Ammex, Inc. v. United States of America; Internal Revenue Service

*The Honorable Joseph M. Hood, United States District Judge for the
Eastern District of Kentucky, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0131P (6th Cir.)
File Name: 04a0131p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
AMMEX, INC.,
Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA;
INTERNAL REVENUE SERVICE,
Defendants-Appellees.
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No. 02-2375
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 00-73388—George C. Steeh, District Judge.
Argued: March 12, 2004
Decided and Filed: May 6, 2004
Before: MERRITT and DAUGHTREY, Circuit Judges;
HOOD, District Judge.*
2 Ammex, Inc. v. United States, et al. No. 02-2375
_________________
COUNSEL
ARGUED: Craig L. John, DYKEMA GOSSE, Bloomfield
Hills, Michigan, for Appellant. Teresa E. McLaughlin, U. S.
DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellees. ON BRIEF: Craig L. John, Mark H. Sutton,
Christopher S. Olson, DYKEMA GOSSE, Bloomfield Hills,
Michigan, for Appellant. Teresa E. McLaughlin, U. S.
DEPARTMENT OF JUSTICE, Washington, D.C., Judith A.
Hagley, U. S. DEPARTMENT OF JUSTICE, TAX
DIVISION, Washington, D.C., for Appellees.
HOOD, D. J., delivered the opinion of the court, in which
DAUGHTREY, J., joined. MERRITT, J. (pp. 11-12),
delivered a separate concurring opinion.
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OPINION
_________________
HOOD, District Judge. Plaintiff-Appellant, Ammex, Inc.
(“Ammex”) sued the United States to recover motor fuel
excise taxes allegedly collected in violation of, inter alia, the
Export Clause of the United States Constitution. Ammex
now appeals the district court’s order granting Defendants-
Appellees’ motion for summary judgment on the basis of lack
of standing. For the reasons set forth below, we AFFIRM the
judgment of the district court.
I. FACTUAL AND PROCEDURAL HISTORY
Ammex operates a “sterile” U.S. Customs Class 9 bonded
warehouse, commonly known as a duty-free store, or duty-
free sales enterprise, in Detroit, Michigan. The designation
”sterile” means that the physical design and operation of the
facility guarantee the exportation of products sold therein.
The store is located on West Lafayette Street adjacent to the

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No. 02-2375 Ammex, Inc. v. United States, et al. 3
Ambassador Bridge, which connects the United States and
Canada. Customers entering Ammex’s facility have
necessarily proceeded beyond the “point of no return” and
must exit the United States.
As a duty-free sales enterprise, Ammex is permitted to sell
for export certain goods “duty-free.” These duty-free goods
are sold to customers who transport them directly to Canada
after leaving Ammex’s store. At issue in the district court
case was whether Ammex could sell gasoline and diesel fuel
on a duty-free basis.
Ammex purchased the fuel in question with the intention of
selling it for export from its duty-free store. This store has an
Automatic Tank Gauging system, whereby its daily fuel
needs are automatically recorded and transmitted to its
purchasing agent, Fleet Fuel, LLC (“Fleet Fuel”). Based on
the data received from that system, Fleet Fuel prepares
purchase orders on behalf of Ammex. During the periods at
issue, Ammex purchased both gasoline and diesel fuel from
several local suppliers, including BP Oil Co., Atlas Oil Co.,
Viking Oil, Peerless Distributing Co., and Mooney Oil Co.
Because of the duty-free nature of its operations, Ammex
requested to purchase the fuel free of federal excise tax. The
suppliers, however, as a condition of Ammex’s purchase of
the fuel, required payment of federal excise taxes at the time
of purchase. These taxes were imposed at the time the fuel
was removed from the fuel terminal, known as the terminal
rack, for delivery to Ammex’s duty-free store. This practice
is consistent with I.R.C. § 4081, which places the legal
incidence of the excise tax at this point in the chain of sales
transactions. After removing the fuel from the terminal rack,
third-party carriers delivered the fuel directly to Ammex’s
duty-free facility and unloaded it into Ammex’s fuel
dispensing tanks. Ammex’s purchasing agent remitted
payment for the fuel within ten days of its delivery to
Ammex’s fuel storage facility. After delivery, Ammex sold
4 Ammex, Inc. v. United States, et al. No. 02-2375
the fuel to customers who were necessarily required to take it
into Canada.
The Export Clause of the United States Constitution
prohibits the imposition of any federal tax on duty-free
merchandise. This constitutional proscription is confirmed by
federal customs law. See, 19 U.S.C. § 1555(b)(3)(C), (8)(E).
Ammex also cites to several provisions of the Internal
Revenue Code in support of its claim for a refund of the tax
paid on the gasoline and diesel fuel at issue.
In part, Ammex relies on a letter ruling it received from the
U.S. Customs Service Port Director for Detroit dated
September 5, 2000. In that letter, Ammex was granted
permission to expand its Class 9 duty-free warehouse
operation to include the sale of gasoline and diesel fuel. That
letter ruling, however, was revoked in a notice-and-comment
ruling letter and explanatory note dated November 1, 2001.
The basis of the revocation was that only fuel on which
neither duty nor tax has been assessed can qualify as duty-free
fuel under 19 U.S.C. § 1555(b)(8)(E), and the fuel sold by
Ammex had been assessed a federal excise tax. Customs was
enjoined from effectuating its revocation because of a
temporary restraining order (“TRO”) issued by Court of
International Trade Judge Evan J. Wallach on January 23,
2002. That TRO was subsequently dissolved by Judge
Wallach on February 22, 2002.
Asserting that taxation of the fuel violated the Export
Clause of the Constitution, Ammex made refund claims with
respect to gasoline and diesel fuel for each of the tax periods
at issue. The total refund requested was $647,494 plus
interest. The IRS disallowed Plaintiff’s claims for two
reasons: first, Plaintiff did not establish that the gasoline and
diesel fuel sold constituted export sales, and second, Ammex
did not establish that it was the proper party to seek a refund.
On February 3, 2000, Ammex filed its complaint against
the United States and the Internal Revenue Service, seeking

