CAFC Rules that CBP Action on 1515(a) Protests not Mandatory

The Court of Appeals for the Federal Circuit has ruled that the two year time limit in 19 USC 1515(a) for CBP to decide protests is not mandatory. Hitachi Home Electronics (America) Inc. had argued that all protests not allowed or denied within the two-year statutory time period should automatically be “deemed allowed by operation of law.” The CAFC said that the time limit is merely directory, and 28 USC 1581(i)¹ jurisdiction for this case is not triggered if CBP fails to act in the two year period.

The CAFC further stated that a 1581(a) jurisdictional remedy was available to Hitachi under 1515(b), which requires CBP to respond to requests for accelerated disposition of a protest. If U.S. Customs and Border Protection does not act in that 30 day time period, the protest is deemed denied and eligible for 1581(a) jurisdiction. A 1515(b) request for accelerated disposition can be filed concurrently with a protest or afterwards.

Two Year Deadline in 1515(a) Is only Directory, Not Mandatory

The lower Court of International Trade dismissed this case for lack of jurisdiction. Using the same reasoning, the appeals court affirmed the CIT's decision. Both the CAFC and the CIT ruled that the two-year time limit of 1515(a) is only directory, and not mandatory. According to the CAFC, this decision is in line with several Supreme Court rulings on the issue of directory vs. mandatory regulatory language. As a result, CBP’s lack of action on Hitachi’s 1515(a) protest does not provide the court with jurisdiction under 1581(i).²

1515(b) Provides for Jurisdiction Under Accelerated Disposition

According to both courts, Hitachi has an opportunity for jurisdiction by requesting accelerated disposition of a protest under 19 USC 1515(b). If that step is taken and CBP does not then decide the protest within 30 days, the protest is “deemed denied,” and court jurisdiction would be available under 28 USC 1581(a).

(Pursuant to 19 USC 1515(b), a request for the accelerated disposition of a protest filed in accordance with 19 USC 1514 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 jurisdictional purposes under 28 USC 1581, a protest that has not been allowed or denied in whole or in part within 30 days following the date of mailing by certified or registered mail of a request for accelerated disposition shall be “deemed denied” on the 30th day following mailing of such request.)

Background

Hitachi is challenging the rate of duty on imported plasma flat panel televisions that were made or assembled in Mexico in 2005. CBP liquidated them as dutiable under HTS 8528.12.72 at a rate of 5% ad valorem. Hitachi claimed that the TVs qualified for duty-free treatment under NAFTA, and filed timely protests of the duty rate along with the required documentation. CBP never denied the protest, and in May 2009, Hitachi filed a summons and complaint requesting action by the CIT, which, it argued, had jurisdiction under 28 USC 1581(a) or 28 USC 1581(i).

The CIT found that it did not have jurisdiction under 28 USC 1581(a) or 1581(i) to rule on the duty rate dispute since CBP had not denied or allowed the protest, and that 19 USC 1515(a) does not provide for a deemed denial. A deemed denial however, is provided for in 1515(b) after an importer has requested accelerated disposition of its protest, and jurisdiction could have been available using that avenue.)

¹28 USC 1581(i) is a catchall jurisdictional provision.

²The CIT also stated that there was no jurisdiction under 28 USC 1581(a), and the CAFC concurred.

(Note that the CAFC majority opinion was written by Judge Restani, with Judge Reyna dissenting. See ITT’s Online Archives 10050432 for summary of the CIT ruling.)

CAFC Case 2010-1345 (decided 10/31/11)