AM/NS Calvert LLC v. United States

654 F.Supp.3d 1324

AM/NS CALVERT LLC, Plaintiff, v. UNITED STATES, Defendant.

California Steel Industries, Inc., Plaintiff, v. United States, Defendant.

Valbruna Slater Stainless, Inc., Plaintiff, v. United States, Defendant.

Slip Op. 23-129

Court No. 21-00005

Court No. 21-00015

Court No. 21-00027

United States Court of International Trade

September 6, 2023

Ann C. Motto, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of Washington, DC, for Defendant in all three matters. With her on the briefs were Brian M. Boynton, Acting Assistant Attorney General; Jeanne E. Davidson, Director; Tara K. Hogan, Assistant Director; Stephen C. Tosini, Senior Trial Counsel; and Kyle S. Beckrich, Trial Attorney. Of counsel on the papers for Defendant in all three matters was Kimberly Hsu, Office of Chief Counsel for Industry & Security, U.S. Department of Commerce of Washington, DC.

Paul C. Rosenthal, Kelley Drye & Warren LLP of Washington, DC, for Plaintiff AM/NS Calvert LLC in Court No. 21-00005. With him on the briefs were R. Alan Luberda, Joshua Morey, and Julia A. Kuelzow.

Sanford Litvack, Chaffetz Lindsey LLP of New York, NY, for Plaintiff California Steel Industries, Inc., in Court No. 21-00015. With him on the briefs were Andrew L. Poplinger, R. Matthew Burke, and Rebecca Meyer.

Craig A. Lewis, Hogan Lovells US LLP of Washington, DC, for Plaintiff Valbruna Slater Stainless, Inc., in Court No. 21-00027. With him on the briefs were H. Deen Kaplan, Maria A. Arboleda, Nicholas W. Laneville, and Molly B. Newell.

OPINION AND ORDER

Baker, Judge:

Invoking this court's residual jurisdiction, three domestic importers bring Administrative Procedure Act challenges to the Department of Commerce's refusal to exclude certain steel products from national security tariffs and seek court-ordered refunds of duties that they paid. Defendant moves for voluntary remand without confessing error, representing that the Department's reconsideration might afford Plaintiffs the relief they seek and make adjudication of their APA claims unnecessary.

Plaintiffs object, pointing to recent litigation in which the government argued that no relief is available as a matter of law for entries that have finally liquidated. They explain that under the government's theory, remand would be pointless as to most of their entries at issue, which so liquidated after Commerce denied their exclusion requests.

To resolve that threshold issue, the court ordered the parties to address whether any relief is available as to Plaintiffs' finally liquidated entries. In response, the government argues that these cases are largely, if not entirely, moot because the court lacks authority to order reliquidation (refunds) as to such entries as a matter of law or at least on these facts. The government belatedly acknowledges that under its theory, remand—whether voluntary without confessing error or court-ordered after a finding of an APA violation—would not provide any practical relief to Plaintiffs as to their finally liquidated entries.

As explained below, Defendant's challenge to the court's authority to order reliquidation is not a mootness question but instead goes to the merits. Viewing that challenge as a motion for partial summary judgment, the court denies it. Upon a finding of unlawful agency action in a case properly brought under the CIT's residual jurisdiction, the APA authorizes injunctive relief requiring reliquidation of finally liquidated entries because no "other statute . . . expressly or impliedly forbids" such relief. 5 U.S.C. § 702. The government also fails to show how ordinary equitable principles bar such relief here.

Finally, the court grants Defendant's requested voluntary remands, subject to certain conditions. One of them is that if Commerce issues the requested exclusions, it must make Plaintiffs whole. To do so, the Department must instruct U.S. Customs and Border Protection to honor the exclusions as to any entries that had not finally liquidated when those requests were originally denied. The court imposes this condition to prevent Defendant from using voluntary remand to dodge relief that Plaintiffs could obtain by successfully litigating their APA claims.

I

A

Federal law requires Customs to classify all imported merchandise under the Harmonized Tariff Schedule of the United States (HTSUS), 19 U.S.C. § 1202. See 19 U.S.C. § 1500(b) (requiring Customs to "fix the final classification and rate of duty applicable to [imported] merchandise"). Customs's classification "is critical because the applicable duty, or tariff, can vary considerably depending on which HTSUS subheading applies." ARP Materials, Inc. v. United States, 520 F. Supp. 3d 1341, 1346 (CIT 2021), aff'd, 47 F.4th 1370 (Fed. Cir. 2022).

To assist Customs with classification, the regulatory scheme requires an importer to file a statement—an "entry"—declaring the "value, classification[,] and rate of duty applicable to the merchandise." 19 U.S.C. § 1484(a)(1)(B). Concurrent with making an entry, "the importer must deposit estimated duties and fees with Customs" based on the information supplied in the declaration. ARP, 520 F. Supp. 3d at 1347.