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No. 02-2375 Ammex, Inc. v. United States, et al. 5
recovery of fuel tax of $647,494.00, plus interest for quarterly
tax periods ending March 31, 1999, and June 30, 1999.
Ammex based its claims on the Export Clause of the United
States Constitution, art. I, § 9, cl. 5, and I.R.C. §§ 4221, 6421,
and 6427.
On November 19, 2001, Ammex filed a motion for
summary judgment. On November 20, 2001, the Government
filed its own motion for summary judgment. The district
court heard the cross-motions for summary judgment on
February 7, 2002. On July 31, 2002, the district court granted
the Government’s motion for summary judgment and denied
Ammex’s, holding that Ammex lacked standing to seek a
refund of fuel taxes because it could not establish “an injury
in fact caused by defendant.” The court did not reach the
merits of the Export Clause claim. Judgment was entered on
August 1, 2002.
On August 14, 2002, Ammex filed a motion for
reconsideration; the motion was denied by the district court
on October 22, 2002. The instant appeal followed.
II. STANDARD OF REVIEW
This Court reviews a district court’s grant of summary
judgment de novo. See Upsher v. Grosse Pointe Public
School System, 285 F.3d 448, 451, (6th Cir. 2002). The
constitutional and statutory interpretation issues presented in
this case are questions of law, also subject to de novo review.
See Johnson v. Economic Dev. Corp., 241 F.3d 501, 509 (6th
Cir. 2001).
6 Ammex, Inc. v. United States, et al. No. 02-2375
III. DISCUSSION
A. Standing under the Export Clause
The “case or controversy” limitation of Article III of the
Constitution requires that “a federal court act only to redress
injury that fairly can be traced to the challenged action of the
defendant, and not injury that results from the independent
action of some third party not before the Court.” Simon v. E.
Ky. Welfare Rights Org., 426 U.S. 26, 41-42 (1976). The
district court’s conclusion that Ammex had no standing was
based, in part, upon the fact that it was not the Government
that collected the tax from Plaintiff, but rather Plaintiff’s
suppliers. In other words, it was the action of a third party
(the suppliers), as opposed to the Defendant (the
Government), that caused Plaintiff’s alleged injury.
In order to satisfy the standing requirements imposed by
Article III of the United States Constitution,
A plaintiff must have suffered some actual or threatened
injury due to the alleged illegal conduct of the defendant;
the injury must be ‘fairly traceable’ to the challenged
action; and there must be a substantial likelihood that the
relief requested will redress or prevent the plaintiff’s
injury.
Coyne v. American Tobacco Company, 183 F.3d 488, 494
(6th Cir. 1999) (citing Valley Forge Christian College v.
Americans United for Separation of Church & State, Inc., 454
U.S. 464, 473 (1982)). Plaintiff claims that (1) it suffered an
economic injury in fact by the Government’s imposition of
the challenged excise tax, (2) since the Government imposed
this tax, its injury is fairly traceable to the Government, and
(3) by reimbursing Ammex for the taxes paid, its injury will
be redressed.
Although the Government did impose an excise tax on the
fuel that Ammex purchased and later sold at its “duty-free

