Arp Materials, Inc. v. United StatesArp Materials, Inc. v. United States
Decided: September 6, 2022
CHRISTOPHER M. KANE, Simon Gluck & Kane LLP, New York, NY, argued for plaintiffs-appellants. Also represented by MARIANA DEL RIO KOSTENWEIN, DANIEL J. GLUCK.
SOSUN BAE, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by BRIAN M. BOYNTON, PATRICIA M. MCCARTHY, LOREN MISHA PREHEIM; VALERIE SORENSEN-CLARK, Office of Assistаnt Chief Counsel, International Trade Litigation, United States Customs and Border Protection, New York, NY.
Before HUGHES, LINN, and STOLL, Circuit Judges.
Importers ARP Materials, Inc. and The Harrison Steel Castings Company seek refunds of estimated duties they deposited with the United States Customs and Border Protection for tariffs that the United States Trade Representative retroactively rescinded. The United States Court of International Trade dismissed the importers’ amended complаints for lack of jurisdiction. ARP and Harrison appeal. The jurisdictional provision on which the importers rely,
I
A
Section 301 of the Trade Act of 1974 authorizes the Office of the United States Trade Representative (USTR) to investigate and enforce domestic rights under trade agreements and to respond to certain foreign trade practices.
“[T]o mitigate the potential harm of these tariffs on U.S. companies and workers,” USTR established, “for the first and only time,” an opportunity for domestic stakeholders “to request to exclude particular products from the additional tariffs.” Id. at 1, 6; see also 83 Fed. Reg. 40,823, 40,824 (Aug. 16, 2018) (for List 2); 84 Fed. Reg. 20,459, 20,460 (May 9, 2019) (for List 3). USTR informed importers that any exclusion granted would “apply to the particular product covered by the exclusion” rather than the “particular producer[] or exporter[]” who requested the exclusion. ARP Materials, Inc. v. United States, 520 F. Supp. 3d 1341, 1349 (Ct. Int‘l Trade 2021) (Decision). These exclusions were thus “product-specific,” meaning that “the grant of an exclusion in response to one importer‘s application could apply to like products imported by other entities.” Id.; see also 84 Fed. Reg. 37,381, 37,381 (July 31, 2019) (“[T]he exclusions are available for any product that meets the description in the Annex, regardless of whether the importer filed an exclusion request.“). These exclusions were applied retroactively to the effective date of each tariff—August 23, 2018 for List 21 and September
USTR declared that Customs “w[ould] issue instructions on entry guidance and implementation,” and it instructed importers to reach out to Customs directly. 84 Fed. Reg. at 37,381. It further provided contact information for importers to do so—for answers to any specific questions importers might have about “[C]ustoms classification or implementation of the product exclusions.” Id.; see also Decision at 1349 (“Just as . . . USTR‘s initial imposition of [§] 301 duties was not self-executing as to any entry of goods and instead depended upon Customs’ classification of the entry as subject to such duties, . . . USTR‘s retroactive exclusions were not self-executing as to the eligible goods.“).
On May 22, 2019, Customs published instructions detailing how importers could obtain refunds of previously paid § 301 tariffs on eligible imports. See U.S. Customs & Border Prot., CSMS No. 19000260, Section 301 Products Excluded from Duties - Liquidation Extension Request (2019). For entries covered by granted product exclusions, Customs instructed importers as follows:
Once a product exclusion is granted by USTR, an Importer of Record (IOR) may request an administrative refund by filing a Post Summary Correction (PSC) for unliquidated entries that are covered by the exclusion. If an entry is liquidated prior to the filing of a PSC, a party may file a protest.
Id. For entries covered by pending product exclusion requests, Customs provided these instructions:
As the IOR, if you have a pending product exclusion request with USTR, or are importing a product that is covered by such a pending exclusion request, and you are concerned that a corresponding entry may liquidate before USTR renders a decision on the exclusion request, you can:
- request an extension of the liquidation deadline, and file a PSC no later than 15 days before the extended date of liquidatiоn; and/or
- file a protest within the 180 day period following liquidation. When filing a protest, the protestant should identify the pending product exclusion decision from USTR as a basis for the protest. Upon receiving USTR‘s decision on the product exclusion, the protestant should submit the exclusion information to [Customs], as additional information pursuant to 19 C.F.R. [§] 174.28.
