CIT Says No Protest Needed Against Deemed Liquidation of Suspended Entries

The Court of International Trade on Jan. 25 said importer Fraserview Remanufacturing Inc. didn't need a protest to file suit at the trade court for its entries that were erroneously deemed liquidated while liquidation was suspended. Judge Timothy Reif said that because the statute for deemed liquidation requires the that entries not be suspended, CBP's notices of deemed liquidation didn't operate to actually liquidate the entries.

As a result, the court said jurisdiction in the importer's case is proper for two of its claims under Section 1581(i), the court's "residual" jurisdiction, as opposed to Section 1581(a), the jurisdictional basis for challenging CBP decisions. Reif dismissed the importer's third claim, which challenged CBP's addition of antidumping and countervailing duties to its entries to "the extent that" CBP's designation "caused actual liquidation to occur." Because the court said the notices of deemed liquidation didn't liquidate the importer's entries, the count was dropped as moot.

Fraserview had imported 80 entries of softwood lumber from Canada that were subject to the first administrative reviews of the AD/CVD orders on softwood lumber from Canada. The Commerce Department suspended the liquidation of the entries while the reviews proceeded, but CBP nonetheless issued notices of deemed liquidation in error. Fraserview brought suit to contest the deemed liquidations under Section 1581(i), prompting a motion to dismiss from the government claiming a lack of subject-matter jurisdiction.

Reif first considered whether a decision is protestable only after an entry has been liquidated, then whether Fraserview's entries were liquidated. In tackling the first question, the judge invoked two key U.S. Court of Appeals for the Federal Circuit precedential opinions, in Juice Farms v. U.S. and Cemex v. U.S.

In Juice Farms, the Federal Circuit said the decision to liquidate entries while suspension of liquidation is in place was protestable, mandating jurisdiction under Section 1581(a). Reif distinguished the present case from Juice Farms by noting that the entries here were deemed liquidated, while the entries in Juice Farms were in fact liquidated. The statute for regular liquidation doesn't require suspension to be lifted, unlike the statute for deemed liquidation, the court held.

In Cemex, meanwhile, the appellate court said notices of deemed liquidation were protestable even though the notice lifting the suspension of liquidation was premature and nonpublic. Reif again distinguished this precedential opinion, noting that in Cemex the suspension of liquidation was in fact removed and CBP received notice of the removal, "but here, none of the prerequisites for deemed liquidation were met."

This distinction prompted a further discussion from the court on whether Fraserview's entries were actually liquidated. Reif cited the Federal Circuit in laying out the requirements for deemed liquidation, which say an entry is deemed liquidated when Commerce removes suspension of liquidation, CBP receives notice of the removal and CBP fails to liquidate the entries within six months of the notice. The court said the entries at issue were never liquidated since the statutory requirements for deemed liquidation under the relevant statute, 19 USC 1504(d), were never met. "To the contrary, Commerce" told CBP that suspension of liquidation was to continue, the court remarked.

The U.S. claimed that the notices of deemed liquidation operated to liquidate the entries, but that is contradicted by the "statute and Customs' own regulations, which make clear that" a notice "may not effectuate a deemed liquidation under Section 1504 while liquidation of the subject entries remains suspended." CBP's regulations say that deemed liquidation occurs at the end of the "appropriate statutory period" under Section 1504 and not "on the date that the bulletin notice of deemed liquidation is posted," as the U.S. argued.

The government also argued that CBP made a protestable "clerical error, mistake of fact, or other inadvertence" by issuing the notices of deemed liquidation. Reif first found that a "mistake of fact" in any liquidation may be protested "after the entry is liquidated." The deemed liquidation notices were issued while the entries remain suspended, so the notices "did not involve a protestable mistake of fact," the court said.

Reif let Fraserview's first two claims in the case proceed. In them, the importer is seeking declaratory judgment from the court against the deemed liquidations and an order from the court under the Administrative Procedure Act setting aside the deemed liquidations.

(Fraserview Remanufacturing Inc. v. United States, Slip Op. 24-8, CIT # 22-00244, dated 01/25/24; Judge: Timothy Reif; Attorneys: Heather Jacobson of Nakachi Eckhardt for plaintiff Fraserview Remanufacturing Inc.; Mathias Rabinovitch for defendant U.S. government)