B-151335, MAY 17, 1963

B-151335: May 17, 1963

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TO ENGLISH ELECTRIC EXPORT AND TRADING COMPANY LIMITED: REFERENCE IS MADE TO YOUR LETTER DATED APRIL 15. THAT YOUR COMPANY IS ENTITLED TO A REFUND OF CERTAIN CUSTOMS DUTIES COLLECTED BY THE BUREAU OF CUSTOMS IN CONNECTION WITH THE IMPORTATION OF A NUMBER OF TRANSFORMERS AND APPURTENANCES INTO THE UNITED STATES FOR THE CHIEF JOSEPH DAM ON THE COLUMBIA RIVER. IT WAS REPORTED IN YOUR LETTER THAT THE TRANSFORMERS AND APPURTENANCES WERE TO BE MANUFACTURED IN GREAT BRITAIN AND THAT THE CONTRACT PRICE INCLUDED SUCH FEDERAL TAXES AND DUTIES AS WERE APPLICABLE. THAT THE EQUIPMENT CALLED FOR UNDER THE CONTRACT WAS IMPORTED IN 1955 AND 1956 AND WAS DELIVERED TO THE GOVERNMENT IMMEDIATELY UPON INSPECTION.

B-151335, MAY 17, 1963

TO ENGLISH ELECTRIC EXPORT AND TRADING COMPANY LIMITED:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 15, 1963 (C/119/WHP), WITH ENCLOSURES, WHEREIN YOU ALLEGE, IN EFFECT, THAT YOUR COMPANY IS ENTITLED TO A REFUND OF CERTAIN CUSTOMS DUTIES COLLECTED BY THE BUREAU OF CUSTOMS IN CONNECTION WITH THE IMPORTATION OF A NUMBER OF TRANSFORMERS AND APPURTENANCES INTO THE UNITED STATES FOR THE CHIEF JOSEPH DAM ON THE COLUMBIA RIVER, PURSUANT TO CONTRACT NO. DA-45-108 ENG-2286, ENTERED INTO BETWEEN YOUR COMPANY AND THE CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, UNDER DATE OF JUNE 15, 1953.

IT WAS REPORTED IN YOUR LETTER THAT THE TRANSFORMERS AND APPURTENANCES WERE TO BE MANUFACTURED IN GREAT BRITAIN AND THAT THE CONTRACT PRICE INCLUDED SUCH FEDERAL TAXES AND DUTIES AS WERE APPLICABLE; THAT THE EQUIPMENT CALLED FOR UNDER THE CONTRACT WAS IMPORTED IN 1955 AND 1956 AND WAS DELIVERED TO THE GOVERNMENT IMMEDIATELY UPON INSPECTION; AND THAT UNDER DATE OF MARCH 22, 1957, THE CONTRACTING OFFICER MADE A FINAL DECISION TO THE EFFECT THAT THE TEN TRANSFORMERS WERE UNACCEPTABLE AND DIRECTED YOUR COMPANY TO FURNISH THE GOVERNMENT WITH TRANSFORMERS WHICH WOULD COMPLY WITH THE REQUIREMENTS OF THE CONTRACT. YOUR LETTER THEN WENT ON TO SAY THAT IMPLICIT IN THE CONTRACTING OFFICER'S FINAL DECISION IS A FINDING THAT THE TRANSFORMERS WERE DEFECTIVE, OR POTENTIALLY DEFECTIVE, OR CONTAINED LATENT DEFECTS, AT THE TIME OF DELIVERY TO THE GOVERNMENT, AND THAT THE FAILURES AND DEFICIENCIES NOTED BY THE CONTRACTING OFFICER WERE EITHER DIRECT MANIFESTATIONS OF, OR CONSEQUENTIAL TO, THOSE DEFECTS.

IT WAS STATED FURTHER IN YOUR LETTER THAT YOUR COMPANY FILED WITH THE BUREAU OF CUSTOMS A REQUEST THAT IN ASCERTAINING THE DUTIABLE VALUE OF THE TRANSFORMERS, AS ORIGINALLY IMPORTED AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 55 (A) (1) OF THE TARIFF ACT OF 1930, AS AMENDED, RECOGNITION BE GIVEN TO THE FACT THAT THE TRANSFORMERS WERE FOUND TO BE DEFECTIVE AT THE TIME OF THE ORIGINAL IMPORTATION. IT WAS POINTED OUT THAT SINCE THE APPRAISEMENT OF THE TRANSFORMERS HAS NOT BEEN COMPLETED, YOUR REQUEST TO THE BUREAU OF CUSTOMS WAS TIMELY. YOUR LETTER THEN CONTAINED THE FOLLOWING PARAGRAPH:

"OUR REQUEST TO THE BUREAU OF CUSTOMS ALSO CONTAINED A PROPOSAL THAT THE DUTIABLE VALUE INDICATED BY THE COST OF PRODUCTION STATEMENT BE REDUCED BY AN AMOUNT EQUAL TO THE COST OF SUCH REMEDIAL WORK NECESSITATED BY THE CONTRACTING OFFICER'S FINAL DECISION AS WAS PERFORMED OUTSIDE THE UNITED STATES AND ON WHICH FULL DUTY WAS PAID IN THE AMOUNT OF APPROXIMATELY $43,000.00. BY THAT FORMULA THE FINAL DUTY COLLECTED BY THE BUREAU OF CUSTOMS IN RESPECT OF THE ENTIRE CONTRACT WOULD EQUAL THE AMOUNT OF DUTY FOR WHICH WE WOULD HAVE BEEN LIABLE HAD THE TRANSFORMERS NOT BEEN DEFECTIVE AT THE TIME OF IMPORTATION.'

