CIT Decision Highlights CAPE Phase II IEEPA Refund Concerns

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Apr. 24, 2026
By: David G. Forgue

On April 23, 2026 the Court of International Trade issued a decision with potential (if indirect) implications for the IEEPA refund process. The underlying classification dispute in Cyber Power Systems (USA) Inc. v. United States had to do with the proper classification of certain cables and the extent to which duties under Section 301 would be due on imports of those cables. That argument is interesting (if you are interested in it) and explored in depth by the court. However, for the general public that is unlikely to be the most interesting element of the case.

Instead, the interesting part of the case for many people will be procedural. As many importers are aware, Section 301 duties contained a number of exclusions at one point (alas, long gone). Initially Customs and the importer agreed on the harmonized tariff provision for these entries (8544.42.20) but disagreed which Section 301 Chapter 99 provision properly applied. Plaintiffs claimed the goods were covered by an exclusion, Customs liquidated them without the exclusion. A protest and denial by Customs followed. So far, so typical.

During the court case the United States sought to change the classification it advocated to 8544.42.90. For reasons beyond the scope of this write up, the court treated the proposed change as a defense to Cyber Power’s case rather than as a counterclaim, which was significant for the government’s position in the litigation. Suffice it to say that the defense/counterclaim issue matters most with respect to the past impact of a decision (as we shall see).

The court found that Customs was correct that 8544.42.90 was the classification and that no Section 301 exclusion applied to goods classified in that provision. However, the court also found that the decision could not apply to any entry that had passed the period of voluntary liquidation (90 days after entry) because Customs had not preserved its ability to keep such entries open (which is why the defense/counterclaim matters). Thus, even though the court agreed with Customs, the court found that it had no authority to order reliquidation once the entries were outside the statutory scope for liquidations being preserved for reliquidation.

This is potentially an important reminder and reaffirmation for importers as we work through the CAPE system. Phase 1 was explicitly limited to entries that had liquidated no more than 80 days prior to ensure that Customs would have the authority to voluntarily reliquidate in the 90 day period. If the decision in Cyber Power is correct on this point, entries that are protestable (which is not all IEEPA entries) and do not qualify for Phase 1 treatment, very likely will need to be protested in order to ensure that they are legally able to be reliquidated. Failure to do so could mean that there is no legal authority to reliquidate and refund the entries.

Perhaps the language in the court decision that should give importers the most to think about is where the court stated that "this Court’s authority is broader than that of CBP, but the Court must nonetheless remain within the statutory confines set by Congress." How those statutory confines apply to IEEPA refunds and the CAPE system could yet be a multi-million dollar question for importers and one to which they would do well to give serious consideration.

Do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP to discuss a reasoned and reasonable plan to protect and maximize your IEEPA refunds.