Request for reconsideration of Protest number 0901-93-101342; 19 USC § 1514; Express consignment facility; Express Consignment Carrier Facility; ECCF; 19 USC § 58c; 19 USC § 58a; 19 CFR 24.23; 19 CFR § 24.17.

HQ 226178 March 28, 2003 PRO-2-02; PRO-04 RR:CR:DR 226178 RDC CATEGORY: Protest U.S. Customs Service Port Director 111 West Huron Street Buffalo, NY. 14202 RE: Request for reconsideration of Protest number 0901-93-101342; 19 USC § 1514; Express consignment facility; Express Consignment Carrier Facility; ECCF; 19 USC § 58c; 19 USC § 58a; 19 CFR 24.23; 19 CFR § 24.17. Dear Sir or Madam: The above-referenced Protest was forwarded to this office for reconsideration. We note that the Memorandum from the Port Director, Buffalo, New York, is dated June 28, 1999, and that this file was received by the Duty and Refund Determination Branch on February 10, 2003. Our decision follows. FACTS: The Protestant, TNT Skypak, Inc. (“TNT”) by letter to the District Director, Buffalo, dated July 22, 1992, requested “approval to operate an express consignment facility at the Port of Buffalo.” The letter also states “if approved by your office, we intend to start this operation on August 4, 1992” (emphasis in the original). There is also included a letter dated July 17, 1992, from PBB USA, Inc., customs broker for the Protestant, to the District Director, Buffalo, advising “TNT Worldwide Express will begin operations on August 4, 1992, . . . through the Port of Buffalo’s Airport Facility.” This letter proposes a method to be used by TNT Worldwide Express for releasing the freight. According to the Port and not disputed by the Protestant, TNT began operating an Express Consignment Carrier Facility (“ECCF”) at the Buffalo Port on August 4, 1992. By letter dated January 28, 1993, to the then Office of Inspection and Control at Customs Headquarters, TNT states, “this letter is the follow-up to our telephone conversation of January 4, 1993 regarding TNT’s operation at the Port of Buffalo.” The letter goes on to detail TNT’s dispute regarding the “invoices for the reimbursable services” . . . for the time period from October 2, 1993, to February 5, 1993” generated by the Protestant’s “Buffalo operation.” TNT’s January 28, 1993, letter contains the following: TNT states, “prior to the imposition of the reimbursable charges, we were paying a User fee of two dollars for each low value consignment, or $240 per night. With the imposition of the reimbursable fees, our costs have gone from $240 to $2400 per night, an increase of tenfold. This occurred because Inspectors in an overtime status have been assigned to the operation.” TNT was not notified by Customs in writing of the approval of its ECCF. The Protestant states that it was “informed by our Customs Broker, PBB USA Inc., that effective October 7, we were going to be billed for reimbursable services: but that was all we were told.” TNT states that it was not notified of the approval because the processing of its application was not complete because the hiring of the staff to work the operation was not complete. TNT states that since its application was not complete Customs should have continued to staff its ECCF at no charge to TNT. TNT questions why three inspectors and one supervisor were assigned each night from a rotating overtime list from October 7 until late November when only two inspectors will be permanently assigned when the positions are filled. TNT states that it had been billed more than $100,000 in reimbursable bills, which where then as yet unpaid, and “makes an offer in compromise in the amount of $43,392 which represents an estimate of what we would have paid had two reimbursable positions (Inspectors) been specifically assigned to our operation.” In response to this letter from TNT, a letter dated February 5, 1995, from the District Director, Buffalo, advised TNT that its status as an ECCF was approved effective August 4, 1992. This letter also acknowledged that there was no prior notification of this approval and that this lack of notification was not intentional. Further, by letter dated April 2, 1993, the Assistant Commissioner, Office of Inspection and Control, responded to TNT’s letter disputing the invoices for reimbursable services. The Assistant Commissioner addressed the contentions contained in the Protestant’s letter and stated that on August 4, 1992, “TNT importations [at the Buffalo facility] increased significantly and Customs provided additional personnel to handle the increase.” The letter essentially rejects TNT’s offer in compromise and states that the invoices received by the Protestant “only reflect the actual cost to the Customs Service plus the payment to the Secretary of the Treasury in lieu of merchandise processing fees as required by law.” We note here that there is no direct evidence of the discussed invoices included in the file, that is, no copies of bills. By letter dated May 26, 1995, this office requested copies of the bills issued