B-162384, SEP. 18, 1967

B-162384: Sep 18, 1967

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PROPOSAL FOR PAYMENT OF SURCHARGES IN CONNECTION WITH OCEAN TRANSPORTATION VIA CAPE OF GOOD HOPE DUE TO CLOSING OF SUEZ CANAL IS AUTHORIZED WITHOUT PREJUDICE TO THE RIGHTS OF THE U.S. AS TO THE VALIDITY OF THE SURCHARGES ON THE BASIS THAT SUCH PROCEDURE WILL REMOVE COMPLICATIONS RELATIVE TO DISCHARGE OF CARGO AT PORTS. THESE BILLS WERE FORWARDED TO OUR OFFICE BY THE GENERAL SERVICES ADMINISTRATION PURSUANT TO OUR INFORMAL REQUEST. WAS DISCUSSED AT YOUR MEETING WITH MEMBERS OF MY STAFF ON SEPTEMBER 6. UNDER THE PROPOSAL OUR OFFICE WILL AUTHORIZE PAYMENT OF THE BILLS FOR THE SURCHARGE. SUCH PAYMENT IS NOT TO BE VIEWED AS ACQUIESCENCE IN THE VALIDITY OF THE SURCHARGE ASSESSMENTS AND IS WITHOUT PREJUDICE TO THE RIGHTS OF THE UNITED STATES INSOFAR AS THE MERITS OF THE SURCHARGE ARE CONCERNED.

B-162384, SEP. 18, 1967

TRANSPORTATION - SURCHARGES - SUEZ CANAL CLOSING DECISION CONCERNING PROCEDURE FOR SURCHARGES ASSESSED BY CENTRAL GULF STEAMSHIP CORP. FOR TRANSPORTATION OF ZINC ON S/S GORDIAN FROM BALTIMORE TO INDIA VIA CAPE OF GOOD HOPE DUE TO CLOSING OF SUEZ CANAL. PROPOSAL FOR PAYMENT OF SURCHARGES IN CONNECTION WITH OCEAN TRANSPORTATION VIA CAPE OF GOOD HOPE DUE TO CLOSING OF SUEZ CANAL IS AUTHORIZED WITHOUT PREJUDICE TO THE RIGHTS OF THE U.S. AS TO THE VALIDITY OF THE SURCHARGES ON THE BASIS THAT SUCH PROCEDURE WILL REMOVE COMPLICATIONS RELATIVE TO DISCHARGE OF CARGO AT PORTS.

TO RONALD A. CAPONE, ESQUIRE:

PLEASE REFER TO YOUR LETTER OF SEPTEMBER 11, 1967, CONCERNING SURCHARGES ASSESSED BY THE CENTRAL GULF STEAMSHIP CORPORATION FOR THE TRANSPORTATION OF ZINC ON THE SS GORDIAN FROM BALTIMORE, MARYLAND, TO BOMBAY AND CALCUTTA, INDIA, VIA THE CAPE OF GOOD HOPE DUE TO THE CLOSING OF THE SUEZ CANAL. THESE BILLS WERE FORWARDED TO OUR OFFICE BY THE GENERAL SERVICES ADMINISTRATION PURSUANT TO OUR INFORMAL REQUEST.

YOU SUBMIT A PROPOSAL FOR THE EARLY PAYMENT OF THE SURCHARGE BILLS AND THE PROCEDURE TO BE FOLLOWED IN CONNECTION WITH THE FURTHER CONSIDERATION OF THE SURCHARGE ITEMS. THE PROPOSAL AS SET FORTH IN A LETTER DATED SEPTEMBER 8, 1967, FROM HAROLD S. GREHAN, JR., VICE PRESIDENT OF THE COMPANY, WAS DISCUSSED AT YOUR MEETING WITH MEMBERS OF MY STAFF ON SEPTEMBER 6.

UNDER THE PROPOSAL OUR OFFICE WILL AUTHORIZE PAYMENT OF THE BILLS FOR THE SURCHARGE, CONDITIONED ON A REVIEW OF THE RECORD AND POSSIBLE RECOVERY OF THE SURCHARGE IN THE LIGHT OF THE CIRCUMSTANCES AND LEGAL PRECEDENTS INVOLVED. IN OTHER WORDS, SUCH PAYMENT IS NOT TO BE VIEWED AS ACQUIESCENCE IN THE VALIDITY OF THE SURCHARGE ASSESSMENTS AND IS WITHOUT PREJUDICE TO THE RIGHTS OF THE UNITED STATES INSOFAR AS THE MERITS OF THE SURCHARGE ARE CONCERNED. PAYMENT AT THIS TIME IS BEING AUTHORIZED PRIMARILY TO REMOVE ANY PRESENT COMPLICATIONS RELATIVE TO THE DISCHARGE OF THE CARGO AT THE PORTS CONCERNED, AND DOES NOT SETTLE THE QUESTION WHETHER THE CARRIER IS LEGALLY ENTITLED TO COLLECT AND RETAIN THE DISPUTED SURCHARGE.

AS MR. GREHAN'S LETTER INDICATES, OUR OFFICE WILL REVIEW THE RECORD CONCERNING THE TRANSPORTATION IN QUESTION FOR THE PURPOSE OF DETERMINING THE PROPRIETY OF THE SURCHARGE. IF IT IS DETERMINED THAT THE CARRIER IS NOT ENTITLED TO THE SURCHARGE, WE WILL ISSUE NOTICES OF OVERCHARGES (FORM 1003) TO CENTRAL GULF UNDER THE TERMS OF WHICH CENTRAL GULF WILL BE GIVEN A MINIMUM OF 120 DAYS FOR RESPONSE, EITHER REFUNDING THE ASSERTED OVERCHARGE OR PROTESTING THE NOTICES OF OVERCHARGE. IF A PROTEST IS MADE AND DENIED HERE, CENTRAL GULF WILL EITHER REFUND THE ASSERTED OVERCHARGES OR WILL PROMPTLY INSTITUTE SUIT IN A U.S. COURT FOR APPROPRIATE RELIEF. IN THE EVENT REFUND IS NOT MADE OR SUIT INSTITUTED AS AGREED, AND IF OUR OFFICE RECOVERS THE ASSERTED OVERCHARGES BY SETOFF, CENTRAL GULF WILL NOT CONTEST THE SETOFF ON THE GROUND THAT RECOVERY FROM A CURRENT OPEN ACCOUNT DUE CENTRAL GULF ON ANOTHER TRANSACTION IS NOT PERMITTED AS A MEANS OF LIQUIDATING A DEBT OWED BY AN OCEAN CARRIER. RATHER, CENTRAL GULF WILL LIMIT ITS OPPOSITION TO THE SETOFF TO THE LEGAL GROUND THAT THE SURCHARGE WAS VALID AND PROPERLY COLLECTABLE ON THE CARGO IN QUESTION.

GULF CENTRAL'S BILLS FOR THE TRANSPORTATION CHARGES, AS PREVIOUSLY PAID WITHOUT THE SURCHARGE, WILL BE AUDITED IN THE USUAL COURSE. IF THE BASIC TRANSPORTATION CHARGES ARE DETERMINED TO BE ALLOWABLE IN A REDUCED AMOUNT, THE SURCHARGE, IF ALSO FOUND ALLOWABLE, WILL HAVE TO BE CORRESPONDINGLY REDUCED. THE OVERCHARGES THUS PRODUCED WILL BE REFUNDABLE BY THE CARRIER WITHOUT REFERENCE TO THE PRINCIPAL QUESTION AS TO THE VALIDITY OF THE SURCHARGE.