CIT Continues Ford's Challenge to CBP's Reopening of 17 Drawback Claims

The Court of International Trade has ruled that Ford Motor Company can continue its lawsuit claiming that CBP does not have the authority to reopen 17 drawback entries from 1996-1998 that were "deemed liquidated" one year after they were filed. CBP had wanted the court to dismiss Ford's case, stating that it had the authority to review and then "affirmatively liquidate" them.

(A "drawback" is a refund of duties paid on an import that has been exported or destroyed. Subject to certain exceptions, entries that are not affirmatively liquidated by Customs in a timely manner are "deemed liquidated" by operation of law at the amount originally asserted by the claimant.)

CBP Said Protests Needed for Jurisdiction, but CIT Said not so for "Deemed Liqs"

U.S. Customs and Border Protection argued that Ford could not pursue litigation under the court's residual jurisdiction, 19 USC 1581(i), but instead had to protest CBP's actions and bring suit under 19 USC 1581(a). However, the court found jurisdiction under 1581(i) which allows it to confirm if a "deemed liquidation" occurred, as long as CBP has yet to affirmatively liquidate the entry.

2004 Law Allows only One Year for CBP to Challenge Drawback Claims

The CIT said that Congress had intended, with the 2004 enactment of 19 USC 1504(a)(2), to protect importers from this very situation - an unfair open-ended time period during which CBP could challenge a drawback entry. 19 USC 1504(a)(2) provides deemed liquidation at the drawback amount asserted by the claimant, within one year from the date of the entry or claim.

CBP Asked for Drawback Records 12 Years After 1996-1998 Claims Filed, Etc.

In this case, Ford had maintained its drawback records as required by law and CBP regulations for three years, and then disposed of them. Nine years later, CBP began asking for information on the drawback entries.

The CIT was also critical of CBP for affirmatively liquidating five¹ of the 17 drawback claims at issue after this CIT action commenced in 2009, stating CBP was powerless to exert authority over these five entries in the absence of a court order.²

(The court added that Ford's allegations on certain drawback entries suggest a "potential for abuse," as CBP affirmatively liquidated the 1996-1997 entries, but did not provide notice to Ford as required by 19 USC 1500(e), so that Ford only knew of the affirmative liquidations when it received the duty bills. CBP then denied Ford's subsequent protest, and warned that nonpayment of the duty bills could result in national sanctions (e.g. "live entry" requirements - entry/entry summary and payment of duty at the time of initial importation, in order to obtain release.)

¹Ford protested these five before bringing suit, so CBP argued that jurisdiction existed under 1581(a).

²Note that in an earlier Ford case (2010), the CIT ruled that its jurisdiction under 28 USC 1581(i) included entries that were not affirmatively liquidated but excluded entries that were affirmatively liquidated, even though those liquidations occurred after the action commenced. However, the court said it does not reach a similar conclusion in the instant action. (See ITT's Online Archives 10072920 for summary of that case.)

(Slip Op. 11-130, dated 10/18/11)