CIT Rules CBP’s Lack of Action on Protest Does Not Constitute Denial
In Hitachi Home Electronics (America), Inc., v. U.S., the Court of International Trade granted Customs’ motion to dismiss an action by Hitachi to challenge the rate of duty on imported plasma flat panel televisions, for lack of jurisdiction.
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The TVs were made or assembled in Mexico in 2005. Customs liquidated them as dutiable under HTS 8528.12.72 at a rate of 5% ad valorem. Hitachi claimed that the TVs qualified for duty-free treatment under NAFTA, and filed timely protests of the duty rate along with the required documentation.
Customs never denied the protest, and in May 2009, Hitachi filed a summons and complaint requesting action by the court which, it argued, had jurisdiction under 28 USC 1581(a) or 28 USC 1581(i).
The CIT found that it did not have jurisdiction under 1581(a) to rule on the duty rate dispute since Customs had not yet denied the protest, and that 19 USC 1515(a) does not provide for a deemed denial. A deemed denial however, is provided for in 1515(b) after an importer has requested accelerated disposition of its protest. Thus, jurisdiction under 1581(a) would have been available if Hitachi had waited for a denial of its protest, or if it had requested an accelerated disposition of its protest pursuant to 1515(b).
Hitachi also argued that the Court had jurisdiction under 1581(i) because under 1515(a), Customs is required to act on a protest within two years, and that Customs’ failure to act within the statutory period would result in an allowance of Hitachi’s protest by operation of law.
The CIT, however, stated that, as has long been held, the relevant deadline in the 1515(a) was “directory” and not mandatory, since Customs was not expressly prohibited from acting after the specified time period and no adverse consequences are imposed for a delay. The Court added that no authority has ever recognized that an inaction by Customs might result in a deemed allowance. Since the protest was never allowed as argued by Hitachi, it remains open, and jurisdiction is not available under 1581(i).
The CIT made its decision both because the protest had never been denied by Customs and the fact that the lack of action by Customs in the two year period would not have resulted in granting a refund by operation of law. The CIT granted Customs’ motion to dismiss for lack of jurisdiction without prejudice.
Slip Op 10-46 (dated 04/30/10) available at http://www.cit.uscourts.gov/slip_op/Slip_op10/10-46.pdf