CAFC Says No Challenges to Extensions of Liquidation Until Entry Liquidates
A proper extension of liquidation cannot be challenged in court before the entry liquidates, said the U.S. Court of Appeals for the Federal Circuit in a decision issued June 24. Only if CBP doesn’t extend liquidation or gives improper notice to the importer can a lawsuit be filed to obtain a court order that says its entries have liquidated, said CAFC as it affirmed the Court of International Trade’s decision that it couldn’t hear a lawsuit related to extensions of liquidation while the entries were under CBP and ICE investigation.
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During 2009 and 2010, MCI and Chemsol entered citric acid from India and the Dominican Republic. At the same time, CBP and ICE began an investigation into whether Chinese citric acid was being transshipped through other countries to evade AD/CV duties. CBP and ICE requested information from MCI and Chemsol several times on their entries, and MCI and Chemsol said they complied fully with the requests. Citing the continuing investigation, CBP extended the liquidation deadline, in some cases more than once. CBP did not exceed the three allowable one-year extensions to the liquidation deadline.
MCI and Chemsol eventually brought suit at CIT, arguing that CBP was unjustified in extending the liquidation deadlines because it wasn’t using the extensions to request more information. It filed the lawsuit under 28 USC 1581(i), a “residual” provision for trade cases that aren’t normal challenges of CBP protests under 28 USC 1581(a) or trade remedy cases under 28 USC 1581(c), among other types of cases. To bring a case under Section 1581(i), no other remedy can be available to the importer.
CIT found that it couldn’t hear the Section 1581(i) case because the importer could wait until the entry liquidated, protest the liquidation, and challenge the denied protest under Section 1581(a). Thus, the “residual” provision wasn’t available, and the importer would have to wait, it said (see 13032104). It also found that, for practical purposes, allowing MCI and Chemsol to interrupt the investigation by forcing liquidation “would severely undermine Customs and ICE’s ability to conduct meaningful investigations into possible fraudulent activity.”
On appeal, CAFC agreed that the case should be dismissed. “Customs’ decision to extend the liquidation period is a normal, if infrequent, part of its processing of entries … and the propriety of an extension made with proper notice may only first be challenged before Customs in an administrative protest after liquidation,” it said. “Only where Customs fails to extend the liquidation period, or fails to notify the importers of an extension as required by statute … may importers seek a declaration that their entries have liquidated by operation of law once the deemed liquidation period has passed,” said the Appeals Court.
Section 1581(i) Foreclosed by Future Availability of Remedy, Says CAFC
MCI and Chemsol argued that use of the residual Section 1581(i) provision was possible because filing under any other law was unavailable. Citing an earlier CAFC opinion, it said that jurisdiction is determined at the time a case is filed. At the time MCI and Chemsol filed their challenge there had been no liquidation to protest, so no denied protest could be challenged under Section 1581(a), it said.
CAFC said that interpretation was based on a misunderstanding. “It is the availability of jurisdiction under Section 1581(i) that must be determined at the time of filing, not the immediate availability of possible resort to another subsection of Section 1581,” it said. “The CIT has repeatedly and correctly held that when relief is prospectively and realistically available under another subsection of 1581, invocation of subsection (i) is incorrect.” In this case, Section 1581(a) will be available once the entry liquidates, and MCI and Chemsol will have to wait until that happens to bring its challenge, said CAFC.
(Chemsol, LLC v. U.S., Fed. Cir. No. 13-1402, dated 06/24/14, Judges O’Malley, Meyer and Wallach)
(Attorneys: Russell Semmel of Neville Peterson for plaintiffs-appellants Chemsol, LLC and MC International, LLC; Claudia Burke for defendant-appellee U.S. government)