CBP's Denial of PSCs Establishes Jurisdiction to Impose Section 232 Exclusions, Appellants Tell CAFC

CBP's denial of plaintiff-appellant Borusan Mannesmann's post summary corrections (PSCs) and administrative refund request constitutes a protestable decision, meaning Borusan had jurisdiction to seek Section 232 steel and aluminum tariff exclusions, Borusan and Gulf Coast Express Pipeline argued in an Oct. 17 opening brief at the U.S. Court of Appeals for the Federal Circuit. The appellants also said that Federal Circuit precedent established that CBP's denial of a timely request for a refund of previously paid duties can constitute a protestable decision, and while these precedential opinions do not concern unliquidated entries as is the case with Borusan, there is nothing limiting these decisions (Borusan Mannesmann Boru Sanayi Ticaret v. United States, Fed. Cir. #22-2097).

Borusan and Gulf Coast originally took to the Court of International Trade seeking exclusions for 19 entries of steel pipe from Turkey, claiming jurisdiction under Section 1581(a). The case prompted an initial motion to dismiss from DOJ, seeing as all the entries are not liquidated (see 2108260062). During litigation, 18 of the entries were under an injunction in the Transpacific Steel case, which had sought to overturn the tariff hike on Turkish steel in 2018.

The plaintiffs argued that they're not protesting the classification and amount of duties charged on the entries but are instead seeking to protest "charges or exactions" that came with the failure to apply the exclusions. DOJ disagreed, arguing that the protest sought to change the classification for the subject entries and, "operationally, the only way that CBP could approve the protest would be to change the tariff classification to account for the claimed exclusions" (see 2111160049). The trade court sided with the U.S., finding that since the entries were unliquidated, the court does not have jurisdiction over the matter and that the plaintiffs failed to show that CBP's decision not to issue the refunds before liquidation constitutes a decision as to charges or extractions (see 2206090076).

Borusan and Gulf Coast appealed to the Federal Circuit to argue that the trade court does have jurisdiction to hear the case. In particular, the Federal Circuit and its predecessor court issued two decisions, Eurasia Import Co. v. U.S. and Swisher International v. U.S., which said that CBP's denial of a timely request for a refund of previously paid duties can constitute a protestable decision. The appellants said that the Swisher case was particularly instructive given its legal context and underlying facts.

In that case, Swisher sought to recover harbor maintenance tax (HMT) payments given that the tax was unconstitutional. The company filed a request for a refund of the payments pursuant to the CBP regulations, but CBP denied the request via letter, leading to a timely protest from Swisher of the denial. The Federal Circuit said that since Swisher applied for a refund of the HMT and that refund request had been denied by CBP, the company pursued its constitutional challenge along a procedural path, setting up jurisdiction at the court. The U.S. argues in this case that since the entries at issue are unliquidated, the protest was premature and that CBP's denial of Borusan's refund requests was not a final decision.

"The Government is wrong," Borusan and Gulf Coast said. "As in Swisher, these arguments ignore the “procedural path” established by CBP for importers to obtain refunds. Also as in Swisher, Appellants here followed that path, then CBP denied their refund request, giving rise to a protestable exaction."

The appellants said that CBP's procedures for implementing Section 232 exclusions for merchandise that has already been imported sets up a distinct procedure for claiming refunds on unliquidated entries -- procedures the appellants followed, setting up jurisdiction at CIT. The appellants said the trade court's finding that both Eurasia and Swisher are not relevant was made in error.

"In sum, the plain meaning of the statute; relevant Federal Circuit and Trade Court precedent, and CBP rulings; and CBP’s own regulation all lead to the same conclusion: interested parties such as the Appellants may protest final CBP decisions refusing to effectuate Section 232 exclusions under the governing statute, 19 U.S.C. § 1514, within 180 days of those decisions becoming final," the brief concluded. "Certain CBP decisions do not become final until liquidation, but that is not the case in instances where CBP has imposed an exaction on an importer. Appellants’ protest was timely filed pursuant to Section 1514(c)(3)(B) of the statute, and the Trade Court therefore had subject matter jurisdiction over this dispute under 28 U.S.C. § 1581(a)."