in this matter, including copies of the computations used to calculate those bills. The Port was unable to supply bills but stated that the charges were for overtime for inspector services. The Port has recently provided a spreadsheet which identifies bills issued to TNT between September 22, 1992, and March 23, 1993. This spreadsheet identifies the bill number, entry number, the date issued, status, status date and amount billed. The bills are all shown in the paid status, i.e., these bills were paid by the Protestant. The status date is the date the bills were paid and these dates range between October 21, 1992, and July 28, 1993. Two bills for each entry number, for identical amounts, one bill labeled “type 8” and the second bill labeled “type 3” were issued for each entry number. The Port explains that “type 3” indicates reimbursable overtime and “type 8” “is an addition specific for ECCFs.” However, the spreadsheet does not identify the specific services for which the bills were incurred nor when the charges were actually incurred. A representative of the Port, in a telephone conversation that took place on February 28, 2003, stated that the Protestant was not assessed any flat fees for services during the time it was being charged for the reimbursable fees, and that the disputed bills were paid by the Protestant. The instant Protest, number 0901-93-101342, was filed by letter dated June 28, 1993, to the District Director of Customs, Buffalo, and to the then Assistant Commissioner, Office of Inspection and Control at Customs Headquarters in Washington, D.C. According to Customs’ automated data collection system (ACS) the Protest was received June 30, 1993. There is also a faint marking on the cover letter to the Protest which appears to be a U.S. Customs date stamp and seems to corroborate the date received as June 30. In its letter the Protestant states “because of the unique nature of this Protest, it is being filed concurrently at the Port of Buffalo and Customs Headquarters.” In this letter of June 28, 1993, TNT states that it “protests the refusal to mitigate the Customs Reimbursable charges assessed to TNT for the operation of its Express Consignment Carrier Facility in Buffalo NY for the time period of October 7, 1992 through February 5, 1993. Date of denial of decision being protested in April 2, 1993." Further, the Protestant argues that, “by failing to properly and promptly notify the petitioner of approval of the application [to operate an ECCF] and approximate charges to be assessed, the Customs Service has materially damaged the petitioner and placed it in a hardship position that would not have occurred but for the failure of Customs to notify the petitioner as required” by 19 CFR § 128.12(a). Additionally, TNT states, “[Protestant] contends that because the official notification of approval [of the application to operate an ECCF] was February 5, 1993, all Customs overtime charges prior to that date must be borne by the Customs Service. All bills after that date, are properly chargeable to the [Protestant] under the reimbursable provisions of the User Fee statutes. [Protestant]’s offer in compromise was an acknowledgement that the work was actually performed and was an estimate of what would have been properly owed by the [Protestant] had the District Director processed the application for an ECCF in accordance with Customs own regulations.” Finally, the Protestant requests that, “all monies already paid by the [Protestant] under the User Fee statutes for the time period October 7, 1992 through February 5, 1993, at the Port of Buffalo, be refunded . . . . By memorandum dated April 4, 1995, the District Director, Buffalo, advised this office that the protest should be resolved at Customs Headquarters. This office originally responded to the instant Protest on July 29, 1997. On June 28, 1999, the Port Director, Buffalo, New York, by memorandum, requested that we reconsider our original response. We therefore reconsider the contentions of your office and the Protestant. Our decision follows. ISSUES: 1. Does Customs failure to notify the party in interest in writing of the approval of the operation of an Express Consignment Carrier Facility relieve the obligation to pay for reimbursable services actually rendered? 