CIT Says Protest Needed to Seek Section 232 Refund

Importer SXP Schulz Xtruded Products needed a protest to properly challenge CBP's failure to apply a Section 232 duty exclusion on four entries of its steel forged and turned bars, the Court of International Trade ruled. Dismissing the case for lack of subject matter jurisdiction, Judge Jennifer Choe-Groves held that SXP could have filed for an extension of liquidation while it was waiting for the Commerce Department to correct the erroneous exclusion it issued or simply have filed a protest, which would have queued up jurisdiction under Section 1581(a).

SXP filed the suit under Section 1581(i), the court's "residual" jurisdiction, claiming it had no valid ground to file the protest since Commerce had not issued a correct exclusion before the 180-day protest period had lapsed. Choe-Groves pointed out the contradiction in the importer's arguments, noting the company timely filed a protest for a fifth entry of the same goods, leading to a refund of the Section 232 duties.

"Because jurisdiction would have been available under 28 U.S.C. § 1581(a) if SXP had timely protested Customs’ classification decisions and because failure to invoke an available remedy within the timeframe prescribed did not render the remedy manifestly inadequate, the Court dismisses SXP’s Complaint pursuant to USCIT Rule 12(b)(1) for lack of subject matter jurisdiction," the opinion said.

SXP imported five entries of the forged and turned bars from April to June 2019. Commerce granted Section 232 exclusions for the products in October of that year, though the agency's decision memo included the wrong submission date. SXP sought a corrected exclusion, which was granted in May 2020, but Commerce made a new error by "reversing the supplier countries." SXP sought another correction, and in Commerce's third attempt, the supplier countries were right, but the original error involving the submission date resurfaced. SXP sought another correction, resulting in a final, fourth exclusion.

During this time, however, the 180-day protest period lapsed, and SXP had filed only one protest for one of the entries, leaving the other four uncontested. The importer filed two suits at the trade court, one under 1581(a) and the other under 1581(i). It prevailed in the 1581(a) suit and received refunds for the Section 232 duties. The government moved to dismiss the 1581(i) case on the grounds the case is moot, saying SXP already received the only remedy it was entitled to and no jurisdiction exists.

Choe-Groves overruled the U.S. on the mootness claim, finding there is a "live controversy" and "relief is not impossible for the Court to grant," though the judge ultimately dismissed the case because SXP could have filed for an extension of liquidation or filed a protest of liquidation. While the importer said there were no grounds to file a protest, the judge said the importer already had three exclusion memos from Commerce showing the exclusion was granted.

The court also pointed to the U.S. Court of Appeals for the Federal Circuit's opinion in ARP Materials v. U.S., which said the importers seeking a Section 301 refund could not invoke 1581(i) jurisdiction since a remedy would have been available under 1581(a) had a protest been filed. Choe-Groves said SXP's suit involved a similar jurisdictional dilemma.

(SXP Schulz Xtruded Products v. U.S., Slip Op. 23-51, CIT # 22-00136. dated 04/19/23; Judge: Jennifer Choe-Groves; Attorneys: Lawrence Friedman of Barnes Richardson for plaintiff SXP Schulz Xtruded Products; Aimee Lee for defendant U.S. government)