CBP Protest 'Approval' Doesn't Mean Protest Allowed, Automatically Trigger Refund, CIT Says
A CBP import specialist marking a protest “approved” does not automatically trigger CBP’s obligation to grant a refund, the Court of International Trade said in a decision publicly released Nov. 8. Though it denied the government’s motion to dismiss the case for lack of jurisdiction, the court eventually sided with CBP by ruling that the act of reliquidation and the associated calculation of excess duties is what allows a protest, not the checking of a box on the protest form.
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Erwin Hymer Group North America had filed the protest at issue in the case on the classification of 149 entries of recreational vehicles in 2014, claiming that the entries were U.S. goods returned and should have been duty free. A CBP import specialist evidently agreed, checking the approved box. But acting on orders from higher-ups, the import specialist eventually changed the protest’s status in ACS to suspended pending the outcome of CIT litigation, in part due to the importer’s own instructions on the protest’s cover letter.
Erwin Hymer filed suit, arguing that CBP’s approval of the protest automatically triggered CBP’s obligation to refund excess duties. It sought a court order compelling CBP to issue the refund. The government contended that it was within its rights to change the protest’s status. It also said Erwin Hymer had no right to bring the suit at CIT because the court only has jurisdiction over denied protests under 28 USC 1581(a).
The court first found it has jurisdiction to hear challenges like this one, wherein an importer’s protest has been allowed but no refund has been paid. Under the court’s residual jurisdiction in 28 USC 1581(i), the court can hear challenges to administration of the trade laws, including those related to revenue from imports. The procedures for allowing a protest and granting refunds “involve the administration and enforcement of the laws providing for the revenue from imports, not reviewable by any other jurisdictional route,” CIT said.
But CBP did not act improperly when it failed to refund excess duties, CIT said. “The statutory and regulatory scheme establishes reliquidation as the act which allows a protest,” CIT said. The protest statute says CBP must “allow or deny” a protest, and “thereafter” refund any excess duties. “Since CBP must be prepared to refund any duties” when it allows a protest, “an allowance must, by its nature, involve the calculation of the excess duties paid, if any,” the trade court said. The amount of excess duties is determined at liquidation, so Erwin Hymer’s protest “was not allowed because reliquidation [did] not occur and, therefore, CBP has not failed to perform any mandatory, nondiscretionary duty,” CIT said.
The marking of the protest as approved by the import specialist “may have indicated an initial determination regarding the protest; however, nothing in the statutory scheme indicates that an “approval” triggers any mandatory CBP actions,” CIT said. Protests are allowed or denied, not “approved," and “there is no reason to believe” the two terms are synonymous, it said.
(Erwin Hymer Group N. Am., Inc. v. U.S., Slip Op. 17-151, CIT # 16-00133, dated 11/03/17, Judge Kelly)
(Attorneys: John Peterson of Neville Peterson for plaintiff Erwin Hymer Group North America, Inc.; Marcella Powell for defendant U.S. government)