomolous to find that Congress intended a law enacted a century earlier would provide an additional exemption.


The Harbor Maintenance Fee is not an internal revenue tax within the meaning of 19 U.S.C. 1309. Rather, it is an excise tax collected to repay the costs expended on harbor maintenance. Therefore, you should deny this protest in full.

A copy of this decision should be attached to the CF 19, Notice of Action, and sent to protestant to satisfy the notice requirement of Section 174.30(a), Customs Regulations.


John A. Durant, Director

Previous Ruling Next Ruling