DOJ Says Jurisdictional Issues Should End Section 232 Exclusion Challenge

The Department of Justice continued to raise jurisdictional issues in support for a motion to dismiss a challenge from steel exporter Voestalpine USA and importer Bilstein Cold Rolled Steel seeking a refund of Section 232 duties paid on steel entries in the Court of International Trade. In an April 19 filing, the DOJ challenged the jurisdiction of Voestalpine and Bilstein's challenge while pointing out that the plaintiffs are not entitled to a refund on the duties paid since they forgot to complete one key step in the tariff exclusion process -- alerting CBP that the Commerce Department issued an exclusion in the first place.

For a Section 232 duty exemption to be applied on the relevant imports, an importer must apply for the exclusion with Commerce, then alert CBP of the exclusion along with other relevant information. From there, CBP then determines whether an import is within the scope of the granted exclusion. Bilstein, having been granted an exclusion request from Commerce, did not submit that information to CBP, leading the agency to liquidate the steel entries with 232 tariffs. However, Bilstein and Voestalpine initiated the challenge in CIT on the grounds that Commerce erred when the exclusion included the wrong Harmonized Tariff Schedule subheading. DOJ argues that this error was fixed when Commerce subsequently issued another 232 exclusion, at Bilstein's request, with the proper HTS code.

In the reply supporting the motion to dismiss, DOJ argued that the challenge should truly be made against CBP, rather than Commerce, since the plaintiffs failed to file a protest against CBP's lack of assessment of the exclusion and are applying for duty refunds. “Thus, reliquidation of the entries does not result from Commerce’s action of approving or denying an exclusion, but rather from CBP’s decision with respect to the application of the exclusion to the merchandise in the entries,” DOJ said.

If DOJ were to get its way, the case would be dismissed since it should've been made under 1581(a) as opposed to 1581(i). “That there was an error in the approved exclusion does not change the true nature of plaintiffs’ cause of action -- obtaining duty refunds -- an area for which Commerce is not responsible and a remedy which is now foreclosed due to plaintiffs’ failure to file a timely protest with CBP,” the DOJ said.

DOJ also argued that even if Commerce granted an exclusion with an invalid HTS number, it was not a prejudicial action. “In a situation where there is an intervening event between the identified error and the alleged result, there may be no prejudice,” the defendants explained. Since Bilstein submitted the incorrect HTS code to be excluded, then failed to attempt to apply it at all, no prejudice exists on the government's part.

Even if the CIT finds jurisdiction to be correct, the claim should not lead to the refund of Section 232 duties, the DOJ said. Since a protest was never filed within 180 days of the entries' final liquidation, relief cannot be granted. If it's a challenge to Commerce's incorrect exclusion request that the plaintiffs are making, then they should be appeased by the proper exclusion request already granted by Commerce, the government said.