CAFC Says Certificate of Origin Subject to One-Year Deadline for NAFTA Refund Claims

Certificate of Origin Filed Over One Year Past Import Date

Ford imported a shipment of auto parts from Canada into the Port of Detroit in June 1997. At the time of entry, Ford did not claim that the goods were eligible for NAFTA duty-free treatment. In May 1998, within a year of the date of importation, Ford filed a post-importation NAFTA claim for refund of duties. But Ford didn't submit the certificate of origin associated with the entered goods until November 1998, over a year after the date of importation. The U.S. Customs Service, as it was known at the time, denied Ford's claim, because it said the certificate of origin was a component of the post-importation NAFTA claim, and so was also subject to the claim's one-year time limit.

Ford protested the denial, and upon denial of its protest filed suit at the Court of International Trade. CIT said it did not have jurisdiction to hear the case, because CBP's denial of its claim was in effect a denial for untimely filing, and not protestable (see 10011940). On appeal, CAFC reversed the lower court's decision, finding CIT did have jurisdiction to hear the case (see 11032320). According to the appeals court, saying the denial of a claim is not protestable simply because CBP does not rule on the merits of the protest would prevent protests of claims that are erroneously denied. In November 2011, on remand, CIT ruled that the certificates of origin were untimely filed, and CBP was correct in its denial of the claim (see 11113017). According to CIT, a valid claim only exists when the importer has filed all required documentation, including the certificate of origin. Ford's claim was therefore filed late.

Treaty, Statute, and Regs All Require C.O. Within One Year; Waiver Doesn’t Apply

First considering the question of whether certificates of origin are required to be filed within the same one-year time limit as NAFTA post-importation claims, the appeals court ruled that CIT and CBP were correct. The NAFTA treaty, the applicable statute at 19 USC 1520(d), and the applicable regulation at 19 CFR 181.32(b) are all clear in requiring the complete post-importation NAFTA claim, including the applicable certificate of origin, to be filed within one year of importation, the court said. This requirement is supported by other regulations; 19 CFR 181.23(a) says the port director may deny preferential tariff treatment if the importer fails to comply with any of the NAFTA regulations, including submission of a certificate of origin, CAFC said.

Section 10.112 of the customs regulations does not allow for late submission of certificates of origin to support post-importation NAFTA claims either, CAFC said. That provision allows late submission of documentation to support a claim for duty-free or reduced duty treatment, so long as the failure to file the document was not due to willful negligence or fraud. But while Section 10.112 should be read broadly, it cannot overrule the statute's clear requirement that certificates of origin for NAFTA post-importation claims be filed within a year, CAFC said.

Remanded to Explain Different Treatment for Reconciliation Program

While ruling CBP's time limit for filing of certificates of origin is supported by the law, the appeals court noted that CBP waives the one-year time limit for post-importation claims filed under the reconciliation program. CAFC said the question of why CBP interprets 19 USC 1520(d) on post-importation NAFTA claims differently for reconciliation program and paper submissions remains unanswered. So does the question of why CBP treats reconciliation filers different from paper filers, the appeals court said. CAFC remanded so that CBP can explain its differing interpretations of the statute. "Absent a reasonable explanation, an agency may not simultaneously interpret the same statute in two different ways," the court said.

Dissent Says Waiver of Time Limit Should Apply

Judge Newman dissented from the ruling, arguing that Section 10.112 applies to post-importation NAFTA claims as well, and therefore Ford's late certificate of origin should have been accepted. "The NAFTA statute and regulations do not overrule or qualify or even mention this earlier regulation, although this regulation was not obscure, and has been widely applied in Customs transactions," Newman said. "It cannot be presumed that by silence such an important and useful benefit was intended to be eliminated as to Canada and Mexico even as the purpose of the NAFTA is to support and ease trade with Canada and Mexico."