AAEI, NCBFAA, CITBA Urge Supreme Court Review of Hitachi CBP Protest Case

The Court of Appeals’ decision in Hitachi Home Electronics (America), Inc. v. United States “not only deprives importers of timely review of protests, but also allows Customs to block their access to judicial review,” said the American Association of Exporters and Importers (AAEI) in an amicus brief in support of Hitachi’s request for a Supreme Court hearing. Hitachi is appealing the October 2011 ruling of the Court of Appeals for the Federal Circuit that the statute does not require CBP to decide customs protests within two years, even though 19 USC 1515(a) says it “shall” do so.

AAEI, the Customs and International Trade Bar Association (CITBA), and the National Customs Brokers & Forwarders Association of America (NCBFAA) each submitted amicus briefs in support of a Supreme Court review of the Hitachi case. The government has until Oct. 1 to file a response to Hitachi's petition. Email documents@brokerpower.com for copies of any of the briefs or Hitachi's original July 30 filing seeking a Supreme Court hearing.

(See ITT’s Online Archives 12081606 for summary of Hitachi’s request for a Supreme Court hearing of Hitachi. See also ITT’s Online Archives 11111428 for summary of CAFC’s October ruling, and 12082404 for summary of Hitachi’s chances of getting the case heard.)

Hitachi Ruling Ends Over One Century of Protest Procedure, says AAEI

Congress for over a century has prescribed a system for review of customs protest decisions that consists of (1) time-limited customs review of protests, followed by (2) a specialized court (currently the Court of International Trade) to provide impartial review of denied protests, said AAEI. But if, as was held in Hitachi, CBP can not only allow or deny a protest but also postpone processing of protests indefinitely, “the Congressionally-mandated system of administrative and judicial review can be virtually shut down at the agency’s whim,” it said. CBP would become a “gatekeeper,” depriving CIT of jurisdiction over protest matters, it said.

In effect, said AAEI, CAFC held in its Hitachi ruling that the longstanding policy of time-limited administrative procedures followed by judicial review ended with the Customs Courts Act of 1970. But according to the legislative history of the law, this was not Congress’ intent, AAEI said. Instead, the Customs Courts Act of 1970 sought to expand meaningful Customs review of protests by extending the time limit for protest decisions from 90 days to two years, as well as reduce the number of protests which were automatically referred to the courts with administrative review (as was the case after 90 days after protest filing prior to the Customs Courts Act of 1970).

Citing statements made by Customs officials made around the time of passage of the 1970 law, CITBA said that around the time the 1970 law was enacted, Customs understood it to impose a mandatory deadline of two years for decisions on protests. Furthermore, said CITBA, the Hitachi decision subverts prior case law of the now-defunct Court of Customs Appeals, which held the 30-day deadline for Customs protests in effect at the time of its ruling was mandatory despite a lack of consequence for inaction written into the statute or regulations.

Statute says No Action After Two Years Results in Approval, argues CITBA

The briefs not only argued that CAFC ignored the legislative history, but that it misinterpreted the protest statute itself. 19 USC 1515(a) gives only two options to CBP when deciding protests, it said, which are to allow or deny. In effect, CAFC wrote a third option into the statute though its Hitachi ruling: “Customs can elect to disregard it,” it said.

With respect to CAFC’s ruling that the two-year time limit is not mandatory because the statute does not provide for a consequence, CITBA argued that the statute contains a consequence overlooked by CAFC. Given the plain language of the current law, it said, “a protest not decided within two years is deemed to have been approved.” Only two options, allow or deny, are provided for, said CITBA. Under 19 USC 1515(a), denials require notification by CBP, but allowed protests do not require any action beyond reliquidating entries and refunding overpayments. Therefore, said CITBA, the lack of a CBP decision before the two-year deadline results in allowance of the protest.

Impact on Brokers

NCBFAA agreed with Hitachi that the use of "shall" within the statute "creates an obligation" that is "clear on its face." The disagreement between the Federal Circuit's majority and dissenting opinions show the uncertainty over the "interpretation of directory statutory language" and the Supreme Court should take up the issue to resolve the question, said the association. "Simply stated, the current protest statute (and its predecessors) does not contemplate a limitless amount of time for government review and action on a protest."

The issue is of significance to customs brokers in that they advance duties on behalf of importer clients and "must often wait for protests to be resolved before they are reimbursed, said the NCBFAA. "As a practical business matter, importers require timely certainty as to their liability for duties on imported goods."

(The relevant statute, 19 USC 1515(a), on "Administrative review and modification of decisions" says "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.") -- Brian Feito, Tim Warren