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Arbon Steel & Service Co., Inc. v. United States
Citations: 315 F.3d 1332; 24 I.T.R.D. (BNA) 1897; 91 A.F.T.R.2d (RIA) 461; 2003 U.S. App. LEXIS 337; 2003 WL 77046Docket: 02-1299
Court: Court of Appeals for the Federal Circuit; January 9, 2003; Federal Appellate Court
Arbon Steel Service Company, Inc. appeals a decision by the United States Court of International Trade that denied its claim for prejudgment interest on fees paid under the Harbor Maintenance Tax (HMT). The HMT, established by the Water Resources Development Act of 1986, imposes a 0.125 percent tax on commercial cargo for port use. This tax was deemed unconstitutional for exports based on the Export Clause, as affirmed by the Supreme Court, which held it did not qualify as a permissible user fee. Arbon Steel had recovered $24,357.56 in fees related to exports but sought prejudgment interest. Previous cases, including International Business Machines Corp. v. United States and United States Shoe Corp. v. United States, established that no statutory interest is available under tax or customs statutes, and that constitutional provisions do not mandate interest in such cases. The court also noted that equitable remedies are not available without clear congressional direction. Arbon Steel's arguments for interest, based on 19 U.S.C. 1505(b) and various constitutional theories, were rejected, prompting this timely appeal. The Federal Circuit reviews the statutory and constitutional interpretations without deference, affirming the lower court's decision that denied the interest claim. Arbon Steel contends that it is entitled to interest under 28 U.S.C. § 2411, asserting that the statute reflects the common law principle allowing recovery of interest on government overpayments of internal-revenue tax, unless a statutory waiver of sovereign immunity exists. However, the Supreme Court has ruled that § 2411 itself serves as a waiver of immunity, rather than codifying a recoverable interest rule. When Congress intends to waive the U.S. government's immunity regarding interest, it does so explicitly, as seen in § 2411, which permits both prejudgment and postjudgment interest in tax-refund cases. Arbon Steel also argues that the Harbor Maintenance Tax qualifies as an internal-revenue tax under § 2411. Nonetheless, the Harbor Maintenance Tax statute stipulates that customs laws and regulations govern its administration and enforcement, indicating that § 2411 is inapplicable. Arbon Steel disputes the precedent set by International Business Machines, but is bound by it. Additionally, Arbon Steel claims that the denial of prejudgment interest under § 2411 constitutes a due process violation, asserting that any unconstitutional tax is inherently arbitrary. The court finds the tax to be rationally related to maintaining ports, thus not arbitrary enough to violate due process. Furthermore, the court concludes that the interest accrued from tax payments does not constitute Arbon Steel's property since the tax revenue became Treasury property upon payment and was allocated to the Harbor Maintenance Trust Fund. Consequently, the interest earned on these payments is also government property. The judgment of the Court of International Trade is affirmed.