Customs Ruling HQ H303404 - Application for Further Review of Protest Number 2002-18-100050; Concerning Product under Antidumping Order A-xxx-xxx

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HQ H303404
Jun 25, 2020

Type : • HTSUS :
Related: 230409; 113979; 287014; 228838; 221591; 223539; 220975; 229410; H030606; H097501

LIQ 4-01
H303404 SMS
OT:RR:CTF:ER

Center Director
Industrial and Manufacturing Materials Center
U.S. Customs and Border Protection
726 Exchange Street, Suite 400
Buffalo, NY 14210

Attn: Fernando A. Biscarra and Laramarie Calero, Supervisory Import Specialists

RE: Application for Further Review of Protest Number 2002-18-100050; Concerning Product under Antidumping Order A-xxx-xxx

Dear Center Director:

The following is our decision regarding the Application for Further Review (“AFR”) of Protest Number 2002-2018-100050, filed on behalf of Protestant on July 25, 2018, which contests the antidumping duties (“ADD”) assessed on its entries of Product. This protest is designated the lead to protest number 4909-2018-100018, filed on July 27, 2018. Counsel has requested confidential treatment be afforded to certain information submitted in connection with this AFR request. In consideration of the request and sufficient justification presented pursuant to 19 C.F.R. § 177.2(b)(7), this office will not identify the party having any connection to the transactions under review nor any other identifying or financial information provided to U.S. Customs and Border Protection (“CBP”).

FACTS:

Protestant is a manufacturer of Product, which has been importing Product into the United States since 1987. According to CBP’s Automated Commercial Environment, (“ACE”), Protestant made 693 entries of Product, which it produced and exported, and are subject to this protest. We note, however, that Protestant asserts that four of these entries were entered prior to the period of review (“POR”). Protestant does not dispute that these entries are subject to antidumping order A-xxx-xxx. At the time of entry Protestant made ADD cash deposits of []% ad valorem.

With regard to the antidumping order on Product in April of 2013, the U.S. Department of Commerce (“Commerce” or “DOC”) published its final results of ADD administrative review for the POR. [] (“Final Results”). In these Final Results, Commerce assigned Protestant a dumping margin of []%, and instructed CBP, to collect cash deposits equal to this rate. Id. Subsequently, Protestant filed suit challenging Commerce’s determination. The Court of International Trade (“CIT”) issued a Temporary Restraining Order (“TRO”) and a preliminary injunction enjoining liquidation of the subject entries of the Product. See DOC Message No. xxxxxxx. After multiple appeals and affirmations Commerce’s Final Results were upheld in Federal Court. Following the conclusion of litigation, in DOC Message xxxxxxx, dated December [] 2017, Commerce issued liquidation instructions for all shipments of Product, produced and exported by Protestant and entered between the POR. Message xxxxxxx instructed CBP to liquidate and assess ADD liability of [] percent. Id.

The Industrial and Manufacturing Materials Center for Excellence and Expertise (“Center”) liquidated 539 entries between February 2, 2018 and April 27, 2018. On February 2, 2018, and February 16, 2018, CBP attempted to liquidate 153 entries. However electronic notice of liquidation for these 153 entries failed to post to cbp.gov until September 18, 2018. One entry, number xxx-xxxxx7933, was liquidated on April 6, 2018, and noted in ACE as “voided” by the Port of San Juan (“the Port”), liquidation was suspended on June 7, 2018, and the entry was “deemed liquidated” on July 13, 2018, and then reliquidated on July 27, 2018; furthermore, liquidation was again suspended on February 7, 2019. The first notice of liquidation of entry number xxx-xxxx7933 was posted on July 13, 2018, and the comment “deemed liquidated” was included in ACE.

On February 12, 2018, CBP notified Protestant that its $50,000 continuous import bond was insufficient and required a replacement bond at a higher amount. On March 30, 2018, Protestant requested a ruling from Regulations and Rulings (“RR”) for guidance on CBP’s authority to evaluate and accept claims for compromising ADD. We directed Protestant to CBP’s Office of Finance, which rejected Protestant’s offer in compromise. Additionally, Protestant has submitted a Freedom of Information Act (“FOIA”) request to RR’s FOIA Branch, regarding CBP interest calculation determination policy.

