Only Way to Establish Jurisdiction Was Through Premature Protest, Importer Tells CAFC
The only way importer Acquisition 362, doing business as Strategic Import Supply, could have properly challenged a CBP decision on its entries, according to the Court of International Trade, was to file a "[p]remature, overly broad, or indefinite" protest, SIS argued in a Dec. 6 supplemental brief at the U.S. Court of Appeals for the Federal Circuit. But these types of protests "do not constitute a proper basis for invoking CIT jurisdiction," the importer claimed, citing a prior Federal Circuit ruling (Acquisition 362 v. United States, Fed. Cir. #22-1161).
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CIT dismissed SIS's case in April 2021, finding that the 180-day deadline for protests of CBP decisions runs from the date of liquidation, rather than the date CBP received updated assessment instructions from the Commerce Department (see 2104210066). SIS, an importer of passenger vehicle and light truck tires from China, originally filed the case seeking a lower countervailing duty rate on its entries. In the underlying CVD administrative review, Commerce set a 30.61% duty rate for the subject entries. After uncovering errors in the case, Commerce amended the final results and reduced the rate to 15.56%. Commerce then instructed CBP to liquidate entries at the new rate.
Some relevant entries had already liquidated more than 180 days prior to Commerce's instructions. Nevertheless, the importer filed a protest with CBP, arguing that it was valid because it was filed within 180 days of the instructions. The trade court disagreed, finding that the protest was challenging a Commerce decision, not a Customs one. As such, the trade court ruled it belonged under Section 1581(c), as opposed to Section 1581(a), as the plaintiffs had claimed. SIS then brought its case to the Federal Circuit to contest the ruling, arguing it should not have had to file the protest because the U.S. should have provided the necessary refunds for overpaid CV duties (see 2203040065).
The matter went to oral argument before the appellate court, where the judges expressed a hesitancy over whether to believe the importer's claims (see 2211030070). During the oral argument, the court asked, but never received a clear answer as to, whether Commerce issued an order suspending liquidation during the CVD review. SIS submitted its supplemental brief to clear this up and answer follow-up questions.
Addressing whether Commerce suspended liquidation, SIS said that what "complicated the issue is that the manufacturer," Shandong Zhongyi Rubber Co., is the same entity as Dongying Zhongyi Rubber Co. Shandong Zhongyi withdrew its request for a CVD review after undergoing a name change in an attempt to minimize redundancies. This move should have had no impact on its entries given that Dongying Zhongyi was still part of the review. Instead, the withdrawal triggered CBP to liquidate Shandong Zhongyi's entries, "robbing A362 of a clear path to its owed refund" via a typical protest while Dongying Zhongyi was still a part of the review, the brief said. After Shandong Zhongyi withdrew the request for a review, Commerce told CBP to liquidate its entries, though it failed to do the same thing for Dongying Zhongyi.
"It is at this point in the journey where there is an extreme disconnect as to what exactly A362 was legally and procedurally able to do," the brief said. "And even today -- with the benefit of hindsight -- A362 is at a loss at how this could have been handled differently given these particular factual circumstances."
The U.S. claims that SIS's only option would have been to file a protest -- a move SIS says would have been premature given the ongoing review. The importer further said this "myopic position" disregards three things: during liquidation, SIS didn't have any reason to believe CBP applied the wrong rate in liquidating its entries; Shandong Zhongyi and Dongying Zhongyiu are the same company; and there was a separate statutory mechanism through which SIS could protest, and it timely did so.
"So, when Customs decided not to act on Commerce’s instruction in regard to the refund attached to A362’s entries, A362 protested within 180 days of when Customs first had authority and instruction to issue the refunds," the brief said. "These jurisdictional avenues (19 U.S.C. §1514(c)(3)(B) and 19 C.F.R. §174.12(e)(2)) are separate and distinct from the avenues regarding a protest to liquidation, and they are the mechanism through which A362 timely protested and through which the CIT had jurisdiction over A362’s claims."