1

 The HMT is established by 26 U.S.C. §§ 4461, 4462 (1994).

Slip Op. 99-95

UNITED STATES COURT OF INTERNATIONAL TRADE ___________________________________

:

BMW MANUFACTURING CORPORATION, :

: Court No. 97-03-00396

Plaintiff, :

:

v. :

:

THE UNITED STATES, :

:

Defendant. :

___________________________________:

[Partial summary judgment for defendant.]

 Dated: September 14, 1999

Lamb & Lerch (Sidney H. Kuflik and David R. Ostheimer) for

plaintiff.

David W. Ogden, Acting Assistant Attorney General, David M.

Cohen, Director, Commercial Litigation Branch, Civil Division,

United States Department of Justice (Jeanne E. Davidson, Todd M.

Hughes and Lara Levinson), Richard McManus, Office of the Chief

Counsel, United States Customs Service, of counsel, for

defendant.

OPINION

RESTANI, Judge: This matter is before the court on crossmotions for summary judgment. Plaintiff seeks recovery of Harbor

Maintenance Tax (“HMT”)1

 payments collected by the United States

Customs Service on merchandise admitted into a foreign trade zone

(“FTZ”) within the geographical territory of the United States.
COURT NO. 97-03-00396 PAGE 2

2 The statement of facts is derived from plaintiff’s

opening brief. Defendant does not dispute the material facts

contained therein.

I. Jurisdiction

In United States v. U.S. Shoe Corp., 118 S.Ct. 1290 (1998),

the Supreme Court held that imposition of the HMT on exports

violated the Export Clause of the Constitution. It also upheld

jurisdiction over such challenges in this court, pursuant to 28

U.S.C. § 1581(i). Id. at 1293-94. The HMT on admissions into

foreign trade zones is paid on a quarterly basis, as was the HMT

on exports. Again, Customs’ role as HMT collector is passive; it

merely receives payments. There is no decision-making by Customs

under 19 U.S.C. § 1514 which would give rise to protest-denial

jurisdiction under 28 U.S.C. § 1581(a). As no other subsection

of § 1581 specifically covers these claims, the court’s residual

jurisdiction, 28 U.S.C. § 1581(i), applies. See Miller v. United

States, 824 F.2d 961, 963 (Fed. Cir. 1987) (§ 1581(i)

jurisdiction proper only when jurisdiction not otherwise

available under another subsection of § 1581).

II. Background2

Plaintiff, BMW Manufacturing Corporation (“BMW”), is a

United States company incorporated in the State of Delaware. BMW

is a wholly-owned subsidiary of Bayerische Motoren Werke 
COURT NO. 97-03-00396 PAGE 3

3

 The difference between a general purpose foreign-trade

zone and a foreign trade subzone is that the former must be made

available for use to multiple entities which desire to operate

within a foreign-trade zone. If a company is unable to operate

within a general purpose foreign-trade zone, a foreign-trade

subzone can be established for the use of a single specific

company. See Citgo Petroleum Corp. v. United States Foreign

Trade-Zones Board, 83 F.3d 397, 399 (Fed. Cir. 1996); Nissan

Motor Mfg. Corp., U.S.A. v. United States, 884 F.2d 1375, 1375-76

(Fed. Cir. 1989) (quoting Nissan Motor Mfg. Corp., U.S.A. v.

United States, 12 CIT 737, 738, 693 F.Supp. 1183, 1185 (1988));

Armco Steel Corp. v. Stans, 431 F.2d 779, 788-89 (2d Cir. 1970).

Aktiengesellschaft of Munich, Germany. BMW has a facility in

Spartanburg, South Carolina, at which it both manufactures motor

vehicles and receives foreign manufactured motor vehicles. BMW

utilizes U.S. components and foreign components in the vehicles

it manufactures at Spartanburg. The Spartanburg-manufactured

motor vehicles are sold in the United States, as well as shipped

abroad for sale in other countries. The foreign-produced motor

vehicles received at the Spartanburg facility are intended for

sale in the U.S. BMW’s Spartanburg facility is a foreign trade

subzone.3 Foreign goods admitted to the Spartanburg FTZ,

including complete motor vehicles and automotive components, are

entitled to receive beneficial FTZ treatment. See generally 19

U.S.C. Chapter 1 and 19 C.F.R. Part 146 (1999).

