CUSTOMS CASES: DECISIONS UNDER 28 U.S.C. § 1581(a) AND 28 U.S.C. § 1582

Georgetown Journal of International Law, Fall 2007 by Williams, Barbara S

I. INTRODUCTION

The United States Court of Appeals for the Federal Circuit and the United States Court of International Trade examined several of aspects of substantive Customs law and litigation in the past year which implicated 28 U.S.C. § 158Ua),1 28 U.S.C. § 1582,2 and 19 U.S.C. § 1592.3 Many of these decisions addressed critical procedural concerns, while others provided guidance regarding more traditional issues of the classification or valuation of goods under the Harmonized Tariff Schedule of the United States ("HTSUS").4 This commentary will analyze several of the decisions reached by these two courts in 2006.

II. BACKGROUND

The significance of recent developments in Customs law is highlighted by a short summary of the import process. When an importer enters its goods into the United States, it makes "entry" of its merchandise with U.S. Customs and Border Protection ("Customs"), along with entry documents.5 In its entry papers, the importer sets forth its claimed classification, rate of duty, and appraisement under the HTSUS, as well as including a deposit of all duties it calculates are due.6 For entries not liquidated through bypass liquidations,7 the port of entry examines the information provided by the importer and other relevant precedential documents to analyze their effect on the liquidation.8 One type of document which may govern the classification of goods is a Customs ruling, which is typically a letter from Customs to an importer advising the importer of the tariff classification for the importer's goods before the importer brings them into the country.9

The port eventually liquidates the entry based on its review of the entry papers, relevant rulings, and other information if necessary.10 Liquidation of an entry is the final calculation by Customs as to the amount of duty owed on the entry.11 If an importer disagrees with the liquidation, it can protest it.12 If Customs denies the protest, the importer may commence an action with the Court of International Trade under 28 U.S.C. § 1581 (a). Where an importer has not paid duties due under a final liquidation, Customs may sue that importer for the duties due under 28 U.S.C. § 1582. Similarly, where Customs determines that an importer committed negligence or fraud in the entry of its goods, Customs may seek penalties against the importer under 19 U.S.C. § 1592.

III. JURISPRUDENCE OF THE COURT OF APPEALS FOR THE FEDERAL CIRCUIT & THE COURT OF INTERNATIONAL TRADE

A. The Substantive Merits of a Cause of Action

Each of the cases discussed below reflects a significant development in the substantive merits or reach of a cause of action for recovery proffered by a plaintiff, typically in an action commenced under 28 U.S.C. § 1581 (a).13 For example, as discussed in detail below, in Saab Cars USA, Inc. v. United States,14 the Court first explained that in certain cases, the Government may defeat a summary judgment without the introduction of evidence.15 The Court also found that a regulation supported recovery by the importer, but held the plaintiff to a strict standard of proof on the merits of its case.16

In Motorola, Inc. v. United Stated7 and California Industrial Products, Inc. v. United States,16 the Court examined 19 U.S.C. § 1625(c), and upheld Customs' interpretation regarding the nature of liquidations which can trigger the statute in one case, while, in the second, rejected Customs' limitations on the effect of 19 U.S.C. § 1625(c). Corrpro Companies, Inc. v. United States,19 rejected the importer's claim for duty-free entry under North American Free Trade Agreement ("NAFTA") because the importer failed to timely raise its claim. In U.S. Tsubaki, Inc. v. United States*0 and Shima America Corp. v. United States*1 the Court agreed with the Government that the original version of the governing statute, 19 U.S.C. § 1504(d), applied, based on long settled judicial precedent regarding retroactivity of a statute.

Finally, the Cricket Hosiery, Inc. v. United States32 court found that Johanns v. Livestock Marketing Association,** which addressed the constitutionality of a series of laws entitled the Beef Act, governed, and the Cotton Act the subject of Cricket was constitutionally protected governmental speech.24

1. Saab Cars USA, Inc. v. United States25

In Soob, the importer entered numerous automobiles into the United States. After entry, Saab determined that the vehicles were damaged at entry, and sought an allowance in the appraised value of the vehicles in the amount of the cost of repairing the damage, which was covered under warranty. Saab relied upon 19 C.F.R. § 158.12, which permits importers to receive an allowance for "merchandise ... found by the port director to be partially damaged at the time of importation[.]"26 The action was first heard before the Court of International Trade, and then both Saab and the Government appealed the decision to the Court of Appeals for the Federal Circuit.2

After addressing jurisdictional issues regarding the sufficiency of the protests, the Federal Circuit examined three other points. The Court first analyzed whether a plaintiff can prevail on a motion for summary judgment as a matter of law, where the Government, which enjoys a presumption of correctness regarding its administrative decisions, failed to submit any evidence in opposition to that motion.