US Misread Statute on Deemed Liquidation of Drawback Claims, Importer Tells CIT

The U.S. misread the statute governing deemed liquidation for drawback claims to create exception to the rule where none exists, importer Performance Additives argued Dec. 26 (Performance Additives v. United States, CIT # 22-00044).

The liquidation statute says that "except as provided in subparagraph (B) or (C)," a claim for drawback not liquidated within one year of entry is deemed liquidated at the drawback amount claimed by the claimant. In its reply, the U.S. said the phrase "[e]xcept as provided in subparagraph (B) or (C)," particularly subparagraph (B), shows that these subparagraphs create a "general exception to the rule of deemed liquidation" for drawback claims.

Performance Additives argued in reply that they don't. Subparagraph (B) allows a claimant to obtain a deemed liquidation for a claim that wasn't deemed liquidated under subparagraph (A) and, as such, is inapplicable here. The U.S. interpretation of subparagraph (B) "overlooks the fundamental rule that a statute must be read as a whole," the brief said. The subparagraph "does not create a broad exception to the 'deemed liquidation' provision," the importer argued.

For starters, the subparagraph deals with "unliquidated imports," requiring the reader "to ask a single question: Are any of the underlying consumption entries in the drawback claim unliquidated?" If they are, the remedy here may be pursued, but if not, the subparagraph doesn't apply. Since all entries at issue here had been liquidated within the one-year provision, this provision doesn't apply.

"There is no basis for this Court to insinuate such exclusionary language into an otherwise clear statutory provision," the brief said, adding that reading the statutes as written in this case "does not produce an absurd result."

The case concerns a pair of the drawback claims for the company's petroleum derivatives made in 2016 and 2020. In 2015, CBP approved applications for drawback privileges and accelerated payment of drawback for the importer. The agency then made accelerated drawback payments between 2016 and 2020 but never affirmatively liquidated the underlying claims. In July 2020, CBP told Performance Additives that its payment of drawback was suspended and then liquidated all claims without benefit of drawback, including those on which accelerated payment had been paid.

Performance Additives protested the liquidations, which CBP denied, stating that a drawback claim wasn't deemed liquidated since all of the entries weren't liquidated and final within one year of the claim being filed. The importer took to the trade court to contest the move, claiming that the two drawback claims had been deemed liquidated when CBP later tried to attempt liquidation (see 2309010051).