Government Counterclaim in Dried Botanicals Case Shouldn't Be Tossed, DOJ Argues

DOJ argued that its counterclaims against an importer in a tariff classification case on dried botanicals should be sustained by the Court of International Trade, despite similar counterclaims being rejected. In an April 6 brief, DOJ said that the importer, Second Nature Designs, claimed "only that the Government has failed to state a claim" and that "such a claim is barred by the statutory finality of liquidation" (see 2303030015) rather than making a jurisdictional argument (Second Nature Designs v. U.S., CIT # 18-00131).

The allegations provided by the government are sufficient to state a counterclaim, DOJ argued. An opinion in an earlier case involving Second Nature held that "if the Government’s proposed classification relates to the same entries as the protest, it is not barred by the finality of liquidation," DOJ said. The court simply ruled that the government has no cause of action for a counterclaim for increased duties, but is not barred from arguing for a different classification at a higher duty rate, DOJ said.

Recent decisions by the court in another Second Nature case (see 2207250040) and in Cyber Power Systems v, U.S. (see 2207200052) held that the government lacks a cause of action to assert counterclaims for underpaid duty on the same merchandise for which plaintiff claims a duty refund.

The finality of liquidation never attached because Second Nature protested the classification of its merchandise, the government said. That protest avoided finality to all parties, including the government, and, because the proper classification of the goods is the open issue, the government is not prevented by liquidation from filing a counterclaim. A plain reading of the statutory language prevents finality of liquidation from attaching to any person, including the government, when a protest has been filed and an action commenced at the trade court, DOJ argued.

The "correctness of duty liability" is the heart of the case brought by Second Nature, so the government is authorized to recover customs duties relating to the merchandise at issue and the court is authorized to render judgment, DOJ said.