U.S. Customs and Border Protection · CROSS Database
HQ H098068 November 27, 2012 VES-13-18 OT:RR:BSTC:CCR H098068 DAC CATEGORY: Carriers CBP Supervisory Import Specialist c/o Vessel Repair Unit U.S. Customs and Border Protection 423 Canal Street, Suite 246 New Orleans, LA 70130 RE: Application for Further Review; Protest No. 2002-09-100120; Vessel Repair Entry No. VR3-0000031-8; HORIZON HAWAII; V-351; Court of Appeals for the Federal Circuit Judgment and Decision, 2012-1163; Court of International Trade Slip Op. 11-141, 08-cv-00009; 19 CFR § 177.12(d)(1)(iv). Dear Sir: FACTS: This letter is in response to your March 10, 2010, Application for Further Review of Protest 2002-09-100120, with respect to Vessel Repair Entry No. VR3-0000031-8, for the HORIZON HAWAII. We note that regarding the subject items protested, the recent publication of the final judgment of court decisions concerning the HORIZON CRUSADER are particularly relevant to the instant protest for the HORIZON HAWAII. In particular, we point out the relevant decisions and judgments of the Court of Appeals for the Federal Circuit ("CAFC") regarding Horizon Lines, LLC v. United States, (docket no. 2012-1163), affirming the Court of International Trade ("CIT") judgments and decisions regarding Horizon Lines, LLC v. United States, (docket no. 08-cv-00009), concerning the HORIZON CRUSADER. On February 7, 2005, Horizon Lines, LLC, submitted Vessel Repair Entry No. VR3-0000031-8, for the HORIZON HAWAII. CBP issued a duty determination letter to Horizon Lines, LLC, that was dated June 19, 2009. On September 18, 2009, Horizon Lines, LLC, timely filed the subject Protest No. 2002-09-100120. See 19 U.S.C. § 1514. In such protest, Horizon Lines, LLC, protested the following list of items: A. Item 6 American Bureau of Shipping (Initial Survey Anti-Fouling System) B. Item 13, 16 & 17 3.1-1 - Paint Modification Preparation (Tin free) 3.1-1 - Paint Modification Preparation (Tin free) 3.1-1 - Paint Modification Preparation (Tin free) 3.1-3.2f - Fresh Water Wash for Paint Modification (Tin free) 3.1-4a - Flat Bottom Coating Application Modification (Tin free) 3.1-4b - Vertical Sides Coating Application Modification (Tin free) C. Item 8.15000-5 Modify Entry Guides #4 Hold The subject protest lists such items under the labels A, B and C. We note that the A and B items are all associated with the services performed for the anti-fouling system. Additionally, the C items all have to do with cell entry guides. The protested items are completely within one of two categories, the anti-fouling systems or the cell entry guides. We note that prior litigation regarding these two categories has been completed, with respect to the HORIZON CRUSADER and the HORIZON HAWAII. We shall introduce the cases relevant for each category and discuss them below. As for services performed regarding cell entry guides, relevant court decisions, which involve the HORIZON HAWAII, include: Horizon Lines, LLC v. United States, (Ct. Int'l Trade), Slip Op. 09-111, 07-cv-00039, October 7, 2009; Horizon Lines, LLC v. United States, (Ct. Int'l Trade), Slip Op. 09-110, 07-cv-00039, October 7, 2009; and Horizon Lines, LLC v. United States, (Fed. Cir.) 2010-1138, December 6, 2010. As for services performed regarding anti-fouling systems, relevant court decisions, which involve the HORIZON CRUSADER, include: Horizon Lines, LLC v. United States, (Ct. Int'l Trade), Slip Op. 11-141, 08-cv-00009, November 18, 2011; and Horizon Lines, LLC v. United States, (Fed. Cir.) 2012-1163, November 9, 2012. Additionally, for services performed regarding cell entry guides, there is a relevant stipulated judgment on agreed statement of facts, which involves the CSX TRADER, Horizon Lines, LLC v. United States, (Ct. Int'l Trade), 08-00175, June 27, 2012. ISSUE: Whether, based upon relevant court judgments and prior decisions the protested items shall be granted or denied. LAW AND ANALYSIS: In accordance with CBP Regulations at 19 CFR § 177.12(d)(1)(iv), which provides, in pertinent part: (d) Exceptions to notice requirements -(1) Publication and issuance not required. The publication and issuance requirements set forth in paragraphs (b) and (c) of this section are inapplicable in circumstances in which a Customs position is modified, revoked or otherwise materially affected by operation of law or by publication pursuant to other legal authority or by other appropriate action taken by Customs in furtherance of an order, instruction or other policy decision of another governmental agency or entity pursuant to statutory or delegated authority. Such circumstances include, but are not limited to, the following: * * * (ii) Promulgation of a treaty or other international agreement under the foreign affairs function of the United States; * * * (iv) Subject to the provisions of § 152.16 of this chapter, the rendering of a judicial decision which has the effect of overturning the Customs position; 19 CFR § 177.12(d)(1)(ii),(iv). (emphasis added.) CBP determined for Vessel Repair Entry No. VR3-0000031-8, regarding the HORIZON HAWAII, V-351, that some of the services performed on the HORIZON HAWAII were dutiable repairs and not modifications. In regards to anti-fouling systems, in Horizon Lines v. United States, the Court of International Trade held that