A-8132, DECEMBER 12, 1925, 5 COMP. GEN. 426

A-8132: Dec 12, 1925

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INCREASED COSTS - CUSTOMS DUTIES WHERE GASOLINE IS FURNISHED THE WAR DEPARTMENT AT MANILA. UNDER A CONTRACT PROVIDING THAT DELIVERY WAS TO BE MADE "EX BONDED TANK" AT THE PORT OF ENTRY. ACCORDINGLY THE CUSTOMS DUTIES ARE PAYABLE BY THE VENDOR IN ACCORDANCE WITH THE GENERAL RULE THAT IN THE ABSENCE OF AN EXPRESS AGREEMENT TO THE CONTRARY CUSTOMS DUTIES ARE CHARGEABLE TO THE OWNER OF THE GOODS AT THE TIME THEY ARE IMPORTED. WAS SHIPPED TO MANILA IN BULK. CONSIGNED TO THE CLAIMANT'S AGENTS AND STORED IN THE BONDED TANKS OF THE CLAIMANT FROM WHICH IT WAS DELIVERED AS NEEDED TO THE GOVERNMENT'S DRUMS AND LORRIES. BEFORE THE GASOLINE COULD BE WITHDRAWN FROM THE BONDED TANKS IT WAS NECESSARY THAT THE PHILIPPINE CUSTOMS DUTIES ON THE QUANTITY WITHDRAWN BE PAID.

A-8132, DECEMBER 12, 1925, 5 COMP. GEN. 426

CONTRACTS, INCREASED COSTS - CUSTOMS DUTIES WHERE GASOLINE IS FURNISHED THE WAR DEPARTMENT AT MANILA, PHILIPPINE ISLANDS, UNDER A CONTRACT PROVIDING THAT DELIVERY WAS TO BE MADE "EX BONDED TANK" AT THE PORT OF ENTRY, TITLE TO THE GASOLINE DID NOT PASS TO THE UNITED STATES UNTIL THE GASOLINE HAD BEEN REMOVED FROM THE TANKS AND PASSED INTO THE POSSESSION OF THE UNITED STATES. ACCORDINGLY THE CUSTOMS DUTIES ARE PAYABLE BY THE VENDOR IN ACCORDANCE WITH THE GENERAL RULE THAT IN THE ABSENCE OF AN EXPRESS AGREEMENT TO THE CONTRARY CUSTOMS DUTIES ARE CHARGEABLE TO THE OWNER OF THE GOODS AT THE TIME THEY ARE IMPORTED.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 12, 1925:

THE ASIATIC PETROLEUM CO. HAS APPLIED FOR REVIEW OF SETTLEMENT NO. W 02193, DATED FEBRUARY 13, 1924, DISALLOWING CLAIM FOR $4,222.49 AS REIMBURSEMENT OF THE AMOUNT PAID BY IT TO THE PHILIPPINE GOVERNMENT AS CUSTOMS DUTIES ON GASOLINE FURNISHED THE WAR DEPARTMENT AT MANILA, PHILIPPINE ISLANDS, UNDER CONTRACTS NO. 11077, DATED JULY 7, 1922, AND NO. 7484-A, DATED OCTOBER 3, 1922, AND PRESENTS AN ADDITIONAL CLAIM FOR $1,354.69 AS REIMBURSEMENT OF THE AMOUNT PAID AS CUSTOMS DUTIES ON OTHER GASOLINE DELIVERED TO THE WAR DEPARTMENT UNDER PURCHASE ORDER 1060-23, DATED APRIL 26, 1923. NEITHER THE CONTRACTS NOR THE PURCHASE ORDER CONTAINS ANY PROVISION OR STIPULATION AS TO PAYMENT OF CUSTOMS DUTIES, IT BEING PROVIDED IN EACH CONTRACT AND IN THE PURCHASE ORDER THAT THE CLAIMANT SHOULD RECEIVE THE PRICE STIPULATED THEREIN FOR THE GASOLINE DELIVERED "EX-BONDED TANK," MANILA, PHILIPPINE ISLANDS.

THE GASOLINE PURCHASED UNDER THE CONTRACT OF JULY 7, 1922, WAS SHIPPED TO MANILA IN BULK, CONSIGNED TO THE CLAIMANT'S AGENTS AND STORED IN THE BONDED TANKS OF THE CLAIMANT FROM WHICH IT WAS DELIVERED AS NEEDED TO THE GOVERNMENT'S DRUMS AND LORRIES, PURCHASE ORDERS BEING ISSUED TO COVER THE ACTUAL AMOUNTS WITHDRAWN FROM TIME TO TIME. BEFORE THE GASOLINE COULD BE WITHDRAWN FROM THE BONDED TANKS IT WAS NECESSARY THAT THE PHILIPPINE CUSTOMS DUTIES ON THE QUANTITY WITHDRAWN BE PAID, WHICH PAYMENT WAS MADE BY THE CLAIMANT AND CHARGED TO THE UNITED STATES. THE GASOLINE PURCHASED UNDER CONTRACT NO. 7484-A WAS SHIPPED TO MANILA, CONSIGNED TO THE CLAIMANT'S AGENTS, AND AS THE DRUMS IN WHICH IT WAS SHIPPED WERE NOT STORED IN A BONDED WAREHOUSE BUT IN THE OPEN, IT WAS NECESSARY THAT THE DUTY BE PAID IMMEDIATELY UPON ARRIVAL OF THE CONSIGNMENT. DELIVERY OF THIS GASOLINE WAS ALSO MADE TO THE GOVERNMENT REPRESENTATIVES UPON RECEIPT OF TELEPHONE ORDERS THEREFOR AND PURCHASE ORDERS ISSUED IN EACH INSTANCE TO COVER THE ACTUAL QUANTITY RECEIVED.