Customs regulations mandate the imposition and collection of

the Harbor Maintenance Tax upon the admission of foreign

merchandise into a FTZ. See 19 C.F.R. § 24.24(e)(2)(iii) (1999). 
COURT NO. 97-03-00396 PAGE 4

The HMT is to be paid on a quarterly basis by the party

responsible for admitting the foreign goods into the FTZ by way

of a completed Customs Form 349 (“CF 349"). See id.

Four types of shipments are listed on the CF 349 for which

HMT payments must be made on a quarterly basis: exports, domestic

movements, passengers, and FTZ admissions. As the party

admitting foreign goods into a FTZ, BMW has been filing CF 349s

with its HMT payments for its FTZ admissions of foreign

merchandise in the manner prescribed by Customs Regulation

§ 24.24(e)(2)(iii).

BMW commenced this civil action challenging the imposition

and collection of the HMT on the foreign goods it has admitted

into its Spartanburg FTZ. BMW’s amended complaint raised four

causes of action. Three of the causes of action – the

severability claim, the Port Preference constitutional claim and

the Uniformity constitutional claim – have not been briefed, and

plaintiff does not desire to brief them in this action. Rather,

plaintiff relies on the presentations in other test cases and

raises the claims protectively. The court has recently found

these three legal theories wanting and has dismissed a test case

based upon them for failure to state a claim. See Amoco Oil Co. 
COURT NO. 97-03-00396 PAGE 5

v. United States, No. 95-07-00971 (Ct. Int’l Trade Sept. 1,

1999). The court adopts that opinion for purposes of this case.

III. Discussion

Plaintiff’s argument relies on two premises, the first of

which is not disputed. First, Customs duties on imports are not

paid upon admission to a FTZ. Rather, they are paid if the goods

exit the FTZ for entry into the Customs Territory of the United

States. See 19 U.S.C. § 81c(a). Second, section 4662(f)(1) of

Title 26 requires the HMT to be treated as a customs duty for

administrative and enforcement purposes, and 19 U.S.C. § 1528

requires that a tax is to be construed as a customs duty if it is

to be treated as a customs duty. Ergo, plaintiff argues that

Customs regulations requiring collection of the HMT on admission

into a FTZ violates statutory law. See 19 C.F.R.

§ 24.24(e)(2)(iii) (requiring HMT to be paid on admission to the

FTZ by the party responsible for admission).

A. Liability upon unloading for HMT on goods

admitted to FMZ 

The starting point is the HMT statute. It specifies that

HMT is to be paid on "any port use" in "an amount equal to 0.125

percent of the value of the commercial cargo involved." 26

U.S.C. § 4461(a) & (b). The statute specifies that the fee

shall be paid by --
COURT NO. 97-03-00396 PAGE 6

(A) in the case of cargo entering the United

States, the importer,

(B) in the case of cargo to be exported from

the United States, the exporter, or

(C) in any other case, the shipper.

26 U.S.C. § 4461(c). Liability attaches, for port use other than

exportation, "at the time of [cargo] unloading." 26 U.S.C.

§ 4461 (c)(2)(B). 

Congress expressly exempted certain port use from the fee. 

Congress created a "[s]pecial rule for Alaska, Hawaii, and

possessions." 26 U.S.C. § 4462(b). See Amoco, slip op. at 14-15

(given the dependence of Alaska and Hawaii on shipping, the

exemption equalizes burdens among the states). Congress also

expressly exempted "bonded commercial cargo entering the United

States for transportation and direct exportation to a foreign

country." 26 U.S.C. § 4462(d)(1). The facts of this matter give

rise to neither exemption and the statute does not include

specific exemption for cargo that is admitted into a foreign

trade zone after unloading at a covered port.