Later, "Customs 'liquidates' the entry to make a final computation or ascertainment of duties owed on that entry of merchandise." Id. (cleaned up) (citing 19 C.F.R. § 159.1 and 19 U.S.C. § 1500). Liquidation is a true-up process following which "Customs either collects any additional amounts due, with interest, if the importer's deposit was lower than the final assessment or refunds any excess deposit, with interest, if the deposit was higher than the final assessment." Id. (citing 19 U.S.C. § 1505(b)).

If Customs does not liquidate an entry, liquidation occurs after one year by operation of law. See 19 U.S.C. § 1504(a)(1) (providing that an entry "shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted by the importer of record" unless, within one year of entry, Customs liquidates the entry, or liquidation is either extended¹ or suspended²).

If an importer believes Customs erred in liquidating an entry or that a deemed liquidation was incorrect, the importer must file a protest within 180 days, see 19 U.S.C. § 1514(c)(3)(A), or else lose the right to challenge the liquidation results, see id. § 1514(a). As used in this opinion, "finally liquidated" means a liquidated entry that was not timely protested.

A timely "protest challenging classification may lead to 'reliquidation.' " ARP, 520 F. Supp. 3d at 1347. "[R]eliquidation is the re-calculation [by Customs] of the duties . . . accruing on an entry." Shinyei Corp. of Am. v. United States, 355 F.3d 1297, 1310 n.8 (Fed. Cir. 2004) (cleaned up). If that re-calculation determines that the importer overpaid duties, Customs refunds them. See 19 U.S.C. § 1520(a)(1).

On the other hand, if Customs denies a timely protest, an importer's only recourse is to timely bring an action in this court. See 19 U.S.C. § 1514(a) (authorizing suit in the CIT to challenge protest denials); 28 U.S.C. § 2631(a) (same).

B

Section 232 of the Trade Expansion Act of 1962 authorizes the President to restrict imports of goods "so that such imports will not threaten to impair the national security." 19 U.S.C. § 1862(c)(1)(A)(ii). The President exercised that authority in 2018 to impose a 25 percent tariff on imports of certain steel products. See Proclamation 9705 of March 8, 2018, Adjusting Imports of Steel into the United States, 83 Fed. Reg. 11,625 (Mar. 15, 2018).

Proclamation 9705 also directs the Secretary of Commerce to exclude imports from the tariff if they meet certain criteria. Id. at 11,627 cl. 3. Such relief may be granted "only after a request for exclusion is made by a directly affected party located in the United States." Id.

The President later amended Proclamation 9705 to make granted exclusions retroactive to entries made on or after "the date the request for exclusion was posted for public comment." Proclamation 9711 of March 22, 2018, Adjusting Imports of Steel into the United States, 83 Fed. Reg. 13,361, 13,364 cl. 7 (Mar. 28, 2018). He also amended Proclamation 9705 to make such retroactive relief available only for entries "with respect to which liquidation is not final." Proclamation 9777 of August 29, 2018, Adjusting Imports of Steel into the United States, 83 Fed. Reg. 45,025, 45,028 cl. 5 (Sept. 4, 2018).

Commerce duly issued an interim final rule allowing U.S. importers to request an exclusion from Section 232 duties for imports satisfying criteria set by the President. Requirements for Submissions Requesting Exclusions from the Remedies Instituted in Presidential Proclamations Adjusting Imports of Steel into the United States and Adjusting Imports of Aluminum into the United States; and the Filing of Objections to Submitted Exclusion Requests for Steel and Aluminum, 83 Fed. Reg. 12,106, 12,110 (Dep't Commerce Mar. 19, 2018); see 15 C.F.R. Pt. 705, Supp. 1. When the Department approves an exclusion request under this rule, "[c]ompanies are able to receive retroactive relief on granted requests dating back to the date of the request's submission on unliquidated entries." 15 C.F.R. Pt. 705, Supp. 1 (h)(2)(iii)(A).

Exclusions are not self-executing, because Commerce "does not provide refunds on tariffs." 15 C.F.R. Pt. 705, Supp. 1 (h)(2)(iii)(B). Instead, the Department assigns a product exclusion number, which an importer can "rely" upon to seek relief from Customs effective five business days after the grant of an exclusion. 15 C.F.R. Pt. 705, Supp. 1 (h)(2)(iii)(A).

Armed with an exclusion number, an importer must "provide any information that may be required, and in such form, as is deemed necessary by [Customs]." Proclamation 9705, Annex (U.S. Note 16(d)), 83 Fed. Reg. at 11,630 cl. 16(d); see 15 C.F.R. Pt. 705, Supp. 1 (h)(3)(ii). This information enables Customs "to determine whether an import is within the scope of an approved ...