Government Capitulates in CIT Case on Reliquidation of Entries Deemed Liquidated

Lawyers for the U.S. government recently conceded an apparent victory to an importer in a Court of International Trade case on the extent to which the government can reliquidate entries that have deemed liquidated. In a Dec. 21 filing that marked a reversal from its previous position, the government moved for liquidation “as entered” for an entry by Consolidated Fibers that it had previously reliquidated at a higher rate, even though the entry had deemed liquidated nearly three years earlier.

The six-page motion is silent on several issues raised by Consolidated Fibers’ complaint: whether 19 USC 1501 allows CBP to reliquidate entries that have deemed liquidated and, if so, whether the 35 months that passed between deemed liquidation and the bulletin notice that started the reliquidation clock was a “reasonable period of time” under CBP’s regulations (see 14092328). According to the lawyer representing Consolidated Fibers in the case, Gregory Menegaz of deKieffer & Horgan, the government may have judged it waited too long. "In the strictest sense, this can be interpreted as a concession by the government that waiting some 35-odd months to provide a notice that they intended to reliquidate a deemed liquidation could not possibly be justified as notice within a reasonable period of time.” Consolidated Fibers' formal response to the motion is due Jan. 5. The Justice Department did not comment.

The dispute stems from an entry of polyester staple fiber imported by Consolidated Fibers from South Korea in 2005, at an antidumping duty cash deposit rate of 7.91 percent. In June 2008, six months after suspension of liquidation had been lifted following the end of a Commerce Department administrative review, the entry deemed liquidated. However, in May 2011 CBP posted a bulletin notice of the deemed liquidation, and two months later reliquidated the entry at an AD duty rate of 48.14 percent. It said the administrative review had actually calculated a higher rate for the entry, and pointed to 19 USC 1501’s mandate that the 90-day period for reliquidation runs from the date notice is posted, and not from the date of deemed liquidation itself. CBP headquarters upheld the decision in a ruling issued in 2014 (see 14092328).

The ruling was one of several instances where CBP ruled it could reliquidate an entry that deemed liquidated well after deemed liquidation occurred (see 14080712). The conference customs reauthorization bill recently passed by the House and currently under consideration by the Senate would amend 19 USC 1501 so that the 90-day deadline runs from the actual liquidation date, rather than the date of the notice (see 1512100024).

One recent development that could have prompted the government’s capitulation is CIT’s decision in a similar dispute with the surety Great American Insurance. In November, CIT Judge Mark Barnett ruled that CBP may reliquidate entries that have deemed liquidated, but only if the bulletin notice triggering the reliquidation clock is issued within the reasonable period of time required by 19 CFR 159.9 (see 1511170068). Barnett deferred a decision on whether the 11-month period between deemed liquidation and the notice of deemed liquidation in Great American’s case was reasonable, but the government may have seen the writing on the wall: that the government may have considered the two cases factually distinct would be “an obvious reason for the motion confessing error in our case,” said Menegaz.

Email ITTNews@warren-news.com for a copy of the government’s motion.