B-134519, JAN. 10, 1958

B-134519, JAN. 10, 1958

TO HONORABLE LEWIS L. STRAUSS, CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

ON NOVEMBER 26, 1957, THE GENERAL MANAGER, ATOMIC ENERGY COMMISSION, ENCLOSED A LETTER DATED OCTOBER 2, 1957, WITH ATTACHMENTS FROM SMITH TRANSPORT LIMITED, ONTARIO, CANADA, REQUESTING THE ATOMIC ENERGY COMMISSION TO REIMBURSE THE CARRIER THE SUM OF $5,735.80. THAT AMOUNT REPRESENTS THE SO-CALLED "DUTY" PORTION OF PENALTIES IN THE TOTAL AMOUNT OF $7,169.75 IMPOSED UPON THE CARRIER AS LIQUIDATED DAMAGES AND COLLECTED BY THE UNITED STATES COLLECTOR OF CUSTOMS, ALEXANDRIA BAY, NEW YORK, PURSUANT TO 19 CFR 18.8.

THE RECORD SHOWS THAT THE PENALTIES WERE IMPOSED AGAINST SMITH TRANSPORT LIMITED AS THE RESULT OF IRREGULAR DELIVERIES, BY CONNECTING CARRIERS OF SMITH, OF THREE BONDED SHIPMENTS OF CALCIUM GRANULES CONSIGNED TO THE COMMISSION IN CARS OF NATIONAL LEAD COMPANY OF OHIO, THE COMMISSION'S OPERATING CONTRACTOR AT ITS FERNALD, OHIO AREA OFFICE. THE CONNECTING CARRIERS FAILED TO CLEAR THE SHIPMENTS AT THE UNITED STATES CUSTOMS, CINCINNATI, OHIO, NOTWITHSTANDING INSTRUCTIONS TO THAT EFFECT ON THE DELIVERY RECEIPTS AND THE CUSTOMS MANIFESTS. THE CARRIER ALLEGES IN HIS LETTER OF OCTOBER 2 THAT THE CONNECTING CARRIERS MERELY ASSUMED THAT THE INSTRUCTIONS TO DELIVER THE GOODS AND THEIR ACCEPTANCE BY A CONTRACTOR OF THE GOVERNMENT WAS SUFFICIENT.

FURTHER, THE CARRIER ALLEGES THAT THE LIQUIDATED DAMAGES PAID TO THE UNITED STATES CUSTOMS INCLUDES THE DUTY PLUS A PENALTY; THAT THE PENALTY SHOULD BE ASSESSED AGAINST THE CARRIER, BUT IN A LESSER AMOUNT IN LIGHT OF THE MITIGATING CIRCUMSTANCES. IT IS ADMITTED IN THE COMMISSION'S LETTER OF NOVEMBER 26, 1957, THAT BUT FOR THE IRREGULAR DELIVERIES THE DUTY WOULD HAVE BEEN PAYABLE BY THE COMMISSION AND THE CARRIER CONTENDS THAT IT WOULD BE ALTOGETHER FAIR AND PROPER FOR THE COMMISSION TO PAY THE CARRIER AN AMOUNT EQUAL TO WHAT ORDINARILY WOULD HAVE BEEN THE DUTY INVOLVED, OR $5,735.80.

THE REGULATIONS OF THE BUREAU OF CUSTOMS, TREASURY DEPARTMENT APPEARING IN 19 CFR 18.8 PROVIDE FOR THE LIABILITY OF BONDED CARRIERS FOR SHORTAGE, IRREGULAR DELIVERY OR NONDELIVERY AT DESTINATION OF BONDED MERCHANDISE RECEIVED BY THE CARRIER FOR CARRIAGE. SECTION 18.8 (B) OF TITLE 19 CFR PROVIDES AS FOLLOWS:

"/B) PENALTIES IMPOSED AS LIQUIDATED DAMAGES UNDER THE COMMON CARRIER'S BOND FOR SHORTAGE, FAILURE TO DELIVER, OR IRREGULAR DELIVERY SHALL BE AS FOLLOWS:

