Protests Needed for Retroactive Section 301 Duty Exclusions, CIT Says

Importers must file protests to preserve their ability to obtain refunds under exclusions from Section 301 tariffs, the Court of International Trade said in a June 11 decision. Dismissing a lawsuit from importers ARP Materials and Harrison Steel Castings, Judge Miller Baker found the court did not have jurisdiction to hear their challenge since the importers did not timely file protests of the CBP liquidations assessing the Section 301 duties.

In nearly identical complaints, both ARP and Harrison sought refunds based on Section 301 exclusions that had been issued at the request of other importers. The exclusions had issued after the 180-day protest deadline had passed for the relevant entries. The importers filed suit under CIT's Section 1581(i) jurisdiction, a "residual" jurisdiction provision that covers trade cases where no other jurisdiction provision applies.

But in essence, CBP's decisions to classify the imports as subject to Section 301 tariffs and assess the duties amounted to a tariff classification dispute, Baker said. By law, the procedure for challenging CBP's classifications is via protest, followed by a lawsuit under CIT's Section 1581(a) denied protest jurisdiction if the protest is unsuccessful, the trade court said. As refunds were available to the importers under Section 1581(a), the trade court's residual jurisdiction under 1581(i) was unavailable, it said. The importers should have filed protests.

CBP said as much in guidance issued to importers, Baker said. The agency provided guidance to importers in 2019 that said, "'to request a refund of Section 301 duties paid on previous imports of duty-excluded products granted by the USTR, importers ... may protest the liquidation,'" according to the decision, which quoted the guidance. CBP also told importers that it would not rule on protests where exclusion requests for the relevant product were pending, said Baker, who noted that the exclusions ARP and Harrison sought had been requested prior to the expiration of the protest deadline for the entries at issue in the case.

"That Customs’ classification decisions became retroactively erroneous due to the USTR’s exclusions rather than some other reason is immaterial; the obligation to protest a Customs classification error does not turn on whether it was erroneous ab initio or later became erroneous due to retroactive legislation or (as here) administrative action," Baker said. "Therefore, as to Plaintiffs’ claims for refunds of Section 301 duties that are not moot, jurisdiction would have existed here under § 1581(a) had Plaintiffs timely protested Customs’ classification decisions that resulted in their erroneous liability for Section 301 duties."

ARP and Harrison are strongly considering the possibility of an appeal to the Court of Appeals for the Federal Circuit. "We very much would like to appeal the dismissal of these cases," said Christopher Kane of Simon Gluck in a LinkedIn post. "We feel that the grounds articulated by the CIT are less than air tight, and the decision is susceptible to reversal."