New CBP Policy on Reliquidation of Entries Deemed Liquidated Harmful, Arbitrary, Says Court Complaint
CBP’s position that it can reliquidate entries that deemed liquidated years prior “runs counter to reason” and the statutes of limitations under which CBP operates, according to a complaint filed recently by Consolidated Fibers at the Court of International Trade. The company is challenging CBP’s decision to reliquidate an entry three years after it deemed liquidated in order to increase the amount of antidumping duties owed. Consolidated Fibers also says the additional three years CBP took to decide its protest while interest continued to accrue was abusive and compounded “the harmful effect of its arbitrary actions.”
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The dispute stems from an entry of polyester staple fiber exported by Dongwoo Industry Co. from South Korea in December 2005. Dongwoo didn't have its own exporter-specific AD duty rate, so Consolidated Fibers posted a cash deposit at the all others rate of 7.91%. Liquidation of the entry was suspended while Commerce conducted an administrative review covering the period. When Commerce completed its review in 2008, assigning Dongwoo its own 48.14% AD rate, it instructed CBP to lift suspension of entries and liquidate entries from Dongwoo at the new, higher rate. But CBP didn’t act on Consolidated Fibers’ entry. Six months passed, triggering deemed liquidation. It wasn’t until May 2011 that CBP realized the entry had deemed liquidated and noticed Consolidated Fibers. It reliquidated the entry at the 48.14% AD rate shortly thereafter.
Consolidated Fibers filed a protest in 2011. It wasn’t until April 2014 that CBP issued a ruling denying the protest, holding that the reliquidation was legal because it was within the 90 day period prescribed by its regulations for reliquidations of entries deemed liquidated (see 14061818). Under 19 CFR 173.3, the port director may reliquidate "on his own initiative" within 90 days from the date the notice of deemed liquidation is given to the importer, said the ruling, as well as a separate ruling CBP issued in May for a separate company (see 14080712). Regardless of when the entry deemed liquidated, CBP posted its notice of deemed liquidation in May of 2011 and reliquidated the entry in two months later, meaning reliquidation was proper, it said. Consolidated Fibers filed its summons beginning a court challenge in September (see 14092328).
In its Oct. 10 complaint, Consolidated Fibers argues CBP incorrectly found that it can give notice of liquidation at any point in time and then reliquidate the entry within 90 days of that notice. Although 19 USC 1501 permits reliquidation “within ninety days from the date on which notice of the original liquidation is given or transmitted to the importer,” the provision does not remove limitations in 19 USC 1504 that “cut off the ability for CBP to liquidate after a prescribed time period,” said Consolidated Fibers, represented by Gregory Menegaz of DeKieffer & Horgan. To read otherwise “completely disregards the statutes of limitations under which CBP otherwise operates,” it said. In any case, the notice of deemed liquidation CBP relied upon to reliquidate the entry was unlawful because it was not issued “within a reasonable time of the deemed liquidation” under 19 CFR 159.9,” says the complaint.
Additionally, CBP is only allowed by 19 USC 1501 to reliquidate entries that have deemed liquidated in order to correct errors that hurt the importer. Deemed liquidation within six months of the importer is “intended to protect importers by giving them finality as to their duty obligations.” Permitting CBP to reliquidate an entry years after deemed liquidation “runs counter to reason and the finality purpose of deemed liquidation,” says the complaint.
Finally, the interest accrued during the three years Consolidated Fibers waited for its protest to be decided, “after repeated refusals to discuss the merits” with its lawyer, compounded the harmful effect of CBP’s actions, it said in the complaint. In total, Consolidated Fibers was charged six years of additional interest instead of the three that should have been charged had CBP correctly liquidated the entry in 2008. “CBP’s pre-litigation conduct was abusive, arbitrary, and capricious,” said Consolidated Fibers. “For this independent reason, the Court should declare reliquidation null and void.”
Consolidated Fibers is asking the trade court to declare invalid CBP’s general interpretation that the 90 day period for reliquidation runs from the date notice is provided to the importer. It is also asking the court to declare that its own entry deemed liquidated at the “as entered” rate, and that CBP’s reliquidation was invalid. Consolidated Damages is also asking for damages to remedy the three-year delay for CBP to decide its protest, and attorney’s fees to cover its costs. The government's answer brief is currently due in mid-December.
(Consolidated Fibers, Inc. v. U.S., Court of International Trade #14-00222)