Government Can't Make Counterclaims at CIT When There's No Merchandise, Aircraft Operator Says

The government may only file counterclaims at the Court of International Trade in cases that involve imported merchandise, NetJets said in a June 8 motion seeking dismissal of a DOJ counterclaim seeking liquidated damages from the company for its failure to collect customs user fees (CUFs) for airline ticket purchases (NetJets Aviation, Inc. v. U.S., CIT #21-00142).

"CBP is seeking to recover on a bond relating to the importation of merchandise," but NetJets is "not in the business of importing merchandise," and the government does not allege that the damages relate to importation of any merchandise, the company said.

NetJets provides services to people who wish to fly in a corporate jet but do not need full-time access to it, similar to a time-share. The company says it provides "operation services" for private flights but is not an airline. The law requires that each passenger of a commercial aircraft must be assessed customs user fees. However, CBP does not collect these fees directly from the passengers, instead they are collected from the entity that issues a ticket for entrance into the U.S. Since NetJets does not issue tickets, or even communicate with many of the aircraft's passengers, it is said it is not required to collect the user fees.

CBP performed an audit of NetJets' flights from 2016 and found that the company was a commercial airline and should be collecting the user fees. Since NetJets wasn't doing so, CBP held that the company owed zero dollars. The airline filed its complaint in March contesting the agency's finding, which would make NetJets responsible for the fee collection. NetJets has long argued that its flights are not commercial within the meaning of customs user fee regulations and that CBP's audit relied on an unrelated definition of "commercial" flights.

In the case at CIT, the U.S. then filed a counterclaim to enforce the liquidated damage notices. NetJets countered that this claim should be tossed for lack of jurisdiction at the trade court. The plaintiff said that counterclaims at CIT have limited jurisdiction for actions arising out of the same imported merchandise and since airline tickets are not merchandise, the counterclaim is improper. Alternatively, NetJets asked the court to grant it summary judgment on the counterclaim, because it was not obligated to collect user fees on these flights in the first place.

Elsewhere in its brief, NetJets vied for the court to hold that it is not responsible for the fee collection. "The CUF statute explicitly says that CUF applies only when a ticket is issued to a passenger, and ... CBP has for years consistently maintained that position as well," the brief said. "Yet CBP now insists that NJA must collect CUF from individuals who receive no tickets or other travel documents -- because they are not paying for their flights and have no right to travel on the flights, and the only people who control whether those individuals can fly are inviting them for personal reasons, without compensation. CBP’s demands are contrary to the plain text and to any reasonable interpretation of the pertinent authorities."