Interest on Past Due Duties Subject to Protest, CAFC Affirms
Interest on past due customs duties and fees are subject to the same protest and judicial challenge procedures as those for any other duty or fee, the U.S. Court of Appeals for the Federal Circuit said on May 26 (here). Affirming a Court of International Trade ruling from August 2015 (see 1508200013), the appeals court held that, because interest on past due bills is protestable, American Home Assurance Company (AHAC) waived its right to challenge CBP’s interest calculations because it did not file a court challenge on a denied protest of the interest by the applicable deadline.
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Interest on past due bills under 19 USC 1505(d) is a “charge or extraction” just like a regular customs duty, CAFC said, echoing CIT’s earlier decision. “All reviewable determinations and decisions by Customs relating to liquidation, including ‘all charges or exactions of whatever character within the jurisdiction of the Secretary of the Treasury,’ are final and conclusive unless a protest is filed ‘or unless a civil action contesting the denial of a protest’ is filed at the Trade Court.” it said. “Once final and conclusive, Customs’ decisions are foreclosed from challenge by any party in a collection action.”
The lower court also correctly affirmed CBP’s decision to collect interest on interest, finding CBP correctly calculated Section 580 interest on bonds due for collection based on not only the underlying unpaid duties, but also the interest for past due bills under 19 USC 1505(d). Section 580, which provides for 6 percent interest “upon all bonds, on which suits are brought for the recovery of duties,” does not include a condition that the interest should only be assessed on the unpaid duty portion of the bond amount, CAFC said. And contrary to AHAC’s arguments, the Section 580 interest is calculated from the moment the bonds become due, not from the date of AHAC’s denied protest.
On the other hand, the appeals court agreed with the trade court’s decision not to require equitable interest from AHAC for the period between CBP’s first attempts to collect on the bonds and CIT’s judgment in the case. The court has the authority to assess both legally required interest under Sections 580 and 1505(d), and equitable interest, a common law concept that compensates for the lost time value, CAFC said. But here, the government was more than compensated for the late payment by the 6 percent interest it received under Section 580, which was higher than market interest rates during the period.
(U.S. v. American Home Assurance Company, #16-1088, dated 05/26/17, Judges Moore, Taranto and Chen)
(Attorneys: Beverly Farrell for plaintiff-appellant U.S. government; Herbert Shelley for defendant/cross-appellant American Home Assurance Company; Edward Gallagher for amicus curiae The Surety & Fidelity Association of America)