Federal Circuit: NAFTA-related, post-import customs duty refund procedures

NAFTA-related, post-import customs duty refund

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).

Related content

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.

Summary

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 | dzuvich@kpmg.com

Andrew Siciliano | +1 (631) 425-6057 | asiciliano@kpmg.com

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