The U.S. Court of Appeals for the Federal Circuit today affirmed a decision of the trade court (the U.S. Court of International Trade) that in turn affirmed the remand results of U.S. Customs and Border Protection (CBP) with respect to its denial of an importer’s claims for refunds of customs duty paid on automotive parts imported into the United States and for which the importer sought duty-free entry under the North America Free Trade Agreement (NAFTA).
The case is: Ford Motor Co. v. United States, 2014-1581 (Fed. Cir. January 6, 2016). Read the Federal Circuit’s decision [PDF 182 KB] that includes a dissent.
The importer did not seek preferential treatment at the time of entry, but instead sought preferential treatment after entering the merchandise by filing a (traditional) NAFTA post-import refund claim.
A requirement of a post-import refund claim is that the importer must present certificates of origin to CBP to demonstrate that the goods qualify for duty-free treatment under NAFTA. The importer in this case, however, did not present the required certificates of origin, and CBP did not waive this requirement (as it could have). CBP, therefore, denied the importer’s claim because of this missing documentation.
The case was previously appealed from the trade court to the Federal Circuit, which remanded the case based on a finding that CBP had failed to adequately explain why it treats NAFTA post-import refund claims differently for purposes of waiver depending on whether the claims were submitted traditionally or pursuant to a “reconciliation” program. In general, “reconciliation” is an electronic process.
The Federal Circuit instructed CBP to explain whether it “applies different interpretations to the statute depending on the manner in which claims for refunds are submitted.”
On remand, CBP explained that the difference in treatment “is the result of the reasonable application of two different statutory schemes, one controlling the reconciliation process and the other controlling post-entry NAFTA claims only.”
With the case once again before the trade court, the importer maintained that the CBP explanation for treating the two classes of claims differently for purposes of waiver was an unreasonable interpretation of the statute and, therefore, contented that CBP must approve all disputed NAFTA post-import claims and must refund customs duties paid (plus interest).
The trade court sustained CBP’s remand results. CBP explained that the Federal Circuit’s remand inquiry appeared to be based upon an incorrect assumption that CPB authority to waive presentation of the certificate of origin with regard to NAFTA reconciliation claims stems solely from the NAFTA and 19 U.S.C. section 1520(d). However, CBP explained that the basis for this waiver stems from a wholly different set of statutes that govern the reconciliation process.
Thus, the fact that CBP waived the presentation of all certificates of origin in the reconciliation context, but did not grant a waiver to the importer in the 19 U.S.C. section 1520(d) claim, was not the result of two different interpretations of section 1520(d), but was the result of the reasonable application of two different statutory schemes—one controlling the reconciliation process and the other controlling post-entry NAFTA claims only. The trade court found this explanation was reasonable.
The Federal Circuit today affirmed.
For more information, contact a professional with KPMG’s Trade & Customs practice:
Douglas Zuvich | +1 (312) 665-1022 | email@example.com
Andrew Siciliano | +1 (631) 425-6057 | firstname.lastname@example.org
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.