2. Is the Protest filed timely when filed more than 90 days after the protested bills were issued? LAW AND ANALYSIS: The Protestant states that it “protests the refusal to mitigate the Customs Reimbursable charges assessed to TNT for the operation of its Express Consignment Carrier Facility in Buffalo, NY for the time period of October 7, 1992 through February 5, 1993.” TNT acknowledges that the services for which it was billed were “actually performed” and that its offer-in-compromise “was an estimate of what would have been properly owed by the [Protestant] had the District Director processed the application for an ECCF in accordance with Customs own regulations.” Essentially, the Protestant argues that because Customs failed to notify the petitioner in writing that its operation of an ECCF was approved as required by 19 CFR § 128.12(a) that all Customs overtime charges prior to [February 5, 1993] must be borne by the Customs Service.” However, the instant Protest is so seriously deficient of legal justification for its arguments and positions that it does not meet the requirements of 19 USC § 1514(c)(1) which requires that the justification for the protest “be set forth distinctly and specifically” (see also 19 CFR § 174.13). The Protestant has submitted merely a recitation of the facts and its conclusions drawn from those facts. TNT “contends that because the official notification of approval [of the application to operate an ECCF] was February 5, 1993, all Customs overtime charges prior to that date must be borne by the Customs Service. But TNT offers no explanation or support as to how the application of this regulation results in its conclusion. Nor does the Protestant provide the legal framework which supports the facts and events. Therefore, we have supplied the legal underpinnings of the events and conclusions as necessary. It is undisputed that the Protestant, TNT, began operating an Express Consignment Carrier Facility (“ECCF”) at the Buffalo Port on August 4, 1992. Further, there is no disagreement on the point that the protested charges were for Customs reimbursable services associated with TNT’s operation of an express consignment carrier facility. The Protestant argues that the lack of written notice that its ECCF was approved by Customs relieves TNT from the obligation to pay for the Customs reimbursable services actually provided during the time it operated the ECCF but had not received written approval. The Protestant does not dispute that during this time in the course of operating the ECCF it actually made entries through the Port of Buffalo, New York. However, in requesting that “all monies already paid by the [Protestant] under the User Fee statutes be refunded” TNT takes the position that it is not liable for any fees in connection with the operation of its ECCF from October 7, 1992 through February 5, 1993. However, this position is contrary to the requirement under 19 USC § 58c(a) (1992) (fees for certain customs services) that fees, flat fees or reimbursable fees, are imposed for all entries, formal and informal. Therefore, Customs is without authority to refund all fees paid to TNT, i.e., either a flat fees or reimbursable fees must be paid for the entries made by the Protestant. The fees for formal entries are provided for under 19 USC 58c(a)(9)(A); the informal entry fees are provided for under 19 USC 58c(a)(10), the reimbursable fees for reimbursable facilities such as user fee airports, courier hubs, and express consignment carrier facilities are provided for under 19 USC § 58c(b)(9)(A). ECCFs are specifically exempted from flat fees imposed by 19 USC § 58c(a)(10). 19 USC § 58c(a)(10)(B) provides, In addition to any other fee authorized by law, the Secretary of the Treasury shall charge and collect the following fees for the provision of customs services in connection with the following: (10) For the processing of merchandise that is informally entered or released, other than at (B) an express consignment carrier facility, . . . Further, 19 USC § 58c(a)(10), provides, For provisions relating to the informal entry or release of merchandise at facilities referred to in subparagraphs (A), (B) [an express consignment carrier facility], and (C), see subsection [§ 58c ](b)(9). Reimbursable fees imposed for services at express consignment carrier facilities, such as those billed to the Protestant, are calculated per 19 USC § 58c(b)(9)(A)(ii): With respect to the processing of merchandise that is informally entered or released at a centralized hub facility, an express consignment carrier facility, or a small airport or other facility, the following reimbursements and payments are required: . . . (ii) In the case of an express consignment carrier facility (I) an amount, for which the Customs Service shall be reimbursed under section 524 of the Tariff Act of 1930 [19 USCS § 1524], equal to the cost of the customs inspectional services provided by the Customs Service at the facility during the fiscal year; and (II) an annual payment by the facility to the Secretary of the Treasury, which is in lieu of the payment of fees under subsection (a)(10) for such fiscal year, in an amount equal to the reimbursement made under subclause (I). 19 USC § 58c is implemented by 19 CFR 24.23. 