As there is no express exemption applicable to its goods in

the act establishing the HMT, plaintiff must rely on the FTZ

statute to provide relief. That relief is available only if the

HMT is a customs duty.
COURT NO. 97-03-00396 PAGE 7

As recently stated, however, in Texport Oil Co. v. United

States, Nos. 98-1352, 98-1353, 98-1373, 1999 WL 538186, at *6

(Fed. Cir. July 27, 1999), “The HMT is a generalized Federal

charge for the use of certain harbors.” It is also codified in

the Internal Revenue Code. It is not by its nature a customs

duty. Further, by itself, 26 U.S.C. § 4462(f)(1) does not make

the HMT a customs duty. It merely states, in relevant part:

 Except to the extent otherwise provided in

regulations, all administrative and

enforcement provisions of customs laws and

regulations shall apply in respect of the tax

imposed by this subchapter (and in respect of

persons liable therefor) as if such tax were

a customs duty.

To treat something for administration and enforcement, as

something else, does not make it that other thing for all

purposes. Congress could easily have said the HMT was a “customs

duty” or a “customs duty for all purposes”; it did not do so.

The next issue is whether 19 U.S.C. § 1528 provides the

necessary link. It states, in relevant part:

 No tax or other charge imposed by or

pursuant to any law of the United States

shall be construed to be a customs duty for

the purpose of any statute relating to the

customs revenue, unless the law imposing such

tax or charge designates it as a customs duty

or contains a provision to the effect that it

shall be treated as a duty imposed under the

customs laws.
COURT NO. 97-03-00396 PAGE 8

As the previous discussion indicates, Congress did not

designate the HMT a customs duty. Is it enough that it is

treated as a duty for administration and enforcement? The answer

is “no.” To be treated as a duty for purposes of the Customs

laws denotes a much broader and more substantive treatment than

treatment for mere administration or enforcement purposes. See

U.S. Shoe Corp. v. United States, 20 CIT 206, 208 (1996) (purpose

of 26 U.S.C. § 4462(f)(1) was to specify which agency has

responsibility for collecting and processing HMT payments). 

Plaintiff also ignores the purpose of § 1528. Its purpose

is “to make it clear that preferences and exemptions applicable

to customs duties [are not applicable] to internal revenue taxes

unless Congress expressly [says] so.” United States v. Westco

Liquor Prods. Co., 38 CCPA 101, 107 (1951). Congress has not

said expressly that FTZ exemptions are applicable to the HMT. 

The language of 26 U.S.C. § 4462(f)(1) does not satisfy the

express language requirement of 19 U.S.C. § 1528. Cf. Chicago

Heights Distrib. Co. v. United States, 55 Cust. Ct. 254, 259

(1965) (distinguishing “collection purposes” from an “exemption”

or “preference” covered by § 1528).

Furthermore, plaintiff’s construction is at odds with the

purpose of the HMT. Although constructed as an ad valorem tax on 
COURT NO. 97-03-00396 PAGE 9

4 Under plaintiff’s interpretation goods may “escape” the

HMT because those products entering the FTZ duty-free need not be

later imported into the Customs territory of the United States. 

See, e.g., Citgo, 83 F.3d at 399 (“a company that ships raw

materials into a foreign-trade zone, processes the raw materials

into finished products, and then exports the finished products is

not required to pay duties on the raw materials, as they are

deemed never to have entered the customs territory of the United

States.”).

5 The one exception to this general intent states that the

Harbor Maintenance Tax "shall not apply to bonded commercial

cargo entering the United States for transportation and direct

exportation to a foreign country." 26 U.S.C. § 4462(d)(1). 

Legislative history supports the conclusion that this exception

addressed particularly competitive concerns not implicated by the

issue at hand. S. Rep. No. 228, at 229-30 (1986), reprinted in

1986 U.S.C.C.A.N. 6705, 6742 (exempting "bonded cargo entering

the U.S. for transportation and direct exportation to a foreign

country. This exemption does not apply (a) if Canada imposes a

similar port use charge or (b) to U.S. ports (or classes of

cargo) if the mandated cargo diversion study . . . shows that the

charge is not likely to result in a significant diversion of

cargo or that the nonapplicability of the charge to a given U.S.

port would cause economic harm to another U.S. port.").

merchandise, the purpose of the HMT is to charge for port use. 