If a protest is filed, [Customs] will postpone making a determination on protests that include a claim identifying a pending product exclusion. Once USTR completes the exclusion process, [i.e., rules on the product exclusion request,] [Customs] will process these protests pursuant to USTR‘s exclusion determination. That is, [Customs] will refrain from denying or granting a party‘s protest before the importer receives a final determination from USTR regarding its product exclusion request.
Id. (emphases added). Customs reissued substantially similar instructions immediately following each notice of product exclusion that USTR published. See, e.g., U.S. Customs & Border Prot., CSMS No. 39169565, GUIDANCE: Seventh Round of Products Excluded from Section 301 Duties (Tranche 2) (2019) (“To request a
B
ARP “made five entries (importations) of merchandise” that Customs had classified under subheading 3901.90.1000 (on List 2) of the Harmonized Tariff Schedule of the United States (HTSUS), “render[ing] the entries liable for [§] 301 duties,” i.e., “subject to [§] 301 tariffs on the dates of entry.”3 Decision at 1350. On July 31, 2019, after the five entries were made, USTR granted exclusion requests submitted by other importers that covered the same category of products as ARP‘s merchandise. 84 Fed. Reg. at 37,382. These exclusions appliеd retroactively to
August 23, 2018—before ARP‘s entries—and remained in effect through July 31, 2020. On March 2, 2020, seven months after USTR had published its exclusion notice and 199 days following liquidation,4 ARP protested Customs’ assessment of § 301 duties on entries ‘4968-3 and ‘5369-3. Decision at 1351-52. Customs denied the protest as untimely since ARP had failed to file the protest within 180 days of the entries’ liquidation date. Id. at 1351; see also
Harrison made two entries of merchandise—one on September 27, 2018, and the other on October 12, 2018—that Customs classified under HTSUS subheading 8302.30.3060 (on List 3), rendering the entries liablе for § 301 duties. On March 26, 2020, USTR “granted exclusion requests submitted by other importers that covered the same category of products as Harrison‘s.” Id. at 1352; see also 85 Fed. Reg. 17,158, 17,160 (Mar. 26, 2020). These exclusions applied retroactively to September 24, 2018—before Harrison‘s entries—and remained in effect through
August 7, 2020. On March 31, 2020, five days after USTR had published its exclusion notice but more than 180 days after the liquidation dates for the two entries at issue,7 “Harrison
After Customs denied their protests, ARP and Harrison commenced civil actions against the government in the Court of International Trade, both invoking
The government moved to dismiss ARP‘s and Harrison‘s actions, and the Court of International Trade granted
the motions.8 The court held that it lacks subject matter jurisdiction under
ARP and Harrison appeal. Because they make the same arguments, we address them together. We have jurisdiction pursuant to
II
We review the Court of International Trade‘s “decision to grant the government‘s motions to dismiss for lack of subject matter jurisdiction de novo as a question of law.” Hutchison Quality Furniture, Inc. v. United States, 827 F.3d 1355, 1359 (Fed. Cir. 2016) (cleaned up).
The Court of International Trade‘s jurisdiction is governed by
Section 1581(a) grants the Court of International Trade “еxclusive jurisdiction [over] any civil action commenced to contest the denial of a protest, in whole or in part, under [
Section 1581(i) confers jurisdiction over a civil action arising out of any federal law providing for “tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue.”
mandated procedures and safeguards provided in the other subsections, аbsent which litigants could ignore the precepts of subsections (a)-(h) and immediately file suit in the Court of International Trade under subsection (i).” Id. (internal citations omitted).
An inquiry into
A
ARP and Harrison challenge the Court of International Trade‘s decision holding that jurisdiction under
This is beсause Customs must have the ‘authority to grant relief in [the] protest action.‘” (alterations in original) (citations omitted)).
