CIT Has Jurisdiction Over Excise Tax Collection Cases, Trade Court Says

The Court of International Trade has jurisdiction to hear government lawsuits to recover unpaid excise taxes even when no penalty is sought, it said in a pair of decisions issued July 3. CIT has exclusive purview over cases dealing with violations of 19 USC 1592, and though laws on CIT jurisdiction over those cases refer only to penalty cases and recovery of customs duties, the underlying law specifically allows CBP to seek recovery of duties, taxes and fees without collecting a penalty, CIT said. Federal excise taxes, which are collected at the time of importation and are a condition of release, “are customs duties for the purposes of jurisdiction,” the trade court said.

Good Times, a cigar distributor the government accuses of misdeclaring the value of its imports to underpay the excise taxes, had argued to the contrary. CIT had in March declined to dismiss one suit against Good Times seeking $3,339,011.08 in unpaid excise taxes (see 1803070021), and in one of its July 3 decisions similarly rejected Good Times’ motion to dismiss a second, separate suit seeking recovery of another $1,188,631.95. The government says Good Times acted to introduce the goods, even though it wasn’t the importer of record, because it financed the transactions. The actual importer only acted as a “pass-through” entity that was paid a fee for each shipment, the government alleges.

(U.S. v. Gateway Import Management, LLC, Slip Op. 18-83, CIT # 17-00232, dated 07/03/18, Judge Kelly)

(U.S. v. Maverick Mktg., LLC, Slip Op. 18-84, CIT # 17-00174, dated 07/03/18, Judge Kelly)