"/3) IN THE CASE OF UNAUTHORIZED DELIVERY DIRECTLY TO THE CONSIGNEE OR OTHER PERSON OF MERCHANDISE SUBJECT TO DUTY, AN AMOUNT EQUAL TO ONE AND ONE-QUARTER TIMES THE ESTIMATED DUTY THEREON, OR, IF THE DUTIES CANNOT BE ESTIMATED PROMPTLY, AN AMOUNT EQUAL TO 70 PERCENTUM OF THE VALUE SHOWN ON THE MANIFEST.'

THE REGULATIONS QUOTED IMPOSE A PENALTY ON BONDED COMMON CARRIERS AS LIQUIDATED DAMAGES FOR IRREGULAR DELIVERIES MEASURED BY ONE AND ONE QUARTER TIMES THE ESTIMATED DUTY THEREON. THIS PENALTY IS VIEWED HERE AS AN AMOUNT DETERMINED UNDER THE REGULATIONS AS THE MEASURE OF THE DAMAGES (LOSS OF DUTY PLUS COSTS) SUFFERED BY THE GOVERNMENT AS THE RESULT OF THE BREACH OF THE CARRIER'S BOND OCCASIONED BY THE IRREGULAR DELIVERY OF THE MERCHANDISE. PAYMENT OF A PENALTY THUS IMPOSED UPON THE BONDED CARRIER MEASURED BY ONE AND ONE-QUARTER TIMES THE ESTIMATED DUTY IS NOT TO BE REGARDED AS PAYMENT OF THE DUTY ON THE BONDED MERCHANDISE FOR THE IMPORTER, THE OBLIGATION IMPOSED UPON THE IMPORTER OR CONSIGNEE UNDER THE LAW BEING A SEPARATE AND DISTINCT MATTER. IN THE CIRCUMSTANCES, THE PAYMENT OF THE PENALTIES BY THE CARRIER WAS REQUIRED BY THE AFOREMENTIONED REGULATIONS OF THE BUREAU OF CUSTOMS BECAUSE OF THE IRREGULAR DELIVERIES OF THE BONDED MERCHANDISE AND SINCE THIS IS NOT A PAYMENT MADE ON BEHALF OF THE COMMISSION, NO RIGHT OF SUBROGATION ARISES.

FURTHER, NO EVIDENCE WAS PRESENTED TO SHOW THAT THE ATOMIC ENERGY COMMISSION OR ITS CONTRACTOR, NATIONAL LEAD COMPANY OF OHIO, WAS IN ANY WAY RESPONSIBLE FOR THE IRREGULAR DELIVERIES OF THE BONDED MERCHANDISE. WHILE THE REPORTED PRACTICE OF THE BUREAU OF CUSTOMS OF NOT COLLECTING THE DUTIES FROM THE IMPORTER WHERE PENALTIES HAVE BEEN IMPOSED AND COLLECTED FROM A BONDED CARRIER MAY RELIEVE THE ATOMIC ENERGY COMMISSION FROM THE PAYMENT OF THE CUSTOMS DUTY, THERE APPEARS TO BE NO LEGAL LIABILITY OR RESPONSIBILITY ON THE COMMISSION TO REIMBURSE THE CARRIER FOR THE DUTY PORTION OF THE PENALTIES COLLECTED, THE AMOUNT OF THE DUTY BEING MERELY A MEASURE OF THE PENALTIES ASSESSABLE AGAINST THE CARRIER.

THEREFORE, WE FIND NO LEGAL BASIS FOR THE ATOMIC ENERGY COMMISSION TO REIMBURSE SMITH TRANSPORT, LIMITED, FOR ANY PART OF THE PENALTIES IMPOSED UPON IT UNDER THE AFOREMENTIONED REGULATION OF THE BUREAU OF CUSTOMS.