Monday, August 21, 2006

Liquidation Nation

Liquidation is an odd concept in many ways. Liquidation is the final accounting of the amount of duties, fees, and taxes owed on an entry of merchandise. Each entry is liquidated individually. If your salary were subject to liquidation, you would have to file a tax return every pay day and wait for a tax bill or refund on each return. It is kind of crazy. Customs is experimenting with tools to move away from the entry-centric process. The programs include ACS Reconciliation and Periodic Monthly Payments and Statements. But, in today's environment, it is still important to understand liquidation because the liquidation of an entry triggers a number of deadlines. The most important deadline being the time to file a protest to challenge a decision of the Port Director.

Two recent Court of International Trade Cases have taken a look at the importance of liquidation and an importer's obligation to track liquidations carefully.

In Gerdau Ameristeel Corp. v. United States, the importer of steel rebar from Turkey sought to challenge final results of an antidumping duty administrative review. The problem for the plaintiff was that Customs liquidated the entries. When that happens, the law is pretty clear that liquidation of the entries eliminates the only remedy for an error in an antidumping review. That remedy would be ordering a remand to the International Trade Administration of the Department of Commerce to fix it. If there is no remedy available, there is no case. Consequently, the court dismissed the case for a lack of subject-matter jurisdiction.

So, what should the plaintiff have done? It should have asked the court for an injunction to prevent the liquidation. That would have given it time to proceed with the challenge. These injunctions are pretty standard and the court routinely grants them. So routinely, in fact, that it is a bit ridiculous that parties need to ask for them. Congress should go ahead and face facts by automatically granting an injunction during the period in which a party can commence the action in the CIT. That would prevent a lot of grief in those times when Customs liquidates unexpectedly early.

Bottom line on this case: liquidation in a dumping review case will likely moot out your challenge. Get an injunction.

The second case is Samuel Aaron, Inc. v. United States. This is one of those lousy set of facts that makes one wish there were still true courts of equity that could say, "You clearly lose under the law, but you really are in the right, so we'll make it better." The problem here was that Customs reliquidated some entries to correct an error made in the crazy process of re-authorizing the GSP after it lapsed. For whatever reason, Customs did not send an electronic notice or paper courtesy notice of the reliquidation. Instead, on February 8, 1999, it placed paper notices (that were not on the prescribed form) in a binder in the room used for public postings of liquidation notices. But, these particular notices of reliquidation were not in the binders containing the routine notices. On April 30, 1999, Customs issued bills and an Automated Clearing House electronic notice relating to the reliquidations. The importer filed a protest within 90 days of the April 30 notice but more than 90 days after the February 8 posting. The question for the Court was whether the protest was timely.

What you really want to say to the government here is this: "Come on. You screwed the importer by messing up the GSP renewal and made the posting as hard to find as possible. Do you really have to stick it to the little guy?" Unfortunately, the answer will surely be, "Thanks for asking. We are stuck with the law as written. So, yes we do."

The Court came to the same conclusion. The Court first determined that the February 8 date corresponds to the final calculation of the amount owed. That makes it a liquidation if properly posted. Next, the court found that the binder in the room full of liquidation books was sufficiently conspicuous to be found and that the notice itself was clear enough avoid misleading the importer. Thus, the posting was effective. Consequently, the protest clock started running on February 8 and, therefore, the protest was late.

The importer's last gasp was to argue that the reliquidation notice was invalid because it was not on the proper form. The Court adopted a no-form-over-substance position and held that the information was properly communicated even if Customs did not use the technically required form. It was, therefore, a valid reliquidation.

What this means to importers is a simple reminder: track your liquidations and treat anything that smacks of liquidation as if it is the liquidation. You will likely lose your rights if you fail to file a timely protest of a so-called protestable event. Brokers have reporting tools to track entry status and the Customs ACE Portal has similar tools. Part of an importer's post-entry process should be to track entries and liquidations.

1 comment:

Anonymous said...

Question long do the regulations require an importer to maintain liquidatio notices?