Critical Decisions by the U.S. Court of Appeals for the Federal Circuit and the U.S. Court of International Trade in Customs 28 U.S.C. (Section) 1581(a) Cases

Article excerpt

In 2008, the United States Court of Appeals for the Federal Circuit and the United States Court of International Trade examined several of aspects of substantive customs law in actions arising under 28 U.S.C. [section] 1581(a). (1) These lawsuits arose in the context of U.S. Customs and Border Protection's ("Customs") treatment of importations into the United States. In importing goods into the United States, an importer makes entry of its merchandise with Customs and files entry documents. (2) In its entry papers, the importer sets forth its claimed classification, rate of duty, and appraisement under the governing tariff, the Harmonized Tariff Schedule of the United States ("HTSUS"), and includes a deposit of all duties it calculates are due. (3) For entries not liquidated through bypass liquidations, (4) the port of entry examines the information provided by the importer and other relevant precedential documents to analyze their effect on the liquidation. (5) Liquidation of an entry is the final calculation by Customs as to the amount of duty owed on the entry. (6) The port liquidates the entry based on its review of the entry papers, relevant rulings, and other information if necessary. (7) If an importer disagrees with the liquidation, they can protest it. (8) If Customs denies the protest, the importer may commence an action with the Court of International Trade under 28 U.S.C. [section] 1581 (a).

While the customs decisions issued by the Federal Circuit and the Court of International Trade largely addressed the classification or valuation of imported goods under the HTSUS, one case decided by the Federal Circuit, Hartford Fire Ins. Co. v. United States, (9) extensively discussed the Court of International Trade's subject matter jurisdiction. This commentary will analyze the critical points raised in several of the cases reached by these two courts in 2008, and consider the increasing trend toward judicial conservatism.

I. JUDICIAL ANALYSIS or THE COURT OF INTERNATIONAL TRADE'S SUBJECT MATTER JURISDICTION UNDER 28 U.S.C. [section] 1581 (i) AND 28 U.S.C. [section] 1581(a)

The Federal Circuit's decision in Hartford Fire Insurance Co. v. United States (10) was the most significant action in 2008 examining the subject matter jurisdiction of the Court of International Trade. (11) In restrictively viewing the applicable statues, the Hartford court found that the protest requirements of 19 U.S.C. [section] 1514(a) (12) and the commencement of a subsequent action under 28 U.S.C. [section] 1581 (a) cannot be avoided.

In Hartford, the importer entered goods secured by surety bonds covering applicable duties, with plaintiff as the named surety. At entry, Customs classified the imported merchandise under a dutiable provision. (13) However, upon liquidation, Customs reclassified the imported goods under another provision implicating a higher duty rate. (14) Customs then issued a formal demand to Hartford to pay the duties.

Instead of filing an action under 28 U.S.C. [section] 1581(a), Hartford commenced its action challenging the enforceability of the bonds under 28 U.S.C. [section] 1581(i). (15) Hartford alleged that its bonds were unenforceable because a statutory change to the distribution of collected duties materially altered its bond agreements. Hartford specifically asserted that prior to the Continued Dumping and Subsidy Offset Act of 2000 ("CDSOA" or "Byrd Amendment"), 19 U.S.C. [section] 1675(c) (repealed 2006), collected duties were placed into the general treasury. Pursuant to the Act, however, upon liquidation of dutiable goods, collected duties were placed into special accounts within the general treasury for disbursement to affected domestic producers. (16) Hartford claimed that this change materially affected its liability, rendering its bonds unenforceable. (17)

The Federal Circuit rejected Hartford's jurisdictional argument, explaining that the Court of International Trade does not have subject matter jurisdiction because in 28 U. …