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No. 02-2375 Ammex, Inc. v. United States, et al. 7
1The tax was imposed on Ammex’s suppliers pursuant to 26 U.S.C.
§ 4081(a)(1)(A )(ii) because it was the suppliers that removed taxable fuel
from the terminal.
facility,” that tax was not assessed against Ammex. Instead,
the tax was imposed on Ammex’s suppliers who, in turn,
added the amount of the tax to the wholesale price of the fuel
Ammex purchased.1 As noted by the district court, “The tax
burden at issue here is that of Ammex’s suppliers, and not
Ammex.” Therefore, Ammex did not pay the challenged
excise tax to the Government (nor was such a tax assessed
against it), but instead paid a tax-included price to its
suppliers. It was in the discretion of Ammex’s suppliers to
charge Ammex for the challenged tax amount. Consequently,
any alleged injury suffered by Plaintiff in the form of
increased fuel costs was not occasioned by the Government.
It is difficult to see how, “[i]f the defendant did not lay,
assess, exact, or otherwise collect from plaintiff any federal
excise taxes on the gasoline and diesel fuel during the periods
at issue...,” Plaintiff can proceed under this theory. Ammex
Inc. v. United States, No. 99-338T (Court of Federal Claims,
April 10, 2002) at p. 12. Without an injury-in-fact, caused by
the Government, we hold that Ammex does not have standing
to pursue its claim based on the Export Clause.
B. Fuel Sold “For Export”
26 U.S.C. § 6421(c) provides that if gasoline is sold to any
person for certain exempt purposes set forth in § 4221(a)(2)-
(5), such person is to be paid an amount equal to the tax
without interest. As relevant here, § 4221(a)(2) lists as an
exempt purpose, a sale “for export, or for resale by the
purchaser to a second purchaser for export.” The district
court determined that Ammex was not entitled to recover
payments under § 6421(c) because, according to longstanding
8 Ammex, Inc. v. United States, et al. No. 02-2375
2The district court partially relied on Revenue Ruling 69-150,
specifically holding that it was entitled to Chevron deference. While
Chevron deference may not be the appropriate level of deference to which
revenue rulings are entitled, Ruling 69-150 is a long-standing and highly
persuasive preced ent. Reasonable agency interpretations carry “at least
some added persuasive force” where Chevron is inapplicable.
Metropolitan Stevedore Co. v. Rambo, 521 U.S. 121 , 136 (1997).
administrative practice,2 the fuel sold by Ammex was not sold
for export within the meaning of the statute.
Because the excise tax provisions of the Code do not define
“export,” extrinsic aids for construction may be relied on in
interpreting the meaning of export for purposes of § 6421(c)
and § 4221(a)(2). For more than 30 years, the IRS has taken
the position that delivery of fuel into the fuel supply tank of
a motor vehicle is use of that fuel, and that the subsequent
movement of the vehicle into a foreign country does not
constitute exportation of that fuel for purposes of motor fuel
excise taxes. Revenue Ruling 69-150.
Whether or not Chevron deference is appropriately applied
here, obviously some level of deference to the agency ruling
is due. As the Supreme Court pointed out in United States v.
Mead Corp., 533 U.S. 218, 234 (2001), even though an
agency’s interpretation is not entitled to Chevron deference,
such an interpretation may merit some deference whatever its
form, given the specialized experience, broader investigations
and information available to the agency, and given the value
of uniformity in its administrative and judicial understandings
of what national law requires. Indeed, the Court in Mead
reaffirmed the holding of Skidmore v. Swift & Co., 323 U.S.
134 (1944), that “[t]he weight [accorded to an administrative]
judgment in a particular case will depend upon the
thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later
pronouncements, and all those factors which give it power to
persuade, if lacking power to control.” Mead, 533 U.S. at 228
(quoting Skidmore, 323 U.S at 140).

