Thursday, January 14, 2010

Ford Focus on NAFTA

For purposes of keeping readers of this blog informed, here is a meat and potatoes summary of Ford Motor Company v. U.S., a decision relating to the documentation needed for a successful post-entry NAFTA claim. For now, I am going to leave my person views out of this.

The facts are that Ford entered parts from Canada and did not make a NAFTA claim at the time of entry. Customs liquidated the merchandise as dutiable. Ford made a subsequent claim for post-entry NAFTA treatment. This is a relatively common procedure under 19 CFR 181 Subpart D. At the time of its claim, Ford did not provide NAFTA certificates of origin. When it did provide certificates, the one-year period for filing had elapsed. Because the certificates were not provided within one year of the date of importation, Customs denied the post-entry claim. Ford protested and Customs and Border Protection denied the protest.

In the Court of International Trade, Ford raised several arguments in support of its claim. The Court, however, followed two prior decisions of the Federal Circuit and strictly construed the one-year period for making a complete claim. In Xerox, the Federal Circuit held that a protest is not a valid means of making of post-entry NAFTA claim. Rather, the importer must proceed under the specific law and regulations for post-entry claims, which includes the requirement that certificates be submitted to complete the claim within one year of importation. Corrpro, according to the CIT, went further and held that there can be no valid protest for NAFTA status without a prior valid claim, which for a post-entry claim, would include a certificate.

Consequently, Ford's post-entry claims, which lacked NAFTA certificates, were invalid. Without a valid claim, there could be no valid protest of Customs' denial of the claim. Without a valid denied protest, the Court lacks jurisdiction to review the claim. Ford also argued for review under the Court's residual jurisdiction. The Court, however, noted that had Ford properly proceeded under the claim and protest process, the Court could have reviewed the case under the normal denied protests route. Having failed to properly follow that path to court, Ford could not fall back on residual jurisdiction.

What do we learn from this? Post entry claims require a valid certificate of origin and all the paperwork must be in to Customs within one year of importation. What we don't learn is how the Court would have addressed the substantive issues Ford attempted to raise. Those issues include the application of 19 CFR 10.112 to NAFTA claims. That regulation says:
§ 10.112 Filing free entry documents or reduced duty documents after entry.

Whenever a free entry or a reduced duty document, form, or statement required to be filed in connection with the entry is not filed at the time of the entry or within the period for which a bond was filed for its production, but failure to file it was not due to willful negligence or fraudulent intent, such document, form, or statement may be filed at any time prior to liquidation of the entry or, if the entry was liquidated, before the liquidation becomes final. See §113.43(c) of this chapter for satisfaction of the bond and cancellation of the bond charge.

That, I will let you discuss among yourselves.


Anonymous said...

Larry -

The court was absolutely right. There are SPECIFIC time limits for NAFTA claims. To rely on "residual jurisdiction" to overturn something specific is putting the proverbial cart before the horse. Or as Mrs. Magillicuddy would hsvr put it "They're all out of step but my son John."

Your faithful Customs retiree.

Lowell DeFrance said...

Any broker should know what can and what cannot be protested. It is a favorite test question. 19 CFR 174.11 does not list "claims from preferential treatment" anywhere.

A claim for preferential treatment must be made on post summary adjustment, (PEA/SIL), prior to liquidation. 19 CFR 181.31 allows importers even more time to make a NAFTA claim, even if the entry has been liquidated, it allows customs to re-liquidate within a year.

It would be inconceivable that someone would file a PEA/SIL for a NAFTA claim without including a copy of the NAFTA certificate. It would be like sending your tax returns in and neglecting your W2s.

I think in this case they had a large company Ford with a large broker Expeditors each thinking the other knew what to do.

Its interesting this case and the Tip Top Pants case are both on the same week. They both have to do with NAFTA claims, both had separate routes to take to court, and both dealt with brokers who didn't appear to do the job.

Tip Top Pants seems to have more to do with failure to respond to a CF28. Which makes me wonder if the way they serve CF28s is really sufficient? They send it in the mail like courtesy notices of liquidation, which do not signify anything important.