all the services performed were modifications, stating the following: The work performed on the Horizon Crusader was solely undertaken to comply with the Convention, and as a matter of law, any repairs effected were incidental and irrelevant to the nature of the work. Horizon Lines, LLC v. United States, (Ct. Int'l Trade), Slip Op. 11-141, 08-cv-00009, p. 5, November 18, 2011. Additionally, the Court of International Trade entered judgments including the following: ORDERED, ADJUDGED and DECREED... ...that judgment be, and hereby is, entered in favor of the Plaintiff [Horizon Lines, LLC]; ...that the vessel expenses at issue in this case are non-dutiable; ...that the appropriate United States Customs and Border Protection officials shall reassess the duties at issue in accordance with the judgment of the court; ...that the appropriate United States Customs and Border Protection officials shall refund to Plaintiff all excess duties together with interest as provided by law. Horizon Lines, LLC v. United States, (Ct. Int'l Trade), Slip Op. 11-141, 08-cv-00009, pp. 5-6, November 18, 2011. Subsequently, the Court of Appeals for the Federal Circuit affirmed the judgment of the CIT. See Horizon Lines, LLC v. United States, (Fed. Cir.) 2012-1163, November 9, 2012. Based upon examination and review of the subject Entry and Protest submitted, the facts and circumstances regarding the modifications required for compliance with the anti-fouling agreement for the HORIZON CRUSADER and the HORIZON HAWAII are similar and not significantly distinguishable. Therefore, we find the Court's findings for the HORIZON CRUSADER are applicable to the subject entry and protest for the HORIZON HAWAII. See H025902, November 21, 2012. In regards to cell entry guides, in Horizon Lines v. United States, the Court of International Trade held that the services performed were modifications, with statements that include the following: FINDINGS OF FACT 31. The Cell Entry Guide Modifications constitute non-dutiable modifications and not dutiable repairs. CONCLUSIONS OF LAW 13. The Cell Entry Guide Modifications replaced cell and entry guides that in full proper working order when the HAWAII arrived in Lisnave in 2002. 14. CBP incorrectly assessed duties under 19 U.S.C. § 1466(a) for the Cell Entry Guide Modifications because such work constituted non-dutiable modifications as opposed to dutiable repair work. 15. Horizon is entitled to a refund in the amount of [amount omitted dollars] plus interest as provided by law for duties imposed on the Cell Entry Guide Modifications. Horizon Lines, LLC v. United States, (Ct. Int'l Trade), Slip Op. 09-111, 07-cv-00039, pp. 7-9, October 7, 2009. Subsequently, the Court of Appeals for the Federal Circuit affirmed the judgment of the CIT. See Horizon Lines, LLC v. United States, (Fed. Cir.) 2010-1138, December 6, 2012. Based upon examination and review of the subject Entry and Protest submitted, the facts and circumstances regarding the services performed for the cell entry guides for the HORIZON HAWAII in the subject protest and the HORIZON HAWAII in the aforementioned Court decisions are similar and not significantly distinguishable. Therefore, we find the Court's findings for the HORIZON HAWAII are applicable to the subject entry and protest for the HORIZON HAWAII. Therefore, in accordance with the decisions and judgments of the Courts, by operation of law, the prior CBP decision for Vessel Repair Entry No. VR3-0000031-8, for the HORIZON HAWAII, V-351, is modified. See 19 CFR § 177.12. Additionally, any other decisions or rulings inconsistent with these Horizon Lines decisions and judgments are modified by operation of law. See Horizon Lines, LLC v. United States, (Ct. Int'l Trade) Slip Op. 09-111, 07-cv-00039, October 7, 2009. Horizon Lines, LLC v. United States, (Fed. Cir.) 2010-1138, December 6, 2010. Horizon Lines, LLC v. United States, (Ct. Int'l Trade) Slip Op. 11-141, 08-cv-00009, November 18, 2011. Horizon Lines, LLC v. United States, (Fed. Cir.) 2012-1163, November 9, 2012. Accordingly, we determine that Customs and Border Protection officials shall expedite compliance with the aforementioned published decisions and judgments of the Courts. Therefore, we determine that the protested items shall be granted in full. HOLDING: In conclusion, in accordance with the decisions and judgments of the Courts, 19 CFR § 177.12, and by operation of law, the prior CBP decision for Vessel Repair Entry No. VR3-0000031-8, for the HORIZON HAWAII, V-351, is modified. See 19 CFR § 177.12. Additionally, any other decisions or rulings inconsistent with Horizon Lines are modified by operation of law. See Horizon Lines, LLC v. United States, (Ct. Int'l Trade) Slip Op. 09-111, 07-cv-00039, October 7, 2009. Horizon Lines, LLC v. United States, (Fed. Cir.) 2010-1138, December 6, 2010. Horizon Lines, LLC v. United States, (Ct. Int'l Trade) Slip Op. 11-141, 08-cv-00009, November 18, 2011. Horizon Lines, LLC v. United States, (Fed. Cir.) 2012-1163, November 9, 2012. In sum, the protested items shall be granted in full. Finally, CBP shall expedite complete compliance with the aforementioned published decisions and judgments of the Courts. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations & Rulings U.S. Customs and Border Protection 1 5
