CIT Says Different Recordkeeping Requirements Apply to Reconciliation, Post-Importation Claims
Reconciliation and post-importation duty free claims are two separate programs that rely on two separate sets of laws and have different recordkeeping requirements, said the Court of International Trade May 9 as it sustained CBP’s denial of a post-importation NAFTA claim because of a late certificate of origin. The U.S. Court of Appeals for the Federal Circuit had ordered CBP to explain why it consistently grants waivers of certificates of origin for reconciliation entries, but didn’t afford the same treatment to Ford. CBP explained that differences in the programs mean it is able to waive only the filing of the certificate for reconciliation, but can only irreversibly waive “possession” for post-importation claims.
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CAFC Orders Explanation of Waiver Inconsistency
Ford imported some auto parts from Canada in June 1997. At the time of entry, Ford did not claim that the goods were eligible for NAFTA duty-free treatment. Instead, In May 1998, 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.
Both CIT in 2011 and the Court of Appeals for the Federal Circuit in 2013 found that Ford’s post-importation NAFTA claims were correctly denied by CBP as untimely filed (see 11113017) and 13050617). But CAFC, noting that CBP automatically waives the requirement to present certificates of origin for duty-free claims filed under the reconciliation program, wondered why CBP took such a hard line with Ford on filing its certificate of origin in the context of a post-importation claim. "Absent a reasonable explanation, an agency may not simultaneously interpret the same statute in two different ways," the court said as it remanded for further explanation.
Two Different Programs Have Different Recordkeeping, Waiver Requirements
CBP’s answer was that the two programs don’t operate under the same statute at all. A reconciliation filing is considered an entry, said CBP. That means reconciliation-related forms and documents are subject to recordkeeping requirements for entries. For entry records, CBP may waive the requirement that an importer present documentation. So for waivers of certificates of origin filed under the reconciliation program, the importer must still keep the certificate of origin even if it doesn’t have to be presented, and CBP can impose penalties if an audit finds the importer doesn’t have it.
But post-importation claims are not considered entries, said CBP. They’re subject to different recordkeeping requirements. A key difference is that, under 19 CFR 181.22(d)(1), the waiver of the certificate of origin in a post-importation claim is a waiver of possession, not presentment. That means the waiver is irreversible.
“Waiving possession is different from waiving presentment,” said CIT. “Customs cannot ask an importer to later produce a [certificate of origin] if it has already excused the importer from ‘possessing’ that very document.” Given that fact, it makes sense that CBP would automatically grant waivers for reconciliations, while simultaneously denying Ford’s waiver in the context of a post-importation claim, said CIT.
(Ford Motor Company v. U.S., Slip Op. 14-53, dated 05/09/14, Judge Barzilay)
(Attorneys: Robert Silverman of Grunfeld Desiderio for plaintiff Ford Motor Company; Stuart Delery for defendant U.S. government)