A review of the Court of International Trade's 2014 jurisprudence arising under 28 U.S.C. [section] 1581(A).

Author:Vanderweide, Alexander
 
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  1. Introduction II. Jurisdiction A. Puerto Rico Towing & Barge Co. v. United States B. Netchem, Inc. v. United States C. Blink Design, Inc. v. United States III. Cases on the Merits A. Streetsurfing LLC v. United States B. Infantino, LLC v. United States C. Rubbermaid Commercial Products, LLC et al. v. United States IV. Conclusion I. Introduction

    The Court of International Trade (CIT) has exclusive jurisdiction over actions arising under 28 U.S.C. [section] 1581(a). (1) Section 1581(a) actions usually involve challenges by importers to U.S. Customs and Border Protection's (Customs) classification and assessment of duties on entries of merchandise imported into the United States. Normally, once an importer enters merchandise into the United States and files entry papers, Customs examines the supplied information and liquidates the entry. In doing so, Customs calculates the final duty owed on the entry. If an importer disputes Customs' liquidation, it can submit a protest to Customs. If Customs denies the protest, the importer must pay the duties assessed on the entry, and pursuant to 28 U.S.C. [section] 1581 (a), can summons the protest's denial to the CIT.

    The CIT issued few dispositive decisions with respect to section 1581(a) actions in 2014. Yet despite this relative dearth of opinions, a few trends are readily gleaned from the court's decisions. Part II of this Article will address the CIT's reluctance to expand its jurisdiction in actions involving untimely protests, suits, and seized merchandise. Part III will discuss the CIT's reliance on the Explanatory Notes to the Harmonized Commodity Description and Coding System (Explanatory Notes) to anchor its analysis of the classification of toys, sports equipment, and air freshener parts. Part IV concludes this Article with a global analysis of the CIT's 2014 section 1581(a) jurisprudence.

  2. Jurisdiction

    On the face of the statute, triggering the court's jurisdiction under section 1581 (a) appears relatively straightforward, with the only requirement being the commencement of an action challenging the denial of a protest. However, 19 U.S.C. [section] 1514, not 28 U.S.C. [section] 1581 (a), sets forth the statutory conditions of a valid protest. As a result, section 1581 (a)'s apparent simplicity masks the myriad of ways in which importers can fail to properly protest Customs decisions and invoke the court's jurisdiction.

    For instance, when an importer fails to file a timely protest in accordance with 19 U.S.C. [section] 1514(a) (2) and [section] 1514(c)(3), (3) the untimely protest is rendered invalid, and Customs can neither grant nor deny the protest. The protest is simply rejected. Customs must deny a valid protest, otherwise the court's jurisdiction cannot be sought under 28 U.S.C. [section] 1581(a). (4)

    In 2014, the CIT issued three decisions ruling on challenges to its jurisdiction. In two of the three actions, untimely protests failed to properly trigger the court's jurisdiction. In Puerto Rico Towing & Barge Co. v. United States, (5) prior communications with Customs could not salvage a protest filed too late. In Netchem, Inc. v. United States, (6) prematurely filed protests were insufficient to invoke the court's jurisdiction.

    Finally, in Blink Design, Inc. v. United States, (7) the CIT carefully considered whether it could exercise its jurisdiction over entries of merchandise that were seized, but also deemed excluded by operation of law.

    1. Puerto Rico Towing & Barge Co. v. United States

      Puerto Rico Towing & Barge Co. (PR Towing) submitted an application for relief from certain foreign vessel repair duties, which Customs granted in part and denied in part due to a deficient invoice. (8) Customs liquidated PR Towing's entry accordingly. (9)

      Instead of protesting the liquidation, PR Towing emailed Customs at the Port of New Orleans twice in the span of a week to question the partial rejection of its application and "in the hopes that we can avoid the necessity of preparing a very exhaustive protest" and the "time consuming task" of preparing a more detailed invoice. (10) In response to PR Towing's emails, the port restated the invoice's deficiencies and informed PR Towing that it may file a protest. (11)

      The following month, PR Towing advised Customs via letter that it would be filing a protest. (12) Later that month, PR Towing made good on its prior communication and filed a standard protest against Customs' liquidation. (13) However, because PR Towing failed to file the protest within ninety days after the date that its entry was liquidated, in accordance with 19 U.S.C. [section] 1514(c)(3), Customs rejected the protest as untimely. (14)

      A few weeks later, PR Towing filed a second protest, claiming for the first time that the two letters it previously emailed to the port were in fact a formal protest. (15) Again, Customs rejected this protest as untimely and did not consider the prior letters to be a proper protest. (16) Subsequently, PR Towing commenced suit in the CIT, alleging in part that the two letters were a timely filed protest. (17) Soon thereafter, the United States (the Government) moved to dismiss the complaint for lack of jurisdiction.

