The Case of the Unseen Seizure

The Court of International Trade has exclusive jurisdiction to review Customs & Border Protection's denial of a valid protest, including a protest of the exclusion of merchandise. 28 USC 1581(a)(CIT jurisdiction) and 19 USC 1514(a)(4) (exclusions are protestable). An exclusion can happen in two ways. First, CBP can make an affirmative decision on admissibility within 30 days of the merchandise being presented for examination.  After those 30 days and if the merchandise has still not been released, the goods are "deemed excluded." 19 USC 1499(c)(5)(A). Deemed exclusions are as protestable as affirmative exclusions.

A seizure, on the other hand, is subject to the exclusive jurisdiction of the U.S. District Court in the district where the merchandise is located. 28 U.S.C. 1356. A seizure is not an exclusion and is not protestable. In other words, seizure and exclusion are two distinct legal actions subject to two distinct avenues of review. 

The process CBP must follow to effectuate a seizure includes a requirement that it give written notice to each party the circumstances indicate has an interest in the property. 19 CFR 162.31. What happens if CBP seizes merchandise, but the importer (or other interested party) does not receive notice of the seizure? Is there a deemed exclusion and a protestable event? Or does the seizure have the normal legal consequences, even though it may be a surprise to the importer? 

Those questions were presented to the U.S. Court of International Trade in Root Sciences, LLC v. United States. The answers to those questions dictate whether the plaintiff in this case is properly before the Court of International Trade or should be before the relevant U.S. District Court.

The imported merchandise is machinery used in the processing of cannabis. The underlying issue, which turns out to be nothing more than a background fact, is whether the imported equipment is drug paraphernalia. For background on imports of alleged drug paraphernalia, see this prior post.

Prior decisions of the Court of International Trade have held that a seizure that occurs after exclusion but before an interested party files a summons in the CIT divests the Court of jurisdiction. But, if the protest is filed before the seizure happens, then the CIT has jurisdiction to review the protested exclusion. We discussed this here in relation to an earlier case called CBB Group Inc. v. US and in PRP Trading Corp v. US. So, the timing matters. Here is what happened in this case:

• December 2020, plaintiff attempts to import goods
• Jan. 31, 2021, CBP detained the shipment as possible drug paraphernalia
• Feb. 10, 2021, CBP seized the merchandise
• Feb 18, 2021, Plaintiff protested the apparent deemed exclusion
• Mar. 8, 2021, CBP attempted to provide notice by certified mail
• Mar. 11, 2021, the Post Office unsuccessfully tried to deliver the notice
• March 20, 2021, Plaintiff believed protest to be deemed denied 30 days after filing
• March 22, 2021, Plaintiff initiated CIT case challenging denied protest
• March 23, 2021, CBP sent an automated email notifying Plaintiff of the denial of the protest
• Mar. 24, CBP resent the notice, also unsuccessfully

What we have here, is two ships passing in the fog of customs compliance. On the one hand, Plaintiff has no notice of a seizure and is proceeding on what it sees as a deemed exclusion, protest, and deemed denial of the protest. On the other hand, CBP thinks it seized the merchandise a week before the protest and just can't get notice to the Plaintiff.

The first issue before the Court was whether there was, in fact, a deemed exclusion for Plaintiff to protest. If the seizure of February 10 is legal, there can be no subsequent exclusion of already seized merchandise. The Court reviewed the relevant statutes and regulations and found a clear distinction between a seizure and an exclusion. For example, 19 CFR 151.16(j) states that "in lieu of seizure and forfeiture" Customs may deny entry to merchandise. The denial of the entry is the exclusion, and it is a protestable decision on admissibility. Moreover, the Court found the purpose of the protest of a deemed exclusion is to give the importer an opportunity for judicial review when CBP fails to act, which is distinct from reviewing the action involved in a seizure. Thus, the seizure, if legal prevents the deemed exclusions and, in turn, means the Court of International Trade does not have jurisdiction to review the matter (because there was nothing to validly protest).

The remaining question was whether the lack of successful notice to Plaintiff means the seizure was not validly completed. This comes down to whether the effective date of the seizure is when CBP did it or when CBP gave notice. The law on this appears to be mixed. The Court noted CBB, linked above, which give effect to the date of notice. Other cases rely on the date of the seizure itself. The Court concluded that when a seizure happens within 30-days of the merchandise being presented for examination, there can be no deemed exclusion. This was in part based on the because the normal delay in notice, including mailing, might itself lead to deemed liquidations following an effort to seize the goods. 

This may seem like a hand waiving solution to the second question. It is not. The question of whether CBP properly completed the seizure and, therefore, properly took the property remains open to judicial review (probably on due process grounds). That review, however, will happen in the U.S. District Court, not the Court of International Trade. If the District Court finds that the lack of successful notice results in an invalid seizure, then the deemed seizure happened, and the case can move back to the CIT.