Government Counterclaim on Steel Tubes Creates Constitutional Issues, Importer Argues

Granting a government counterclaim that unfinished steel tubes are subject to Section 301 tariffs and imposing the additional duties would be an unconstitutional action by the Court of International Trade "imposing a tax solely based on judicial power," Maple Leaf Marketing argued in a May 12 brief at the Court of International Trade (Maple Leaf Marketing v. United States, CIT # 20-03839).

The counterclaim "potentially infringes" on the Constitution by stating that a cause of action arose from Maple Leaf's decision to contest its protest denial. If the filing of an action grants the government a previously non-existent cause of action, that would effectively deny equal protection to those who seek judicial review, Maple Leaf said. If the Court were to assess a duty that the taxing agency did not, it would create "significant separation of powers issues."

The court lacks the power to award duties above the amount that CBP imposed in its final statutory assessment, Maple Leaf said. Although CIT is granted jurisdiction over counterclaims, that grant does not allow the government to assess duties in excess of the liquidated final amounts, Maple Leaf argued, noting that the Supreme Court has "counseled strongly against inferior courts inferring causes of action from grants of subject matter jurisdiction."

In addition, the “finality of liquidation” provision limits the government’s ability to seek additional duties once the liquidation is final, Maple Leaf said. "After at least 90 days have elapsed from the liquidation or reliquidation of an entry, CBP is barred from changing its liquidation/reliquidation decision," Maple Leaf said. The statute allows only two exceptions to the finality of liquidation, neither of which allows the Government to increase duty assessments or request the court to do so.

"The finality of liquidation is meant to safeguard importers from arbitrary, capricious or tardy actions by the Government," and the statute is designed exclusively for correcting determinations adverse to the importer and is not intended to allow the government to correct actions that may be detrimental to CBP, Maple Leaf argued.

Contrary to the government's argument, the filing of a protest does not delay the finality of liquidation, Maple Leaf said. If an importer’s filing of a protest allows CBP to skirt the finality of liquidation, it would "effectively render the finality of liquidation meaningless" and expose importers to the possibility of unlimited changes to their liquidation decisions, Maple Leaf said.