      In granting the Government's motion, the court listed the statutory (19 U.S.C. [section] 1514(c)(1)) (18) and regulatory (19 C.F.R. [section] 174.12(b) (19) and [section] 174.13(a)) (20) requirements of a protest, and discussed earlier cases that have addressed the form and scope of a valid protest, such as Koike Aronson, Inc. v. United States? (21) Eaton Mfg. Co. v. United States, (22) Mattel, Inc. v. United States, (23) Ammex, Inc. v. United States, (24) and Continental Ore Corp. v. United States. (25) In doing so, the court found that "PR Towing's letters failed to comply with several provisions of both the statute and regulations, and therefore PR Towing has failed to invoke properly the jurisdiction of the court." (26)

      While the court acknowledged that the letters contained some of the statutory and regulatory requirements of a protest, the letters failed to include other required information, such as the name and address of the importer of record, the date of entry, and a "specific description of the various repairs that were made along with support for claiming each as exempt from duty." (27) The court also noted that the emails and letters were not labeled protests, nor did PR Towing make any specific representations to the port that the communications were intended to serve as protests. (28) Consequently, the court dismissed the case.

      In Puerto Rico Towing & Barge Co. II, PR Towing moved the court to reconsider its judgment, which the court denied. (29) The court held that, by referencing other documents, the emailed letters failed to "distinctly and specifically" provide the information statutorily required of a protest. (30) Once again, the court noted that PR Towing failed to treat its own letters as protests and that the letters were "missing information mandated by statute and regulation, which is fatal to PR Towing's claim." (31)

      The court's decision, which presaged the outcome in the factually similar Ovan International, Ltd. et al. v. United States, (32) followed in the footsteps of Koike v. United States, (33) in that the court stated that protests which have often been liberally construed in the past are defective if they omit information required by 19 U.S.C. [section] 1514 and Customs regulations.

      In so ruling, Puerto Rico Towing and its kin serve as a caution to future importers: Customs cannot be expected to construe letters and other documents as protests when the communications are not intended or labeled as such, and are missing information required by statute and regulation. Importers neglecting or circumventing the protest requirements risk falling outside the court's jurisdiction.

    2. Netchem, Inc. v. United States

      Timeliness is also at the heart of the court's decision in Netchem, Inc. v. United States. (34) Between June and December 2011, Netchem, Inc. (Netchem) made thirteen entries of its merchandise at the Port of Buffalo and forty-three entries at three other ports. (35) When Customs re-classified the imported merchandise, Netchem protested Customs' decision against all fifty-six entries at the Port of Buffalo. (36) Only twenty-six of the entries, however, had been liquidated prior to the protest filing date. (37) In contravention of 19 U.S.C. [section] 1514(c) (3) (A), the remaining thirty entries liquidated after Netchem filed the lone protest. (38)

      The Port of Buffalo rejected the protest in its entirety as it covered entries filed at other ports. (39) Nonetheless, Netchem assumed the protest deemed denied under 19 U.S.C. [section] 1515(b) (40) because, in its estimation, the Port of Buffalo failed to take action by granting or denying the protest within thirty days. (41) Thereafter, Netchem commenced an action in the CIT against the liquidations of the forty-three entries made at the non-Buffalo ports. (42) Of these entries, Netchem had only paid the liquidated duties on eighteen. (43) In fact, only one entry that was protested following its liquidation was paid in accordance with 28 U.S.C. [section] 2637(a) before Netchem brought suit. (44)

      The Government moved to dismiss Netchem's action for lack of jurisdiction, which the court granted. In reaching its decision, the court cautiously and carefully took great lengths to establish that each ground for dismissal raised in the Government's motion was jurisdictional in nature. (45) In doing so, the court analyzed the case in three parts.

      First, the court noted that pursuant to 19 U.S.C. [section] 1514(c)(3)(A), importers have 180 days after the date that entries are liquidated to file a protest against the liquidations. (46) In contravention of this statute, seventeen of Netchem's entries were liquidated after it protested Customs' classification decision. (47) The court found the timeliness of a filed...

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