CIT says Post-Liquidation NAFTA Duty-Free Claims Must be Protested to be Heard

In a case involving U.S. Customs and Border Protection’s tariff classification, and denial of eligibility for NAFTA duty-free entry, of plaintiff’s candied peanuts imported from Mexico in 2007, the Court of International Trade dismissed Rogelio Salazar Cavazos’ claims regarding CBP’s denial of his requested NAFTA importation duty refund claims. CIT said it had no jurisdiction over the matter because Salazar never filed a protest with CBP over its determination of the goods’ NAFTA eligibility. Salazar’s HTS classification protest did not likewise cover NAFTA eligibility, it said, and he was eligible to file a second protest, contrary to his arguments. However, Salazar’s claims challenging CBP’s tariff classification of the goods fall within its jurisdiction, CIT said, because he filed a valid protest that CBP denied, and so did not dismiss those claims.

Plaintiff Challenged HTS Classification, NAFTA Eligibility; Protest Filed for Classification, but not NAFTA

CBP originally classified Salazar’s thirteen entries of candied peanuts from Mexico under subheading 2008.11.60 of the Harmonized Tariff Schedule (HTS), “fruit, nuts, and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit,” dutiable at a rate of 131.8%. Salazar filed two protests of CBP’s classification, saying the goods should have been classified under HTS subheading 1704.90.10, “candied nuts,” dutiable at a rate of 40%. Both protests were denied.

Following liquidation of the entries, but before denial of his protests, Salazar filed NAFTA post-importation duty refund claims, asserting that the candied peanuts were originating goods eligible for duty-free status because they were made from peanuts obtained in the U.S. and remaining ingredients obtained in Mexico. Following CBP’s denial of Salazar’s HTS classification protest and finding the correct classification was HTS subheading 2008.11.60, CBP denied his NAFTA claims because goods classified under subheading 2008.11 from Mexico consisting, at least in part, of peanuts do not qualify for NAFTA privileges unless those peanuts were wholly obtained in Mexico. If CBP had instead found the goods to be correctly classified under HTS subheading 1704.90.10, the goods would have been eligible. Salazar did not protest CBP’s denial of his NAFTA claims.

CIT Said Classification Protest Did Not Satisfy Protest Requirement for CIT Jurisdiction

Salazar argued that although he did not file a protest with CBP with respect to his goods’ NAFTA eligibility, CIT nevertheless had jurisdiction because his HTS classification protest satisfied the requirement that a protest be filed. CIT disagreed, saying previous court cases had found that CBP’s determinations of HTS classification and post-liquidation NAFTA eligibility determinations (Salazar requested a refund of duties after liquidation rather than filing for duty-free status at entry) constituted two separate decisions that had to be protested separately. CIT said the only protests filed by Salazar did not challenge CBP’s decision to deny his goods NAFTA duty-free eligibility, because at the time CBP received Salazar’s protests he had not yet filed a valid NAFTA claim. Therefore, CIT said, it had no jurisdiction over the matter.

“One Entry, One Protest” Rule Does not Apply to NAFTA Eligibility Protests

Salazar also said even if he were required to separately protest the denial of his NAFTA claims, this second protest would have been barred by the “one entry, one protest” rule under 19 USC 1514(c), which says only one protest may be filed for each entry of merchandise. CIT disagreed, and saying 19 USC 1514(c) explicitly permits filing of a second protest with respect to determinations of NAFTA duty-free eligibility.

Port Director’s Failure to Check Box Doesn’t Excuse Plaintiff

Finally, Salazar said the Port Director’s failure to check the box labeled “the denial is protestable within 180 days of the date of this letter” on the NAFTA claims denial letter excused him from protesting the denial of his NAFTA claims. CIT once again disagreed, saying (i) U.S. government can only be sued if it expressly waives its right to sovereign immunity in statutory text, and (ii) likewise, CIT’s subject matter jurisdiction cannot be forfeited or waived. As no such provision exists, CIT said Salazar was not excused from his failure to file a protest.

NAFTA Eligibility Claims Dismissed, but CIT Yet to Decide HTS Classification Challenge

Therefore, CIT dismissed Salazar’s NAFTA claims. CIT said his challenge of CBP’s HTS classification decision is still before the court, and he may still be entitled to have the entries at issue reclassified and assessed a lower tariff rate.

(Slip Op. 12-82, dated 06/14/12, Judge Eaton)