CIT Finds That Liquidations Do Not (Always) Bar Remedy

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Sep. 12 2023
By: Pietro N. Bianchi

The Court of International Trade (“CIT”) issued an opinion for three Administrative Procedures Act (“APA”) suits challenging Commerce’s denials of Section 232 duty exclusions. The APA is the law under which almost all Federal agencies act and sets forth the decision-making authority of agencies. Claims against Customs not made under a more specific statute are generally made under the APA.

The Plaintiffs in these three cases sued, claiming that steel exclusion requests were improperly denied by the Department of Commerce. The United States sought a voluntary remand to review the exclusions again and plaintiffs sought a stipulation that if Commerce granted the exclusions the United States would also agree that liquidated entries that would have been subject to the exclusions would have 232 duties refunded. The United States replied that liquidated entries cannot be reopened for refunds and that the matter was moot as to those entries.

To resolve this conflict the court set forth a detailed analysis of the exclusion, liquidation, and protest processes. Section 232 exclusions are not self-executing – importers are not simply sent a refund for past entries after an exclusion is granted. After an administrative process, the Department of Commerce (“Commerce”) assigns a product exclusion number that importers can use to seek relief from Customs. What importers can do with past entries to which the exclusion number applies depends on where the relevant entry is in the liquidation process. Liquidation is the “the final computation or ascertainment of duties.” The typical liquidation cycle is 314 days after entry, although this can be extended or shortened in some circumstances. An importer has 180 days after liquidation to protest that liquidation. After this 180-day limit, liquidation becomes final. Importers can use an exclusion number to 1) submit a post-summary correction if the relevant entry has not liquidated; or 2) protest a liquidated entry if the liquidation is not final and the protest period has not expired.

The CIT found the liquidation cycle, the post-summary correction process, and the protest process important in its decision, noting:

· An importer cannot seek relief from Customs for Section 232 duties until Commerce grants an exclusion;

·       After the Commerce denies an exclusion request, an importer has no administrative means to prevent an entry’s liquidation from becoming final pending litigation challenging that denial; and

·       Customs will not honor exclusions for entries that are finally liquidated.

In the cases at bar, the exclusions had been (potentially wrongfully) denied and the entries had liquidated. The United States argued, in a motion to dismiss, that Plaintiffs’ claims were moot because the CIT lacked the authority to order reliquidation for refunds (on these facts). In essence, there was no meaningful review of the wrongful denial of the exclusion request if the entries in question were liquidated (without a protest).

The CIT denied the government’s motion to dismiss, finding that Plaintiffs’ claims were not moot. Instead, the court found that, in certain cases at least, liquidation was a bar that it could overcome. Under the court’s analysis, in APA cases the court may use its equitable powers to effectuate its decisions. These powers include the power to order refunds for duties collected for entries that Customs has liquidated. Thus, the court remanded the cases to Commerce, making clear that if any of the exclusions are granted entries that would have been eligible for exclusion must be refunded.

This case is potentially important for several reasons. First, the equitable power of the court to order refunds for liquidated entries has been a topic of interest in the massive Section 301 litigation. Second, the court very clearly articulated the conditions under which it would exercise these equitable powers and the analysis it would use. This should assist future litigants. Finally, by finding that Customs could not thwart meaningful judicial review of conduct violative of the APA simply by liquidating entries the decision reaffirms the limitations on the powers of agencies inherent in the APA.

If you have questions about Section 232 duties or duty remedies do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.