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Defunct Company Loses Bid for CIT to Hear Case for Failure to Pay Outstanding Duties

Monday, September 23, 2013
Sandler, Travis & Rosenberg Trade Report

In a Sept. 18 decision, the Court of International Trade dismissed another case because the plaintiff failed to pay outstanding duties before filing suit. This ruling follows a similar decision in a case in which the plaintiff argued that this prepayment requirement is unconstitutional.

In E&S Express Inc. v. U.S., the plaintiff challenged U.S. Customs and Border Protection’s denial of a protest contesting the assessment of more than $76,000 in supplemental antidumping duties, with interest, on certain entries of wooden bedroom furniture from China. The original duties of nearly $15,000 were paid or deposited and the entries were covered by a $50,000 continuous bond, which would have covered the supplemental duties allegedly owed on six of the nine entries. However, E&S did not pay the supplemental duties before filing this case, arguing that:

- the Department of Commerce rescinded the AD duty rate it had determined to apply to the producer of the merchandise at issue and instead instructed CBP to assess AD duties at the cash deposit rate, “a sum that E&S Express states that it previously paid, leaving no additional duties owed”;

- the supplemental duties are “impermissibly retroactive”;

- the supplemental assessments came two to three years after the dates of entry of the goods, without notice and after the goods had been sold, which precluded E&S from increasing the price of the goods to recoup the higher duties and thus denied the company due process and defeated a primary purpose of AD duties; and

- the bills for the supplemental duties were not received until nearly a year after E&S was dissolved.

E&S asserted that the CIT may hear this case under 28 USC 1581(a), which gives the CIT exclusive jurisdiction over civil actions contesting the denial of a protest but requires the plaintiff to pay all liquidated duties, charges or exactions before the suit is commenced. The court rejected the plaintiff’s argument that this requirement should be waived as to six of the nine entries at issue because the outstanding duties could have been paid prior to the case being filed if CBP had made a demand on the surety and the surety had paid out on the applicable bond. “Whatever the facts are or might have been,” the court said, “it is well-settled” that the prepayment requirement “is not subject to the court’s discretion, and any failure to comply … cannot be waived or excused based upon equitable principles.”

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