See Texport, 1999 WL 538186, at *3. The HMT applies whether the

goods are exported, imported or shipped between domestic ports. 

See id. To have goods escape the HMT,4 even though the port use

is the same as for other goods, is not within the intent of

Congress.5 In addition, to further its purpose, Congress

provided that the HMT is to attach at the time of unloading

(except for exports). 26 U.S.C. § 4461(c)(2)(B). To delay

liability until the goods (as entered or transformed) leave the 
COURT NO. 97-03-00396 PAGE 10

6

 Plaintiff’s contention that HMT is paid quarterly, not at

the time of unloading, is irrelevant. Liability attaches at

unloading, before goods can be made into new products in the FTZ.

7

 The court also does not decide whether liability attaches

if bonded sealed merchandise enters an FTZ. This case does not

present such a factual scenario. Nor is the court concerned as

to whether Customs’ forms support the court’s reading of the

statute. The forms, like the regulations, must conform to the

statute, not the converse.

FTZ and perhaps enter the United States Customs territory

conflicts with this express provision.6

Accordingly, the court concludes the HMT must be paid on

goods unloaded at covered ports for admission into FTZs, in

accordance with 19 C.F.R. § 24.24(e)(2)(iii). The only question

remaining is whether the payor specified in 19 C.F.R.

§ 24.24(e)(2)(iii) is the one provided by statute. 

B. Person responsible for HMT on merchandise 

admitted into FTZ 

The answer to the question now posed depends in part on

whether merchandise admitted into an FTZ is cargo “entering the

United States.” 26 U.S.C. § 4461(c)(1)(A). In such a case the

HMT is to be paid by the “importer.” If it is not, the HMT is to

be paid by the “shipper.” 26 U.S.C. § 4461(c)(1)(C).7

If the statute stated “entering the Customs Territory of the

United States,” this matter would be largely resolved. The

goods, not being unloaded for immediate entry into the United 
COURT NO. 97-03-00396 PAGE 11

States Customs Territory, but being an “other case,” would give

rise to shipper liability. Of course, the statute dispenses with

these fine words of art and merely states “entering the United

States.” At first, it is not easily decipherable whether

Congress meant the geographical United States or its Customs

Territory. The word “entering,” which is common Customs

parlance, implies that the Customs Territory is meant, but it is

a mere implication, and not a strong one at that. As defendant

points out, the word “enter” has also been used in reference to

admission to an FTZ. See e.g., Nissan Motor Mfg. Corp., 12 CIT

at 744, 693 F. Supp. at 1189 (“right to enter production

machinery into [a] zone without paying duty.”); see also S. Rep.

No. 81-1107, at 1 (1949), reprinted in U.S.C.C.A.N. 2533, 2533

(referring to merchandise “entered” into an FTZ).

Plaintiff notes on the other hand, that for several excise

tax purposes “United States” is defined to include specifically

FTZs. See 26 U.S.C. §§ 4612(a)(4)(C) (1994) and 4682(e)(2)

(1994). It also notes that there is no specific inclusion of

FTZs in the more general definition of “United States” found at

26 U.S.C. § 7701(a)(9) (1994). This is a strong argument. 

Congress clearly knows how to include FMZs in the definition of

the United States for tax purposes, if it so chooses.
COURT NO. 97-03-00396 PAGE 12

8

 19 C.F.R. § 101.1 (1999) defines importer as:

 [T]he person primarily liable for the

payment of any duties on the merchandise, or

an authorized agent acting on his behalf.

The importer may be:

 (1) The consignee, or

 (2) The importer of record, or

 (3) The actual owner of the merchandise,

if an actual owner’s declaration and

superseding bond has been filed in accordance

with § 141.20 of this chapter, or

 (4) The transferee of the merchandise, if

the right to withdraw merchandise in a bonded

warehouse has been transferred in accordance

with subpart C of part 144 of this chapter.