AS A BASIS FOR YOUR CLAIM YOU STATE THAT THE BUREAU OF CUSTOMS HAS A LEGAL DUTY TO ADJUST DUTIABLE VALUES TO COMPENSATE FOR DEFECTS, MANIFEST OR LATENT, SHOWN TO HAVE BEEN PRESENT AT THE TIME OF IMPORTATION AND OF SUCH A NATURE AS TO ADVERSELY AFFECT THE VALUE OF THE IMPORTED ARTICLE, THIS BEING MADE CLEAR IN THE WORDING OF SECTION 500 (A) (1) OF THE TARIFF ACT OF 1930, AS AMENDED, AND BY VARIOUS TREASURY DECISIONS PROMULGATED THEREUNDER. YOU REPORTED, HOWEVER, THAT ON THE BASIS OF THE RECORD BEFORE IT, INCLUDING THE CONTRACTING OFFICER'S FINAL DECISION, REFERRED TO ABOVE, THE BUREAU OF CUSTOMS FOUND THAT THE TRANSFORMERS WERE NEITHER DEFECTIVE NOR NOT ACCORDING TO THE SPECIFICATIONS AT THE TIME OF IMPORTATION.

YOUR LETTER REQUESTS OUR OFFICE TO RENDER A DECISION RESOLVING THE REPORTED CONFLICT BETWEEN THE DECISION OF THE CONTRACTING OFFICER AND THE DECISION OF THE BUREAU OF CUSTOMS, THAT IS TO SAY, YOU REQUEST A RULING TO THE EFFECT THAT THE CONTRACTING OFFICER'S DECISION IS BINDING ON ALL OF THE EXECUTIVE DEPARTMENTS, WITH DIRECTION TO THE BUREAU OF CUSTOMS THAT IT GIVE FULL FAITH AND CREDIT THERETO AND TO FIND THAT THE TRANSFORMERS WERE DEFECTIVE AT THE TIME OF INSPECTION. YOU THEN TOOK THE POSITION THAT IF IT SHOULD BE FOUND THAT THE DECISION BY THE BUREAU OF CUSTOMS IS CORRECT, IT COULD ONLY BE INTERPRETED AS AN ADMISSION BY THE GOVERNMENT THAT THE TRANSFORMERS, AS ORIGINALLY DELIVERED TO THE GOVERNMENT, WERE WITHOUT FAULT OR DEFECT AND CONFORMED TO THE SPECIFICATIONS. YOU SUGGESTED THAT ON SUCH BASIS IT FOLLOWS THAT THE "FAULTS AND FAILURES" WHICH PROMPTED THE CONTRACTING OFFICER'S DECISION IN 1957 WERE IN NO WAY THE RESPONSIBILITY OF YOUR COMPANY AND THAT CONSEQUENTLY, THE DECISION WAS ERRONEOUS. IN THE EVENT OF SUCH A HOLDING YOU INDICATED YOUR INTENTION OF FILING A CLAIM AGAINST THE UNITED STATES FOR COMPENSATION FOR EXTRA WORK AND, IF NECESSARY, AN APPEAL FOR EQUITY UNDER THE PROVISIONS OF TITLE 18 U.S.C. 236 (APPARENTLY SHOULD BE 31 U.S.C. 236).

IT IS APPARENT FROM THE RECORD IN THIS CASE THAT YOUR COMPANY IS SEEKING RELIEF IN THE APPRAISEMENT OF EIGHT OF THE TEN TRANSFORMERS INVOLVED IN THE PROCUREMENT, AND THAT IN CONSIDERING THE MATTER OF SUCH APPRAISAL YOU INSIST THAT THE BUREAU OF CUSTOMS GIVE FULL FAITH AND CREDIT TO THE CONTRACTING OFFICER'S DECISION.

RESPECTING YOUR REQUEST FOR A RULING ON THE MATTER, WE RECEIVED INFORMAL INFORMATION FROM THE BUREAU OF CUSTOMS TO THE EFFECT THAT IN RENDERING THE DECISION OF MARCH 15, 1963, THE DEPUTY COMMISSIONER OF CUSTOMS WAS AWARE OF THE CONTRACTING OFFICER'S DECISION OF MARCH 22, 1957. IN ANY EVENT, IN VIEW OF THE STATUTES HEREINAFTER REFERRED TO WE CANNOT UNDERTAKE TO ADVISE THE BUREAU OF CUSTOMS AS TO THE CONSIDERATION WHICH SHOULD BE GIVEN THE INDICATED DECISION.

SECTION 1500 OF TITLE 19, US.C., PROVIDES THAT IT SHALL BE THE DUTY OF APPRAISERS TO APPRAISE MERCHANDISE UNDER SUCH RULES AND REGULATIONS AS THE SECRETARY OF THE TREASURY SHALL PRESCRIBE, AND SECTION 1501 OF THE SAME TITLE PROVIDES THAT THE DECISION OF THE APPRAISER, INCLUDING ALL DETERMINATIONS ENTERING INTO THE SAME, SHALL BE FINAL AND CONCLUSIVE UPON ALL PARTIES UNLESS A WRITTEN APPEAL FOR REAPPRAISEMENT IS FILED. THE COURT OF CUSTOMS AND PATENT APPEALS HAS HELD IN NUMEROUS CASES THAT DECISIONS RENDERED PURSUANT TO THE CITED SECTION 1501 ARE FINAL AND CONCLUSIVE UNLESS A WRITTEN APPEAL IS MADE, ETC. ..END :