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Challenge to Lack of Section 301 Refund Not an Entry-Specific Matter, Importers Tell Federal Circuit

A CBP protest was not needed to establish jurisdiction in two companies' challenge to CBP's assessment of Section 301 tariffs on goods subsequently granted a tariff exclusion since the challenge is not an entry-specific matter, the companies, ARP Materials and Harrison Steel, said in a Feb. 7 brief. Replying to the U.S.'s arguments at the U.S. Court of Appeals for the Federal Circuit, the plaintiff-appellants said that their challenge has jurisdiction under Section 1581(i), the trade court's "residual" jurisdiction provision, since the action relates to CBP's imposition of the requirements of an "inapt statute" to all the entries excluded from tariff lists 2 and 3 (ARP Materials Inc. v. United States, Fed. Cir. #21-2176).

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The exclusions had been issued by the Office of the U.S. Trade Representative after the 180-day protest deadline had passed for the entries at issue in the case, leading the importers to file their initial suit at the Court of International Trade under Section 1581(i). CIT ruled that since CBP's decision to subject the entries to Section 301 duties was a tariff classification dispute, it should only have jurisdiction under Section 1581(a) and that a protest was needed to effectuate the Section 301 refunds (see 2106110053).

On appeal, ARP and Harrison said that their challenge is not an entry-specific matter, and as such, does not require a protest. "We believe that the Trial Court erred when it construed the Plaintiffs-Appellants’ claims as objections to classification, on a theory that CBP classified the goods and Plaintiffs-Appellants were not happy with CBP’s classification," the brief said. Rather, ARP and Harrison had no issue with the regular classification nor the secondary classification, since they were right at the time of entry.

"Extrinsic decisions by the USTR, independent of CBP input, and the USTR published changes to the Chapter 99 designations USTR originally created and then changed were the cause for Plaintiffs-Appellants to become entitled to refunds of Section 301 duties, not any error, mistake or improper action by CBP before, during or after the entries were liquidated," the brief said.

The plaintiffs-appellants said that the trade court and the Justice Department "accept as somehow legitimate" that CBP imposed limitations on the decisions of the USTR. CBP said in a notice, not published in the Federal Register, that an importer can request a refund for an entry brought in beyond the post summary correction filing time frame by protesting the liquidation if within the protest filing deadline. "The Trial Court speaks as if that was a perfectly logical response to the exercise of arbitrary government power for importers to file protests on $550 billion of merchandise from China," ARP and Harrison said. But by the time the exclusions were issued, it was too late for Harrison to file protests, the company said.

ARP and Harrison also tacked on a due process claim to their jurisdictional appeal, arguing that this protection, along with the Administrative Procedure Act, is not an entry-specific concern. The plaintiff-appellants said that the APA says that no one can be adversely affected by an agency action that requires a rulemaking where no such process took place. Giving CBP "free rein" to set up the process for implementing the retroactive exclusions violated the APA, the brief said.

"This is not a class action, nor has a class been sought to be certified," ARP and Harrison said. "Nonetheless, had there been a more complete notice-and-comment rulemaking, Plaintiffs-Appellants and others could have participated to prevent the arbitrary and capricious imposition of protest time limits on the USTR’s non-protestable decisions. CBP was entirely at the disposal of the USTR as to what amount of Section 301 duties was to be collected and what amount would be refunded. ... The USTR decisions were to provide retroactive refunds of ALL 301 duties that had been paid on List 2 and 3 excluded items. It was not within CBP’s authority to countermand those decisions. Yet it did."