HQ 0223154 - Application for further review of Protest No. 3201-91- 100023, dated February 26, 1991; Duties on fuel consumed in foreign-trade subzone; FTZ grant restriction; administrative remedy futile; 19 U.S.C. 1514. - United States International Trade Commision Rulings

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HQ 223154

September 24, 1991

FOR-2-02-CO:R:C:E 223154 JR

CATEGORY: ENTRY LIQUIDATION

Regional Commissioner of Customs
Pacific Region
One World Trade Center, Suite 765
Long Beach, California 90831-0700

RE: Application for further review of Protest No. 3201-91- 100023, dated February 26, 1991; Duties on fuel consumed in foreign-trade subzone; FTZ grant restriction; administrative remedy futile; 19 U.S.C. 1514.

Dear Sir:

The above-referenced protest from the Honolulu District was forwarded to our office for further review on April 22, 1991.

FACTS:

Chevron U.S.A., Inc. has filed a protest under 19 U.S.C. 1514 challenging the exaction of duties and merchandise processing fees by Customs on several entries of imported fuel which its refinery consumed as part of its operation in Foreign Trade Subzone Number 9E, in Honolulu, Hawaii.

Chevron protests the exaction of duties and fees on the import entries "because the merchandise never entered U.S. Customs territory and because such exaction is discriminatory treatment in comparison to the rights given to other refiners operating in foreign-trade zones." The District Director, Honolulu, recommends that the protest be denied since the grant establishing the Chevron refinery as a foreign trade subzone specifically states: "1. Foreign crude oil used as fuel for the refinery shall be dutiable." See Foreign-Trade Zones Board Order No. 415.

ISSUE:

Does the Customs Service have the statutory authority to grant the relief the protestant is seeking, that is, the repeal of the grant restriction issued by the Foreign-Trade Zones Board?

LAW AND ANALYSIS:

It is manifestly inadequate for the protestant to protest the exaction of duties and fees assessed on the imported fuel consumed in its foreign trade subzone under 19 U.S.C. 1514 because no relief can be granted by Customs in this case at the administrative level. See United States v. Utex International Inc., 6 Fed. Cir. (T) 166; 857 F.2d 1408 (1988). It is well established that exhaustion of remedies will not be required if administrative review would be futile. See Luggage and Leather Goods Manufacturers of America, Inc. v. United States, 7 CIT 258, 588 F. Supp. 1413 (1984). The District Director, Honolulu, as a Board representative, is bound to carry out the grant restriction of the Foreign-Trade Zones Board, and as such, Customs officials are legally foreclosed from granting the relief sought, that is, overturning the grant restriction. See 19 U.S.C. 81b(a); 19 U.S.C. 81c; 19 CFR 146.2.

Since Customs is bound by law to enforce the Foreign-Trade Zones Board's Order and since Customs has no authority to override the Foreign-Trade Zones Board's grant restriction, we have no choice but to deny the protest.

HOLDING:

The Customs Service is legally foreclosed from granting the relief sought in this case under 19 U.S.C. 1514 since overturning a foreign-trade subzone's grant restriction is a matter outside the authority of the Customs Service. You are instructed to deny this protest. A copy of this decision should be provided to the protestant in accordance with 19 CFR 174.30.

Sincerely,

John A. Durant, Director

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