19 CFR 24.23 (b)(2)(ii) (B) provides, In the case of an express consignment carrier facility, payment by the facility in an amount equal to the cost (including overtime) of the Customs inspectional services provided at the facility during the fiscal year for which Customs is reimbursed under § 24.17 of this chapter. TNT contends, that “by failing to properly and promptly notify the petitioner of approval of the application [to operate an ECCF] and approximate charges to be assessed, the Customs Service has materially damaged the petitioner and placed it in a hardship position that would not have occurred but for the failure of Customs to notify the petitioner as required” by 19 CFR § 128.12(a). The Protestant request that “all monies already paid . . . under the User Fee statues for the time period October 7, 1992 through February 5, 1993, . . . be refunded. The U.S. Customs Service Regulations governing the special procedures for the clearance of imported merchandise carried by express consignment operators are in title 19, Code of Federal Regulations, Part 128. Per § 128.12(a)(1) (1992), The district director shall promptly notify the applicant in writing of the decision to approve or deny the application to establish an express consignment carrier or hub facility or to suspend or revoke operating privileges at an existing facility. It is undisputed that contested bills were for reimbursable Customs services actually rendered at the Protestant’s operation in Buffalo. It is also undisputed that the Protestant was not notified in writing until February 5, 1995, that its operation of an ECCF was approved. However, we find no support for the contention, and the Protestant offers none, that, as a consequence of failing to notify the Protestant per 19 CFR § 128.12(a), “all Customs overtime charges prior to [February 5, 1995,] must be borne by the Customs Service” or even that Customs has a duty to reduce or mitigate the reimbursable costs billed to the Protestant for services which were actually provided. There is also nothing in the law or regulations to suggest that such a failure to notify necessitates the mitigation of the fees payable or requires Customs acceptance of an offer-in-compromise. Moreover, we can find no language in 19 USC § 58a and TNT identifies none, to support the contention that the required reimbursable fees for Customs services are contingent upon any occurrence other than providing the services. TNT seems to contend that since it did not receive notice from Customs that its ECCF in Buffalo was an approved ECCF it should not be liable for payment for services actually rendered. The Protestant provides no evidence that, during the time the services were provided and which bills TNT now disputes, October 2, 1993, and February 5, 1993, it was unaware of the nature of its operation or volume of Customs processing at its facility in Buffalo. In fact, the Protestant had actual knowledge that it would be billed for reimbursable fees - TNT states in its January 28, 1993, letter, that it was “informed by our Customs Broker, PBB USA Inc., that effective October 7, we were going to be billed for reimbursable services: but that was all we were told.” Moreover, 19 CFR § 128.11(b)(7)(iv) (1992) requires that the application for approval of an express consignment carrier or hub facility must include the following: An agreement that the express consignment entity will: Timely pay all reimbursable costs, as determined by the district director. TNT’s July 22, 1992, letter begins, “in accordance with Part 128.11 of the Customs Regulations, TNT Skypak Inc. is hereby applying for approval to operate” an ECCF. Only the first page of this letter was included in the file so it is unknown whether TNT’s application actually states that it agreed to timely pay all reimbursable costs, as determined by the district director. However, TNT’s statement that it was applying for approval in accordance with Part 128.11 is tacit agreement that it will abide by all sections of § 128.11, including 19 CFR § 128.11(b)(7)(iv). However, whether this agreement was expressly stated or not, the Protestant is not relieved of its obligation to “timely pay all reimbursable costs, as determined by the district director.” Further we can find no support in the law or regulations, and the Protestant offers none, for the contention that the obligation to pay all reimbursable expenses is contingent on receiving written notification of approval to operate an ECCF or that the obligation to pay for actual services received is conditioned on the party-in-interest’s agreement to the charges. Nor is there any requirement that duty to pay for services actually rendered is dependent on providing those services with permanent staff. The Protestant also states that its “offer in compromise was an acknowledgement that the work was actually performed and was an estimate of what would have been properly owed . . . had the District Director processed the application for an ECCF in accordance with Customs own regulations.” It is undisputed that TNT commenced operation of the ECCF at Buffalo on August 4, 1992, and that contemporaneously, importations at the facility increased and Customs provided additional personal to process the increased importations. Further, TNT states that the Customs services for which it was billed were actually rendered. 19 CFR,