THE GASOLINE FURNISHED UNDER PURCHASE ORDER NO. 1060-23 WAS DELIVERED IN THE SAME MANNER AS THAT PURCHASED UNDER CONTRACT NO. 7484 A.

PAYMENT WAS MADE IN FULL AT THE CONTRACT PRICE FOR ALL GASOLINE RECEIVED, BUT THE DISBURSING OFFICER REFUSED TO REIMBURSE THE CLAIMANT FOR THE AMOUNT PAID BY IT AS CUSTOMS DUTIES AND CLAIM FOR THE AMOUNT PAID ON THE DELIVERIES UNDER CONTRACTS DATED JULY 7 AND OCTOBER 3,1922, WAS FILED IN THIS OFFICE WHERE IT WAS DISALLOWED ON THE GROUND THAT PAYMENT OF DUTY BY THE UNITED STATES WAS NOT STIPULATED IN THE CONTRACTS.

THE CLAIMANT IN REQUESTING REVIEW OF THE DISALLOWANCE PRESENTS AN ADDITIONAL CLAIM FOR THE AMOUNT OF DUTY PAID ON THE GASOLINE DELIVERED UNDER PURCHASE ORDER NO. 1060-23 AND ASKS THAT DECISION ALSO BE RENDERED AS TO THIS CLAIM.

IT IS CONTENDED BY THE CLAIMANT THAT THE PROVISIONS IN THE CONTRACTS AND PURCHASE ORDERS AS TO DELIVERY "EX-BONDED TANK" RENDERED THE PURCHASER AND NOT THE SELLER LIABLE FOR PAYMENT OF CUSTOMS DUTIES AND THERE ARE SUBMITTED COPIES OF CERTAIN LETTERS IN WHICH IS EXPRESSED THE OPINION THAT SUCH IS THE COMMERCIAL USE OF THAT PHRASE.

AS HERETOFORE STATED THE CONTRACTS AND PURCHASE ORDERS ARE SILENT AS TO PAYMENT OF CUSTOMS DUTIES, AND IT WOULD SEEM TO BE APPARENT THAT THE TERM "EX-BONDED TANK," AS USED IN THESE CONTRACTS, RELATED TO DELIVERY AND MUST BE CONSTRUED AS IMPOSING ON THE SELLER NOT ONLY THE EXPENSE OF DELIVERING THE GASOLINE INTO THE TANKS BUT ALSO OUT OF THE TANKS. IN OTHER WORDS, DELIVERY TO THE GOVERNMENT WAS NOT ACCOMPLISHED UNTIL IT HAD BEEN REMOVED FROM THE TANKS AND HAD PASSED INTO THE POSSESSION OF THE GOVERNMENT.

THE GENERAL RULE IS THAT IN THE ABSENCE OF AN EXPRESS AGREEMENT TO THE CONTRARY CUSTOMS DUTIES ARE PAYABLE BY THE OWNER OF THE GOODS IMPORTED. IN THE INSTANT CASE THERE WOULD APPEAR TO BE NO QUESTION BUT THAT THE GASOLINE CONTINUED TO BE THE PROPERTY OF THE SELLER UNTIL IT WAS DELIVERED EX (OUT OF) THE BONDED TANKS. THE CONTRACTOR HAD NOT COMPLIED WITH ITS OBLIGATIONS UNTIL THE GASOLINE HAD BEEN ACTUALLY DELIVERED TO THE GOVERNMENT'S REPRESENTATIVES AND AS IT WAS IMPOSSIBLE TO MAKE THE DELIVERY STIPULATED UNTIL THE CUSTOMS DUTIES HAD BEEN PAID THE OBLIGATION TO PAY THE DUTIES AS WELL AS ALL OTHER EXPENSES AND COSTS INCURRED BEFORE DELIVERY WAS MADE RESTED UPON THE CLAIMANT.

THE DELIVERIES MADE IN DRUMS WERE NOT MADE IN STRICT COMPLIANCE WITH THE TERMS OF THE CONTRACT, BUT AS PAYMENT OF THE DUTY WAS NECESSARILY MADE ON THIS GASOLINE BEFORE IT COULD BE DELIVERED THE SAME RULE IS APPLICABLE TO THIS SHIPMENT. TITLE DID NOT PASS TO THE GOVERNMENT UNTIL THE GASOLINE WAS DELIVERED TO THE GOVERNMENT IN DRUMS, LORRIES, OR TRUCKS, AND AT THE TIME THE DUTY WAS PAYABLE THIS GASOLINE WAS THE PROPERTY OF THE SELLER; AND IN ACCORDANCE WITH THE GENERAL RULE AS TO PAYMENT OF CUSTOMS DUTIES STATED ABOVE, IT WAS CHARGEABLE TO THE CLAIMANT AS THE OWNER.

IT IS, THEREFORE, CONCLUDED THAT THE CLAIMANT IS NOT ENTITLED TO REIMBURSEMENT OF THE AMOUNT PAID BY IT AS CUSTOMS DUTIES UNDER THE CONTRACTS AND PURCHASE ORDERS REFERRED TO HEREIN.

THE SETTLEMENT OF FEBRUARY 13, 1924, IS SUSTAINED AND THE CLAIM FOR $1,354.69 IS DISALLOWED.