The Court of International Trade Confirms that CBP Has Unlimited Time to Decide Protests

Importers that have contested CBP decisions are familiar with the protest process.  In essence, a protest is a filing through which an importer challenges a CBP decision and advances legal arguments to further its cause.  Importers that are familiar with the protest process may also be familiar with the seemingly endless wait that often must be endured between the filing of a protest and the receipt of CBP’s eventual decision.

The Court of International Trade, in its April 30, 2001 decision in Hitachi Home Electronics v. United States, made it clear that, unless a protesting importer takes the affirmative step of requesting accelerated disposition of its protest pursuant to 19 C.F.R. § 174.22(d), CBP may take its time in deciding a protest, without limitation.  That’s right, CBP has an endless amount of time to issue its decision on a protest.

The facts of the Hitachi case were rather pedestrian.  Hitachi entered plasma televisions made in Mexico claiming duty-free treatment under NAFTA.  CBP instead liquidated Hitachi’s entries at 5.0% ad valorem.  Hitachi protested in May of 2005 and submitted documentation supporting its claim for duty-free treatment.  It protested similar entries thereafter.  For a variety of reasons, CBP took no action.  In November of 2007, Hitachi filed suit at the Court of International Trade, claiming that CBP’s inaction resulted in a deemed allowance of the protests.

The Hitachi court concluded that CBP has an unlimited amount of time within which to decide protests despite the fact that a statue, 19 U.S.C. § 1515(a), provides that “within two years from the date a protest was filed . . . [CBP] shall review the protest and shall allow or deny such protest in whole or in part.”  The court held that the “shall” in Section 1515 is permissive, not mandatory.  To reach this conclusion, the court examined the legislative history of the statute and noted that the Code does not “provide a consequence for Customs’ failure to either allow or deny a protest” within the two year period.  Simply put, the court found that, had Congress wanted the two year period prescribed in Section 1515 to have teeth, it would have passed a measure calling for some consequence, such as deemed denial or allowance, to result from the passing of the deadline.  Instead, the statute is silent.  As a result, the court, following previous Court of International Trade cases, held that Section 1515 is “directory” or “regulatory,” and not “mandatory.”

The court also based its decision on the fact that the accelerated disposition procedure provided for under 19 U.S.C. § 1515(b) was, in the court’s view, enacted by Congress to provide importers with a means to remedy unreasonable CBP delay in deciding protests.  That statute allows an importer to request accelerated disposition of a protest at any time after the filing of the protest and provides that “a protest which has not been allowed or denied in whole or in part within thirty days following the mailing . . . of a request for accelerated disposition shall be deemed denied on the thirtieth day following mailing of such request.”  Of course, it is difficult to imagine CBP personnel receiving a request for accelerated disposition and then rushing to decide a protest due to the ticking of the thirty day clock.  Rather, it is more likely that the filing of a request for accelerated disposition would result in the deemed denial of the filer’s protest because CBP moves at its own speed.  The resulting deemed denial may be appealed at the Court of International Trade, but most importers want administrative fairness, not expensive litigation.

The Court of International Trade’s jurisdictional statute provides that a party, unless certain unique circumstances are present, must exhaust its administrative remedies prior to filing suit by protesting a CBP decision and receiving a ruling thereon.  The Hitachi court concluded by holding that, because Hitachi’s protests had not been ruled upon by CBP, and were not deemed denied or allowed by operation of law, the court lacked jurisdiction to hear its complaint.  As a result, the case was dismissed on jurisdictional grounds, and Hitachi’s protests are presumably still pending.

(Sound of crickets chirping.)

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