Following the most recent developments in the ongoing IEEPA tariff refund litigation, importers should not only continue filing protests of relevant entries but should also strongly consider filing lawsuits to preserve their refund rights.
Luke Mathers, who leads STR’s Litigation Practice, will give a webinar June 24 providing an update on these issues. Click here to register to attend.
Court of International Trade Judge Richard Eaton has previously ordered U.S. Customs and Border Protection to refund all $166 billion worth of IEEPA tariffs. Eaton suspended a requirement that CBP comply with this order immediately, following which CBP developed and started implementing the CAPE system to process refund claims for unliquidated entries and non-finally-liquidated entries within CBP’s statutory authority to voluntarily reliquidate.
However, citing concerns that CBP had not presented a proposal for refunding tariffs on “the millions of informal entries where liquidation was simultaneous, or nearly simultaneous, with the time of entry and for which the liquidation is now final,” Eaton recently ordered CBP to show cause why he should not remove the suspended requirement of immediate compliance with the refund order.
In response, the Department of Justice filed an appeal of the refund order on June 2. The DOJ asserted that once an entry is finally liquidated CBP has no authority to reliquidate or refund money without a valid court order. With respect to such entries for which importers have filed cases at the CIT, the DOJ said that refunds “must be handled through importer-specific orders” and will require “additional system enhancements that will be rolled out in phases.” With respect to such entries for which importers have not filed suit in the CIT, the DOJ said the CIT exceeded its authority by issuing a universal injunction ordering refunds for such entries and that it will contest that order in court.
It remains unclear whether the DOJ will argue that protests against CBP liquidations of affected entries are sufficient to secure IEEPA tariff refunds for those entries. Protests prevent liquidations from becoming final, as the DOJ itself noted in a recent filing; however, the DOJ has not yet clearly stated whether CBP can, or intends to, refund IEEPA tariffs through protests.
Should the courts hold that protesting is insufficient, importers with entries that were subject to IEEPA tariffs and have been finally liquidated would almost certainly have to file complaints at the CIT under 28 USC 1581(i) to preserve their rights to potential refunds. STR is therefore advising importers to strongly consider filing such complaints sooner instead of later given the uncertainty of the DOJ’s position, the lack of a definitive court ruling, and a statute of limitations deadline approaching in about eight months.
Nevertheless, the courts may instead hold that protesting is required to seek refunds on liquidated entries despite any position the DOJ may take. As such, STR also continues to recommend that importers monitor the dates of liquidation of their affected entries, including those that have been accepted into CAPE, and file timely protests of any such liquidations with CBP as necessary. In particular, importers should timely file protests on entries that have not been filed into CAPE or are not currently eligible for that process.
It should also be noted that on June 4 the plaintiffs moved for Judge Eaton to certify a class consisting of all importers of record who paid IEEPA tariffs and who have entries that are ineligible for refunds under phase one of the CAPE system. While such a move could allay concerns about the need to file individual lawsuits, there is no guarantee that the CIT will certify a class action or that any order certifying a class would be upheld on appeal.
For more information or assistance, please contact us at messages@strtrade.com or via your usual STR contact.
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