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CBP Eases Rules on Post-Liquidation Preference Claims; Refund Opportunity for Past Filings

Friday, March 03, 2017
Sandler, Travis & Rosenberg Trade Report

Reversing an August 2014 policy change, U.S. Customs and Border Protection is once again allowing post-liquidation claims for preferential duty treatment under certain free trade agreements and preference programs to be filed via administrative protest. In addition, such claims that were previously rejected by CBP may be resubmitted.

In an Aug. 11, 2014, guidance letter to the ports CBP stated that post-liquidation protests under 19 USC 1514 could not be used to make an initial claim under the Generalized System of Preferences, the African Growth and Opportunity Act, or the FTAs with Singapore, Australia, Israel, and Jordan (i.e., those not subject to the special rules in 19 USC 1520(d)). This change from long-standing practice was done without notice and comment and created a substantial amount of uncertainty for importers. The guidance had no effect on imports under the agreements listed in 520(d), for which post-entry claims can be filed within one year from the date of importation.

Following an August 2016 Court of International Trade decision rejecting CBP’s rationale for this change, the agency has revised its guidance to state as follows.

- The protest mechanism in 19 USC 1514 may be used to submit initial post-importation preference claims for the following FTAs and preference programs that do not specifically provide for claims under the statutory post­-importation mechanism of 19 USC 1520(d): AGOA, Australia FTA, Bahrain FTA, Caribbean Basin Economic Recovery Act, U.S.-Caribbean Basin Trade Partnership Act, Civil Aircraft Agreement, GSP, Insular Possessions, Israel FTA, Uruguay Round Concession on Intermediate Chemicals for Dyes, Jordan FTA, Morocco FTA, Pharmaceutical Products Agreement, Singapore FTA.

- Unliquidated entries under these agreements and programs may continue to be amended by filing a post-entry amendment or post-summary correction prior to liquidation in accordance with current PEA and PSC procedures.

- A 1520(d) post­-importation claim remains the only appropriate mechanism to seek preference when not claimed at the time of importation under NAFTA, CAFTA-DR, and the FTAs with Chile, Colombia, Korea, Oman, Panama, and Peru, which by law have post-importation provisions.

CBP states that in compliance with its August 2014 guidance ports may have rejected as non-protestable (rather than denied) initial post-importation preference claims made under 19 USC 1514. CBP now intends to process such protests and is asking importers to resubmit them to the appropriate field offices within 180 days of Feb. 15 (approximately Aug. 15).

For more information please contact Larry Ordet at (305) 894-1003.

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