Tuesday, July 15, 2014

What's a Protest?

A protest is a very important document. When an importer lodges a protest with Customs and Border Protection, the importer is telling CBP that it disagrees with a decision Customs made when liquidating an entry. Absent a protest, the liquidation becomes final and is not subject to challenge. If the importer files a protest and CBP denied it, the importer can go to the Court of International Trade to challenge the denial. In many cases, if there is no valid protest, there is no way to get into court.

To be valid, a protest has to be timely. Today, that means 180 days from the date of liquidation. That was not always the case. The protest period used to be 90 days. The transition from 90 to 180 days was not smooth and that seems to be the underlying problem in Puerto Rico Towing & Barge Co. v. United States, a recent decision of the Court of International Trade.

The case involves an effort to protest the collection of duties on ship repairs performed on a U.S. flag vessel while it was in the Dominican Republic. The value of the repairs is subject to a duty of 50% , but can be reduced by the value added from beneficiary developing countries under the Caribbean Basin Economic Recovery Act.

In this case, the importer was apparently working with CBP personnel at the relevant port to prove up the amount of the CBERA offset. Customs denied the claim and the importer sent at least two letters in which it requested relief. One of those letters said it was trying to avoid filing a detailed protest within the 180 day limit.

It turns out that this entry was subject to the old 90-day protest period because it was made prior to December 18, 2004. So, the eventual protest was late.

That raises the question of whether the letters, which were within the 90-day period might be construed to be protests. On this, the Court of International Trade has traditionally been pretty generous. Many cases have said that any correspondence that informs the Port Director of the challenged decision is sufficient to constitute a protest. But, that is not always the case.

The Court will not find a protest simply because it can surmise from all of the surrounding circumstances that the importer intended to protest a liquidation. Further, there are detailed regulations specifying the content of a protest. While the Court did not expressly hang its proverbial judicial hat on the regulation, it is clear that the regulation must have some impact on judging whether a correspondence counts as a protest.

More important, in this particular case, the correspondence indicated that the importer working with Customs to avoid filing a protest. Taken literally, that means neither of the letters was intended as a protest. This is a logical conclusion. But, there is another hand in play: Customs knew the importer disagreed with the assessment and on what grounds. In prior years, that might have been enough to get into Court. But, that was not the case here.

Take that result as a learning moment. To co-opt a common aphorism in Chicago, "Protest early and often." And, when you do protest, use the official form or electronic equivalent. It will make your life easier. Remember that the 180-day period applies to current entries and cannot be extended. On the 181st day, you are stuck with the liquidation.

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