## Facts

- Citgo Petroleum Corporation (Citgo) imported jet turbine fuel and stored it in warehouse tanks at a Florida port.
- When Citgo placed the fuel into the warehouse tanks, it paid the Harbor Maintenance Tax (HMT) collected by the United States Customs Service under 26 U.S.C. § 4461.
- Citgo later sold the fuel to commercial airlines.
- A portion of the fuel was withdrawn and used as aircraft supplies for planes engaged in foreign trade (international flights).
- Under 19 U.S.C. § 1309, supplies (including fuel) withdrawn from bonded storage for qualifying foreign-trade aircraft are treated as exports and are exempt from duty and from any internal-revenue tax imposed upon or by reason of importation.
- Citgo requested a refund of the HMT it had paid on the portion of fuel that was withdrawn and used as tax-exempt foreign-trade aircraft supplies.
- Customs denied the refund request, and Citgo filed suit in the U.S. Court of International Trade.
- The parties filed cross-motions for summary judgment.

## Issues

1. Whether the Harbor Maintenance Tax imposed under 26 U.S.C. § 4461 is an “internal-revenue tax” within the meaning of 19 U.S.C. § 1309, such that fuel withdrawn as supplies for aircraft engaged in foreign trade is exempt from the HMT.
2. Whether Citgo was entitled to a refund of HMT previously paid on jet fuel to the extent Citgo could show that the fuel was withdrawn and used in compliance with 19 U.S.C. § 1309.

## Decision

- The court held that the HMT is properly treated as an internal-revenue tax for purposes of 19 U.S.C. § 1309.
- The court ruled that § 1309’s exemption applies to qualifying jet fuel withdrawn as supplies for aircraft engaged in foreign trade, so the HMT could not be retained on that fuel.
- The court granted summary judgment in part to Citgo and in part to the government, limiting any refund to fuel that satisfied § 1309’s conditions (and leaving the HMT in place for non-qualifying fuel).

## Legal Principles

- 19 U.S.C. § 1309 exempts qualifying supplies for aircraft engaged in foreign trade from duty and from “any internal-revenue tax imposed upon or by reason of importation,” when the statutory conditions are met.
- A tax codified in the Internal Revenue Code and administered as a federal excise may be treated as an “internal-revenue tax” for purposes of statutory exemptions that use that term.
- When a party seeks a tax refund based on a statutory exemption tied to a particular use, the party must be able to show that the goods at issue were withdrawn and used in the manner required by the exemption.
- On cross-motions for summary judgment, the court may grant partial relief where the record supports exemption for some transactions but not others.

## Conclusion

The Court of International Trade concluded that the Harbor Maintenance Tax is an internal-revenue tax within the scope of 19 U.S.C. § 1309’s exemption and that Citgo could recover HMT paid on jet fuel withdrawn and used as supplies for aircraft engaged in foreign trade, while denying relief for any fuel that did not meet § 1309’s requirements.


Citgo Petroleum Corp. v. United States, 104 F. Supp. 2d 106 (2000)