Developments in jurisdiction under 28 U.S.C. s. 1581(a) and customs bond enforcement in the U.S. Court of International Trade in 2012.

Author:Farrell, Beverly A.
Position:2012 International Trade Review
 
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  1. Introduction II. Background A. The Jurisdiction of the CIT B. Actions Commenced by the United States to Recover Upon Customs Bonds III. Discussion A. The Court Narrowly Construes Its Jurisdiction Under 28 U.S.C. [section] 1581(a) 1. Tolling Is Unavailable to Expand the Jurisdiction of the CIT 2. A Valid Protest Is Necessary to Confer Jurisdiction 3. No Jurisdiction Over Entries That Have Been Seized 4. The CIT's Jurisdiction Is Narrowly Construed B. Action to Recover on a Customs Bond IV. Conclusion I. INTRODUCTION

    This Article will discuss certain decisions of the United States Court of International Trade (CIT) addressing the contours of the court's jurisdiction under 28 U.S.C. [section] 1581(a). Additionally, this Article will briefly discuss a developing trend concerning claims made on surety bonds securing entries containing merchandise that was subject to U.S. Department of Commerce antidumping duty orders.

  2. BACKGROUND

    1. The Jurisdiction of the CIT

      The CIT is an Article III court of limited jurisdiction with national service of process whose subject matter jurisdiction is established in 28 U.S.C. [section][section] 1581-1584. The exclusive jurisdiction of the CIT covers, among other things, civil actions commenced to challenge the U.S. Customs and Border Protection's (Customs) denial of a protest, in whole or in part; civil actions arising out of an import transaction commenced by the United States to recover under a bond; and civil actions arising under the North American Free Trade Agreement or the United States-Canada Free-Trade Agreement. (1)

      Section 1581(a) confers on the CIT "jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930." Section 515 of the Tariff Act of 1930 is codified at 19 U.S.C. [section] 1515 and provides:

      (a) Administrative review and modification of decisions

      Unless a request for an accelerated disposition of a protest is filed in accordance with subsection (b) of this section the appropriate customs officer, within two years from the date a protest was filed in accordance with section 1514 of this title, shall review the protest and shall allow or deny such protest in whole or in part. Thereafter, any duties, charge, or exaction found to have been assessed or collected in excess shall be remitted or refunded and any drawback found due shall be paid. Upon the request of the protesting party, filed within the time allowed for the filing of a protest under section 1514 of this title, a protest may be subject to further review by another appropriate customs officer, under the circumstances and in the form and manner that may be prescribed by the Secretary in regulations, but subject to the two-year limitation prescribed in the first sentence of this subsection. Within 30 days from the date an application for further review is filed, the appropriate customs officer shall allow or deny the application and, if allowed, the protest shall be forwarded to the customs officer who will be conducting the further review. Notice of the denial of any protest shall be mailed in the form and manner prescribed by the Secretary. Such notice shall include a statement of the reasons for the denial, as well as a statement informing the protesting party of his right to file a civil action contesting the denial of a protest under section 1514 of this title.

      (b) Request for accelerated disposition of protest

      A request for accelerated disposition of a protest filed in accordance with section 1514 of this title may be mailed by certified or registered mail to the appropriate customs officer any time concurrent with or following the filing of such protest. For purposes of section 1581 of title 28, a protest which has not been allowed or denied in whole or in part within thirty days following the date of mailing by certified or registered mail of a request for accelerated disposition shall be deemed denied on the thirtieth day following mailing of such request.

      (c) Request for set aside of denial of further review

      If a protesting party believes that an application for further review was erroneously or improperly denied or was denied without authority for such action, it may file with the Commissioner of Customs a written request that the denial of the application for further review be set aside. Such request must be filed within 60 days after the date of the notice of the denial. The Commissioner of Customs may review such request and, based solely on the information before the Customs Service at the time the application for further review was denied, may set aside the denial of the application for further review and void the denial of protest, if appropriate. If the Commissioner of Customs fails to act within 60 days after the date of the request, the request shall be considered denied. All denials of protests are effective from the date of original denial for purposes of section 2636 of title 28. If an action is commenced in the Court of International Trade that arises out of a protest or an application for further review, all administrative action pertaining to such protest or application shall terminate and any administrative action taken subsequent to the commencement of the action is mill and void.

      (d) Voiding denial of protest

      If a protest is timely and properly filed, but is denied contrary to proper instructions, the Customs Service may on its own initiative, or pursuant to a written request by the protesting party filed with the appropriate port director within 90 days after the date of the protest denial, void the denial of the protest.

      As set forth in 19 U.S.C. [section] 1515(c), "[a] 11 denials of protests are effective from the date of original denial for purposes of section 2636 of title 28." Section 2636 is the statutory provision that sets the time for commencement of an action. Specifically, for actions that are brought in response to a denial of a protest, the time to commence the action is 180 days after the denial of a protest. (2) When an action is commenced beyond 180 days after the denial of a protest, the CIT will not possess jurisdiction over it.

      The court's declination of jurisdiction for actions brought under [section] 1581(a) is not limited to those actions filed outside an applicable statute of limitations. The court also does not possess jurisdiction over a case when a protest does not satisfy the statutory and regulatory requirements respectively set forth in 19 U.S.C. [section] 1514(c1A)-(D) and 19 C.F.R. [section] 174.13.

      Finally, the court does not possess jurisdiction over imported goods that have been seized by Customs before the commencement of an action with the court. In accordance with 28 U.S.C. [section] 1356, jurisdiction over the action resides in the district courts of the United States.

    2. Actions Commenced by the United States to Recover Upon Customs Bonds

      The CIT has recently witnessed an uptick in the number of actions commenced by the United States pursuant to 28 U.S.C. [section] 1582(2). Section 1582(2) provides:

      The Court of International Trade shall have exclusive jurisdiction of any civil action which arises out of an import transaction and which is commenced by the United States--

      2) to recover upon a bond relating to the importation of merchandise required by the laws of the United States or by the Secretary of the Treasury.

      A surety who underwrites a customs bond agrees to joint and several liability with an importer (the principal) for any duties, fees, and charges owed up to the limit of liability on the face of the bond. (3) A surety's obligation on a bond generally arises at the time of a principal's breach. (4) Thus, when a principal fails to satisfy a payment demand by Customs, Customs may seek payment from the bond surety.

      Over the past few years, Customs has referred numerous cases to the Department of Justice concerning sureties of customs bonds that have issued continuous and single transaction bonds (5) and have refused to make payments in response to Customs' demands. (6) The pattern in these cases generally involves entries of goods that are subject to antidumping orders and reviews, (7) and when the antidumping duty rate is finally determined and applied to the goods, the importers are often no longer in business. The Government, therefore, must seek payment of the outstanding duties from the surety pursuant to the bond or bonds covering the entry. (8) If the surety refuses to make payment, the Government commences an action pursuant to [section] 1582(2) to obtain a recovery. (9) When the Government commences an action to recover customs duties, it becomes entitled to interest at a rate of six percent per year from the time the bonds became due pursuant to 19 U.S.C. [section] 580. (10) Sureties, however, have disputed that this entitlement extends to...

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