CAFC Affirms Denial of Ford NAFTA Claims in Dispute Over Certificate of Origin Waivers
The U.S. Court of Appeals for the Federal Circuit affirmed the denial of NAFTA treatment to Ford auto parts imported from Canada (here), finding CBP can apply different certificate of origin waiver requirements to reconciliations than it does to regular post-importation claims. The Jan. 6 decision was marked by a lengthy dissent from Circuit Judge Jimmie Reyna, one of the few Federal Circuit judges with a background in trade.
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The long-running dispute originated from a 1997 entry at the Port of Detroit. According to Reyna’s dissent, importers were having difficulty getting NAFTA certificates of origin due to the complexity of their supply chains, particularly in the automotive industry. CBP’s reconciliation program was developed partially for this reason. Yet at the time of Ford’s entry, reconciliation had not yet gone into effect, so Ford submitted its entry and paid duties and determined to submit its certificate at a later date.
Though Ford had set up informal reconciliation programs at other ports, it met resistance from CBP Detroit. It continued to submit its entries and pay duties as it attempted to set up a way to electronically file its certificates with the port. Once it became apparent that no agreement would be reached with the port, it submitted its certificates on paper during the last half of 1998. The port denied Ford’s Section 1520(d) claims because the certificates were filed past the one year deadline, and declined to grant a waiver – a waiver it subsequently granted to NAFTA claims submitted through CBP’s newly developed reconciliation program.
Now on its third review by CAFC, the government was tasked with explaining why it was able to grant the waiver for the claims filed through reconciliation, but not through normal 1520(d) processes (see 13050617). The government had told the Court of International Trade that the reconciliation program and 1520(d) claims are subject to two different sections of law, with reconciliations eligible for a waiver of “presentment,” but 1520(d) claims only getting a waiver of “possession” (see 14051232). The different recordkeeping requirements, along with the fact that reconciliations are covered by continuous bonds, justifies CBP’s greater caution when deciding whether to waive certificate requirements, CIT had ruled.
The Federal Circuit majority agreed, finding reasonable CBP’s interpretation that reconciliations are covered by laws and regulations on entry, while post-importation NAFTA claims are instead covered by Section 1520(d). Though Ford argued that interpretation was only developed in response to the court case, CAFC found CBP could have held the interpretation but never had reason to justify it before it was asked by the court.
Reyna’s dissent argued that all post-importation NAFTA claims are covered by the requirements of Section 1520(d). If CBP has the discretion to waive “presentment” for reconciliation NAFTA claims, then it has the power to also do it for regular 1520(d) claims, he said. “The fact that Customs issued an informal, across-the-board ‘presentation’ waiver for refund claims filed through reconciliation through notice in the Federal Register illustrates that it could have waived presentment here, particularly when it had no reason to do so,” he said. The fact that bonds are not required for 1520(d) claims isn’t relevant in Ford’s case, because Ford deposited all duties owed with the entry, noted Reyna. Under the Federal Rules of Appellate Procedure, any petition for rehearing from Ford would be due in in the next 45 days.
(Ford Motor Company v. U.S., CAFC # 2014-1581, dated 01/06/15, Judges Prost and Lourie, Reyna dissenting)