Further, who the “importer” is when there is no actual

importation or attempted importation is a somewhat difficult

question to answer. Customs argues that its regulations answer

the query by defining importer as “the person . . . responsible

for bringing merchandise into the zone.” 19 C.F.R. §

24.24(e)(2)(i). In fact, the regulations do not state that this

is a definition of “importer.” Customs’ general regulation does

not include this as a category of “importer.”8

As HMT must be paid on the FTZ admissions, one might ask, 

who pays the HMT if there is no “importer” for FTZ admissions? 

As indicated, except for imports and exports, the shipper is

liable for HMT. 26 U.S.C. § 4461(c)(1)(C). With regard to

domestic shipments, Customs’ regulations indicate a shipper is

the party paying the freight. 19 C.F.R. § 24.24(e)(1)(i). As a
COURT NO. 97-03-00396 PAGE 13

9 Black’s Law Dictionary defines “shipper” as:

 One who ships goods to another. One who

engages the services of a carrier of goods. 

One who tenders goods to a carrier for

transportation; a consignor. The owner or

person for whose account the carriage of

goods is undertaken.

Black’s Law Dictionary 1378 (6th ed. 1990).

10 Under a carriage, insurance, and freight (“C.I.F.”)

contract, the price includes in a lump sum the cost of the goods

and the insurance and freight to the named destination. Black’s

Law Dictionary 242. If the contract has a free on board

(“F.O.B.”) delivery term, the seller ships the goods and bears

the expense and risk of loss to the F.O.B. point designated. Id.

at 642.

11 One might argue that the buyer always pays the freight,

because in a C.I.F. contract the price paid by the buyer includes

the freight and in an F.O.B. contract, the freight is paid

directly by the buyer. See John H. Jackson, William J. Daley, &

Alan O. Sykes, Legal Problems of International Economic Relations

54 (3d ed. 1995) (comparing responsibilities under C.I.F. and 

(continued...)

shipper is a person responsible for procuring movement of goods,9

this regulatory definition comports with common meaning. Unlike

“importer,” there is no general regulatory definition of

“shipper.” 

The person paying the freight, however, may be either the

seller or buyer.10 With domestic shipments, this creates no

problem, but as to shipments into an FTZ a collection problem

might arise if the person responsible for the freight is

interpreted to be the foreign seller.11
COURT NO. 97-03-00396 PAGE 14

11(...continued)

F.O.B. terms).

The parties declined to brief the issue of shipper liability

and have not advised if the plaintiff paid the freight on the FTZ

admissions at issue, or whether the sales contracts placed

responsibility for freight with the seller. In any case, the

court doubts that any reasonable interpretation of the statute

would permit the shifting of liability, by means of a simple

contractual arrangement, beyond Customs’ practical ability to

collect the HMT.

In accordance with Customs’ broad authority to design

procedures for collection of HMT, it may be permissible for

Customs to require that the person responsible for admission to

an FTZ assure that the HMT payment is made. This may be so even

if another party was responsible, pursuant to contract, for the

freight payment, and is, therefore, nominally the “shipper.”

The statute is not entirely clear as to which party is

responsible for HMT on admissions into an FTZ. In such a case,

the court must examine the reasonableness of the agency’s

interpretation. Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837, 843 (1984); see also United

States v. Haggar Apparel Co., 119 S.Ct. 1392, 1400 (1999)

(Chevron analysis to be applied to Customs classification if 
COURT NO. 97-03-00396 PAGE 15

Customs promulgates regulation interpreting ambiguous statute). 

While the interpretation of the statute presented to the court by

the government is not particularly convincing, the regulations

themselves may reasonably carry out the statute by simply

providing that the person responsible for FTZ admission pay the

HMT. As indicated, the court is unaware if plaintiff paid the

freight charge, in which case plaintiff would be liable, no

matter which interpretation of the statute the court accepts.

Accordingly, the parties will inform the court within 20

days hereof if there is agreement as to plaintiff’s

responsibility for HMT under this opinion. If no further dispute

exists, the parties shall submit a form of judgment. If a

dispute exists, a briefing schedule shall be submitted.

_______________________

Jane A. Restani

 JUDGE

Dated: New York, New York

 This 14th day of September, 1999.