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Court Rejects NAFTA Claim Due to Untimely Certificate of Origin

Thursday, December 01, 2011
Sandler, Travis & Rosenberg Trade Report

The Court of International Trade ruled Nov. 28 that U.S. Customs and Border Protection properly denied NAFTA origin claims because the associated certificates of origin were not timely submitted. The CIT issued its decision in this test case following a remand from the Court of Appeals for the Federal Circuit, which found that the untimely filing of the certificates did not by itself remove the case from the CIT’s jurisdiction.

Under NAFTA, importers that do not meet the requirements for duty-free treatment at the time of entry may qualify for a post-entry duty refund if they file within one year of the date of importation a claim that includes copies of all applicable NAFTA certificates of origin. The test case Ford Motor Company v. U.S. arose after Ford filed post-entry duty refund claims for certain shipments of automotive parts imported from Canada within the required one-year period but did not submit the certificates of origin until after that period had expired. CBP denied the NAFTA origin claims as a result, Ford protested and CBP then denied the protest on the same grounds.

Ford argues that 19 USC 1520(d) and CBP’s governing regulations do not require importers to file certificates of origin within one year, stating that this restriction applies only to “claims” and not the accompanying certificates. CBP rejected this argument in its denial of Ford’s protest, stating that a valid refund claim exists only when the importer has filed all the required documentation, including copies of applicable certificates of origin. The CIT finds CBP’s analysis to be “thorough and well-reasoned” and therefore entitled to Skidmore deference.

The CIT also disagrees with Ford’s argument that 1520(d) must be read in harmony with CBP’s regulation at 19 CFR 10.112, which provides that whenever a free entry or a reduced duty document, form or statement required to be filed in connection with the entry is not filed at the time of the entry or within the period for which a bond was filed for its production, but failure to file was not due to willful negligence or fraudulent intent, such document, form or statement may be filed at any time prior to liquidation of the entry or, if the entry was liquidated, before the liquidation becomes final. The CAFC has cautioned that importers cannot use this regulation to circumvent the clear mandate of NAFTA and 1520(d), the court states, and reading this regulation to allow importers to file certificates of origin more than one year after importation “would render fundamental aspects of the statute and regulations void.” The CIT concludes that while “Ford was operating in a nascent legal regime with fastidious rules for importation,” CBP’s “lawful adherence to the controlling statute and regulations” must be respected.

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