CIT Says Importers May Claim GSP Through Protests

Zojirushi had filed its protest to claim GSP in September 2014, just one month after CBP adopted the policy change. In August that year, CBP had sent a letter to the ports directing them to no longer accept protests claiming benefits under preferential trade programs and free trade agreements that aren’t subject to post importation claims under 19 USC 1520(d), which includes GSP, the African Growth and Opportunity Act (AGOA), the Caribbean Basin Economic Recovery Act (CBERA), the Caribbean Basin Trade and Partnership Act (CBTPA), the Civil Aircraft Agreement, U.S. Insular Possessions, the Intermediate Chemicals for Dyes provisions, the Pharmaceutical Products Agreement, and FTAs with Australia, Bahrain, Israel, Jordan, Morocco and Singapore. As directed, the Port of Los Angeles/Long Beach in December returned the protest marked “rejected as non-protestable.” Zojirushi filed suit the following September.

CBP had based its new policy largely on two decade-old cases wherein the Federal Circuit held the importer (Xerox and Corrpro, respectively) could not file a protest to claim NAFTA duty preferences because no post-importation claim under 19 USC 1520(d) had been filed and therefore no protestable event had occurred. A ruling issued by CBP in 2012, HQ H193959, wherein CBP applied that logic to the Singapore FTA and found the importer couldn’t protest because it hadn’t made a valid preference claim at entry, had been listed on Zojirushi’s protest as the reason for refusal. Customs lawyers in the wake of the change had called the new policy fertile ground for a legal challenge (see 14082209).

CIT Judge Timothy Stanceu ruled that the two court decisions are inapplicable to GSP claims and that customs laws and regulations do not preclude the filing of GSP claims through protests. In Xerox and Corrpro, the Federal Circuit ruled protests could not be used when Section 1520(d) post-importation claims are available because otherwise the importer could “resort to a protest of the liquidation in an attempt to defeat the [one-year] statutory time limitation” of Section 1520(d). GSP benefits may not be claimed under Section 1520(d), the court said. “GSP claims are not affected by the limitation in [Section 1520(d)], and nothing in the GSP statute or the applicable regulations requires a GSP claim to be made at the time of entry or precludes a GSP claim that is made at any time before the liquidation of the entry becomes final” upon expiration of the protest deadline, Stanceu said.

However, because the GSP claims were protestable, Zojirushi’s protest must be allowed or denied before it can bring suit, CIT said. Here, CBP only refused the protest, so the court dismissed the case because it hadn’t yet completed the process required to get to court. Though Zojirushi had asked CIT for an order compelling CBP to allow or deny, the court held the importer should instead file for accelerated disposition of its protest, forcing CBP to allow or deny it within 30 days, then refile its challenge. “Zojirushi’s claim, when properly construed, is one for which Zojirushi potentially could obtain an adequate remedy upon prevailing in a future action brought to contest a denial of its protest, were such a denial to occur,” Stanceu said.

The general takeaways from the case are that “no change liquidations can be protested and importers can raise GSP claims for the first time in a protest,” said customs lawyer Alan Lebowitz of Grunfeld Desiderio. Zojirushi, which intends to file for accelerated disposition, will wait to see how the government responds to the case, Peterson said. “If they decide that they're no longer going to hold to their position that GSP can't be claimed in a protest, we will probably wind up fighting them again. But if they back down from that position, perhaps they'll approve the protest. I don't believe the client's substantive entitlement to GSP is questioned,” he said. CBP and the Justice Department did not comment.