Requiring CBP Protest for Section 301 Refunds 'Absurd,' Importers Tell Federal Circuit

Requiring a CBP protest to obtain a refund under exclusions from Section 301 tariffs usurps the authority of the Office of the U.S. Trade Representative and unlawfully hands it over to CBP, importers ARP Materials and Harrison Steel Castings argued at the U.S. Court of Appeals for the Federal Circuit (ARP Materials, Inc., et al. v. United States, Fed. Cir. #21-2176).

The arguments came over ARP's and Harrison's appeal of a June Court of International Trade decision that found that a CBP protest was needed to effectuate the Section 301 refunds (see 2106110053). The trade court said it did not have jurisdiction to hear the pair's challenge since the importers did not properly file protests of the CBP liquidations assessing the duties.

USTR issued the exclusions after the 180-day protest deadline had passed for the relevant entries, leading the importers to file their suit under CIT's Section 1581(i) "residual" jurisdiction, which gives cover to trade cases where no other jurisdiction applies. Judge M. Miller Baker, though, said that since CBP's decision to subject the entries to Section 301 duties was a tariff classification dispute, it should only have jurisdiction under Section 1581(a).

ARP and Harrison pushed back against this idea in their opening brief at the Federal Circuit, arguing that filing a protest does not automatically negate Section 1581(i) jurisdiction. The pair cited the 1998 case United States v. U.S. Shoe Corp. to back this contention, as the case held jurisdiction under Section 1581(i) even though the petitioner filed a protest.

Plus, both companies filed protests and still brought their cases under Section 1581(i). "However, both Plaintiffs-Appellants brought their claims to be reviewed correctly under 1581(i) as CBP had no authority to impose time limits on the decisions of the USTR or to decide the Fifth Amendment Constitutional issues raised by CBP’s actions," the brief said.

The opening brief also called out a number of purported "absurdities" in the U.S.'s arguments. "It is an absurdity for the USTR to have been granting retroactive exclusions, whereby the USTR-authorized refunds of [Section] 301 duties that had been paid were time barred before the retroactive exclusions were granted," the brief said. "Yet that is what Defendant-Appellee is advocating." ARP and Harrison also found it absurd for the U.S. to argue in favor of CBP being allowed to substitute its authority for that of USTR "without statutory or regulatory authority."

The two importers also made a due process argument that had there been notice and comment rulemaking in this instance, ARP and Harrison could have attempted to prevent the "arbitrary and capricious imposition of protest time limits on the USTR's non-protestable decisions." USTR, not CBP, controls the Section 301 process, so it was not within CBP's authority to act against any USTR decision. Yet, that is precisely what it did when it denied the importer's bid for refunds due to protest-related time limits, the pair argued.

"In the midst of the Pandemic, and the large-scale imposition of additional tariffs under sections 232 and 301, the government may have been overwhelmed," the brief concluded. "Nonetheless, it had no justification to arbitrarily and capriciously impose time limits and procedures nowhere authorized by law or regulation as it did here. The final actions taken by the USTR and CBP violate the Equal Protection and Due Process to which Plaintiffs-Appellants are entitled under the Fifth Amendment to the U.S. Constitution."