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No. 02-2375 Ammex, Inc. v. United States, et al. 9
3In Aeroquip-V ickers, this Court reversed the Tax Court’s failure to
defer to a revenue ruling, holding that the Tax Court had
“mischaracterized the degree of d eference accord ed to revenue rulings...”
Aeroquip-V ickers, Inc. C om missio ner, No. 01-2741 (Oct. 20, 2003 ). This
Court stated th at the revenue ruling at issue was not entitled to Chevron
deference. Id. Howeve r, by examining the factors set out in Skidmore,
the Court co ncluded that “some deference to Revenue Rul[ing] 82-20 is
proper.” Id. at 14.
Consideration of the above factors dictates that at least
some level of deference is due Revenue Ruling 69-150.3
Revenue rulings are written and reviewed at the same level of
the IRS and the Treasury Department as are Treasury
regulations, demonstrating that a “central board or office”
accords a great “degree of ...care” to their issuance. Mead,
533 U.S. at 228, 236. Of course, the IRS possesses “relative
expertness” in the application of the Code to particular facts,
given the technical complexity of federal tax law. See id.
Additionally, the fact that the IRS has left Revenue Ruling
69-159 virtually unchanged for over three decades
demonstrates the soundness of the decision there made.
Finally, Ammex has failed to identify any infirmity in this
longstanding and sensible interpretation of the statutory
scheme.
Given the logical and long-standing agency interpretation
of a statue by the department charged with its administration,
we believe Revenue Ruling 69-150 has the power to persuade
and should be followed in a case such as this. Hence, we
conclude that the district court did not err in holding that the
fuel sold by Ammex was not “for export” within the meaning
of § 4221(a)(2) and § 6421(c).
C. Ammex as an “Exporter”
I.R.C. § 6416(c) allows an exporter of motor fuel to recover
an illegally collected tax. The district court found that
Ammex, a duty-free sales enterprise, was not an exporter but,
instead a retailer that facilitated exportation by the individual
10 Ammex, Inc. v. United States, et al. No. 02-2375
retail customers who departed the country. Ammex submits
that its status as a “duty-free sales enterprise” means that,
although it is not a carrier of fuel into Canada, it must be
considered an “exporter” because its “sole business is
arranging for merchandise to be sent to Canada by selling it
for assured exportation.”
The definition of “duty-free sales enterprise” demonstrates
that Ammex is not an exporter. Congress has defined a
“duty-free sales enterprise” to mean “a person that sells, for
use outside the customs territory, duty-free merchandise that
is delivered from a bonded warehouse to an airport or other
exit point for exportation by, or on behalf of, individuals
departing the customs territory.” 19 U.S.C § 1555(b)(8)(D);
see also 19 C.F.R. § 19.35(a) (“A class 9 warehouse (duty-
free store) may be established for exportation of conditionally
duty-free merchandise by individuals...”).
According to the definition, a duty-free store does not itself
export, but rather sells duty-free goods for export by someone
else (i.e., a customer). Thus, Ammex’s assertion that it is an
“exporter” is belied by the definition itself. The district court
correctly held that Ammex was not an “exporter” under 26
U.S.C. § 6416(c).
D. Constitutionality of I.R.C. § 4081
Because Ammex lacks standing to raise the Export Clause
claim, this Court need not decide whether § 4081 is
unconstitutional with respect to fuel sold to a duty-free
enterprise.
IV. CONCLUSION
For the above mentioned reasons, we AFFIRM the
judgment of the district court.

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No. 02-2375 Ammex, Inc. v. United States, et al. 11
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CONCURRENCE
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MERRITT, Circuit Judge, concurring. Although I agree
with the result reached in the majority opinion, I have serious
doubts about the conclusion that Ammex does not have
standing to bring this claim under the Export Clause of the
Constitution. It seems to me that for the purposes of standing,
Ammex alleges an injury that is fairly traceable to the
Government. The fact that Ammex paid the tax to the
wholesaler rather than to the Government does not mean that
the higher price it paid cannot be easily traced to the
Government’s imposition of the tax for the purposes of
standing. If the gas were sold by Ammex in a separate
container and not mixed with the gas in the purchaser’s tank
before entry into Canada, it would presumably count as an
“export” and there would be no question that Ammex has
standing. I do not think that standing should turn on issues
that go to the merits of the claim like the question of whether
the gas is mixed in the fuel tank or sold in a separate
container. Moreover, I do not understand how we can reach
the merits of the statutory claim — implicitly holding that
when pursued through that avenue the injury is fairly
traceable to the Government — yet hold that Article III’s
standing requirements prevent us from hearing a
constitutional claim for the same injury caused in exactly the
same way. This seems a distinction without a difference that
should not encumber the constitutional law of standing to
litigate.
As for the merits of the Constitutional claim, I would
interpret the meaning of “export” in the Constitution the same
way the majority interprets it for the statutory claim, and
uphold the judgment on those grounds. Ammex is not an
“exporter” under the Constitution anymore than it is under the
statute. When it pours gas into the tank of a car, mixing it
with what is there, it is no more of an exporter than the gas
12 Ammex, Inc. v. United States, et al. No. 02-2375
station which does the same thing a few blocks before
reaching the bridge.

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