CIT Says Protest Needed to Challenge Illegally Liquidated EAPA Entries

Pencil importer Royal Brush Manufacturing was required to file protests before it could challenge CBP's allegedly improper liquidations under an Enforce and Protect Act antidumping duty evasion investigation, the Court of International Trade ruled on Dec. 15. Dismissing the company's case for lack of jurisdiction, Judge Mark Barnett echoed the U.S. Court of Appeals for the Federal Circuit's ruling in Juice Farms v. U.S. in ruling that "all liquidations, whether legal or not, are subject to the timely protest requirement."

The liquidations occurred prior to the trade court's preliminary injunction order against liquidation in the lawsuit. The protests were required to "forestall the finality of liquidation and preserve its ability to obtain refunds," Barnett said. The importer makes no argument that the statute's protest procedures "were unavailable or manifestly inadequate," the decision said.

Royal Brush's lawsuit made waves after the Federal Circuit said CBP violated the company's due process rights by not giving it access to business confidential information in the EAPA proceeding (see 2307270038). After succeeding on the due process claim, the importer faced another dilemma: CBP had already liquidated its entries. In all, the company imported five entries -- two of which were assessed the AD on cased pencils from China and three of which were allowed to enter the U.S. duty-free.

On appeal, the U.S. tried to dismiss the case for lack of subject-matter jurisdiction, but the appellate court kept it alive. The Federal Circuit said that the EAPA statute does not require a protest of a liquidation and that, for the three entries without AD, Royal Brush had nothing to protest since it was not assessed AD. The court added that for the duty-free entries, review is not moot since CBP could seek reliquidation, making Royal Brush potentially liable for civil penalties.

Barnett noted that the Federal Circuit's decision "establishes that when CBP erroneously liquidates entries for which suspension applies pending an EAPA determination," a protest is not required for judicial review of an evasion determination. It also established that liquidation without any payment of AD doesn't "moot the action" where the government could take subsequent action based on the EAPA determination.

However, in the decision, Barnett found there is no way to order reliquidation in EAPA cases where there was no protest filed.

Ruling on the duty-free liquidations, Barnett said that the government is bound by the "the statutory constraints on relief for erroneous liquidations" just as importers are. While the government made no claim for reliquidation, EAPA alleger Dixon did, claiming that the law lets CIT order "any other form of relief" in a civil action, including a reliquidation order.

While CIT has ordered reliquidation in cases filed under Section 1581(i), the court's "residual" jurisdiction, the court has long refused to order reliquidation in lawsuits under Section 1581(c) -- the source of all AD/CVD actions. Since EAPA cases are Section 1581(c) lawsuits, and liquidation is found to be final and conclusive on all parties in these cases, reliquidation may not be ordered. The U.S. also conceded that the civil penalty statute may not apply here since the statute of limitations had run on all entries at issue.

On the Royal Brush entries that were assessed the AD duties, the Federal Circuit said review was available since the EAPA statute does not require a protest of liquidation. Barnett noted that this doesn't answer whether the court can grant "any effectual relief whatever" for the entries. Barnett ruled that, for clarity's sake, "the court here concludes that Royal Brush is precluded from obtaining refunds in connection with the duty-assessed entries based on" its failure to protest.

In reviewing the court's authority, Barnett discussed both 19 USC Sections 1516 and 1517. The former provides for a "court-ordered injunction on liquidation," while the latter allows for the suspension of liquidation for entries made on or after the start of the investigation and up to the date of a final decision. For both of these sections, "Congress specified the scope and standard of judicial review," setting limits on the types of determinations on which injunctions or suspensions are allowed. Neither allows CIT to review liquidated entries or allows reliquidation, Barnett said, citing the rule established in Zenith Radio Corp. v. U.S.

This rule was applied to the case of illegally liquidated entries in Juice Farms, in which the Federal Circuit dismissed the case for lack of jurisdiction. "So too here," Barnett noted. Royal Brush needed to file a protest to obtain its right to obtain refunds, so its failure to do so ends the case under Section 1514.

(Royal Brush Manufacturing v. United States, Slip Op. 23-177, CIT # 19-00198, dated 12/15/23; Judge: Mark Barnett; Attorneys: Ronald Oleynik of Holland & Knight for plaintiff Royal Brush Manufacturing; Antonia Soares for defendant U.S. government; Felicia Nowels of Akerman for defendant-intervenor Dixon Ticonderoga Co.)