But “the protest procedure cannot be [so] easily circumvented.” Int‘l Custom Prods., Inc. v. United States, 467 F.3d 1324, 1327 (Fed. Cir. 2006); see Norsk Hydro Can., Inc., 472 F.3d at 1355 (“[A] party may not expand a court‘s jurisdiction by creative pleading.“). “To prevent usurpation of the protest scheme Congress has crafted, it is of utmost importance that mere recitation of a basis for jurisdiction not be сontrolling.” Hartford Fire Ins. Co. v. United States, 544 F.3d 1289, 1293 (Fed. Cir. 2008). Instead, “[w]e look to the ‘true nature of the action’ in determining whether the [Court of International Trade] properly found jurisdiction lacking.” Hutchison, 827 F.3d at 1360 (citation omitted). This “will depend upon the attendant facts asserted in the pleadings.” Id. Thus, “[d]etermining the true nature of an action under
Here, the importers allege that the govеrnment “remains in wrongful possession of the [§] 301 duties on [the importers‘] entries of [certain] merchandise as . . . USTR ha[d] determined that no such duties apply ab initio to the date of implementation of [such] duties.” Appx53, 59. And they request that the Court of International Trade “order refund of the monies due through reliquidation of the involved entries.” Appx54, 60. Thus, as characterized by the importers themselves, the source of their alleged harm is Customs’ classification decisions that “USTR‘s retroactive exclusions rendered erroneous.” Decision at 1359–60 (“According to Plaintiffs, the USTR‘s retroactive exclusions rendered Customs’ classification of their merchandise under those subheadings ‘wrongful.‘“). These classification decisions are necessarily protestable “decisions” because “[p]roper classification of goods under the HTSUS”
requires the agency to “first ascertain[] the meaning of specific terms in the tariff provisions and then determin[e] whether the subject merchandise comes within the description of those terms” the first question being one of law, the second being one of fact. Millenium Lumber Distrib. Ltd. v. United States, 558 F.3d 1326, 1328 (Fed. Cir. 2009). Customs made substantive legal determinations—interpreting the HTSUS subheadings—and factual determinations—determining whether the entries fell within those subheadings—that it had the authority to make. See Hutchison, 827 F.3d at 1362 (“Indeed, when Customs makes a decision to liquidate, that decision is ‘[m]ore than passive or ministerial’ and ‘constitute[s] a “decision” within the context of
Accordingly, this case “presents exactly the scenario in which
B
Because a remedy would have been available under
classification decisions, ARP and Harrison cannot invoke the Court of International Trade‘s residual jurisdiction under
Here, the importers’ successful protests, for example, for entry ‘7552-2, were “far from being exercises in futility.” Decision at 1361. Had ARP protested within 180 days following the liquidation for each entry now at issue, ARP would have had the opportunity to protest Customs’ assessments of § 301 duties underlying the challenged entries’ liquidations. See Juice Farms, 68 F.3d at 1346 (“If Juice Farms had protested within ninety days of bulletin notices, it would have had an opportunity to protest the legality of Customs’ liquidations in the Court of International Trade.“). Indeed, ARP had ample opportunity to file such protests. Of its five entries at issue, ARP‘s earliest protest deadline—i.e., 180 days after an entry‘s liquidation—was January 22, 2020. Yеt ARP did not protest any of Customs’ classification decisions until March 2, 2020, more than seven months after USTR had issued the applicable relevant product exclusion notice. The opportunity to protest is not an inadequate remedy “simply because [ARP] failed to invoke it within the time frame . . . prescribe[d].” Id. at 1346 (citation omitted). ARP “had an adequate remedy for its alleged erroneous liquidation[s], but it lost that remedy because its protest[s] w[ere] untimely,” or not made at all, “not because the remedy was inadequate.” Carbon Activated Corp. v. United States, 6 F. Supp. 3d 1378, 1380 (Ct. Int‘l Trade 2014), aff‘d, 791 F.3d 1312 (Fed. Cir. 2015); see also Hutchison, 827 F.3d at 1362 (“The record demonstrates that Hutchison not only could have filed a protest, but that it in fact did so after Customs liquidated its entries. Hutchison‘s incorrect ‘belief that it had no remedy under
III
We have considered the parties’ remaining arguments and find them unpersuasive. We affirm the Court of International Trade‘s decision dismissing ARP‘s and Harrison‘s amended complaints for lack of jurisdiction.
AFFIRMED