Protestant filed two protests, on July 25, 2018, and July 27, 2018, respectively, protesting CBP’s handling of its entries. Additionally, Protestant submitted supplemental information and arguments on March 14, 2019, and January 21, 2020. Protestant does not dispute that its entries are subject to ADD under case number A-xxx-xxx or that Commerce directed that CBP assess a specific ADD rate of []% on its relevant entries. Additionally, Protestant concedes that its entries were subject to CBP instructions published in DOC Message No xxxxxxx, dated December [] 2017. Protestant advances the following arguments in its protest.

ISSUES:

Whether CBP failed to adhere to the Administrative Procedure Act (“APA”), notice and comment rulemaking requirements and therefore, denied Protestant due process, regarding: establishing bond sufficiency; CBP’s process for offers in compromise; CBP’s method of calculating its duty and interest liabilities, including the use of an “arbitrarily assigned ‘transaction date’”

Whether CBP incorrectly calculated the amount of interest due;

Whether CBP failed to post notices of liquidation for 153 entries, which, as a result, are deemed liquidated by operation of law;

Whether CBP liquidated entries to which DOC Message No xxxxxxx did not apply; and

Whether CBP arbitrarily suspended liquidation of an entry and therefore, cannot hold Protestant liable for duties, taxes, and fees on this entry.

LAW AND ANAYLSIS:

As a preliminary matter, Protestant asserts that all of its claims are properly the subject of a protest under 19 U.S.C. § 1514. Pursuant to 19 U.S.C. § 1514, CBP decisions are final unless a protest is timely filed against that decision, including liquidation, (see 19 U.S.C. § 1514(a)) in accordance with 19 U.S.C. § 1514(c). Protestant asserts that its “claims are protestable” and relies on Thyssenkrupp Steel N. Am., Inc. v. United States, (886 F.3d 1215 (Ct. App. Fed. Cir. 2018), (Thyssenkrupp), for support of this assertion.

In Thyssenkrupp the plaintiff importer disagreed with CBP’s application of Commerce instructions when liquidating its entries subject to ADD. Protestant states that its claims, like those of Thyssenkrupp, focus on the application of Commerce instructions and therefore are protestable. With the exception of 4 of the 693 entries, Protestant complains about almost every aspect of CBP’s procedures with regard to bonds, interest calculations, and billing but does not assert that CBP improperly applied Commerce’s instructions, or contend that CBP should have applied the instructions in Message No xxxxxxx differently than it did. In fact, its only assertion with regard to these four entries is factual, i.e., that they were entered outside the time period addressed by the instructions. That is not the case in Thyssenkrupp, and therefore, the case does not apply here. However, inasmuch as Protestant protests the accuracy of the liquidation of its entries, we agree that liquidation is protestable and further review is afforded. See Xerox Corp. v. United States, 289 F.3d 792 (Ct. App. Fed. Cir. 2002); see also, Headquarters Ruling (“HQ”) 221591 (Feb. 13, 1990) (a mistake in the liquidation process can be corrected by one of the statutory methods set forth in 19 U.S.C. § 1514).

We note that protest 2002-2018-100050 was timely filed, within 180 days from the dates of liquidations, as relating to 539 entries. See 19 U.S.C. § 1514(c)(3)(A). CBP liquidated 539 entries between February 2, 2018, and April 27, 2018. Additionally, on February 2, 2018, and February 16, 2018, CBP attempted to liquidate 153 entries; however notice of liquidation for these entries was posted on September 18, 2018. Lastly, CBP attempted to liquidate one entry on April 6, 2018, and it was finally re-liquidated on July 27, 2018. Protest number 2002-2018-100050 was filed on July 25, 2018 and amended with protest number 4909-18-100018 on July 27, 2018, both within 180 days respectively of these dates of liquidation, for 539 entries. However, as related to the 154 remaining entries the protests were filed prior to their final liquidations, as discussed in detail below. Additionally, under 19 C.F.R. § 174.24, further review shall be accorded a party when the decision against which the protest was filed is alleged to involve questions of law or fact that have not been ruled upon by CBP. See 19 C.F.R. § 174.24(b). As discussed below we find that the first two of the five consolidated issues are not eligible for AFR, as they do not involve novel issues. However, as the Center and Port has sought guidance on these issues we will address their validity.

Generally, it is well settled that when assessing and collecting ADD CBP merely follows Commerce’s instructions. See Mitsubishi Electronics America, Inc. v. United States, 44 F.3d 973, 977 (Ct. App. Fed. Cir. 1994). The courts have consistently held that CBP’s role in the antidumping process is simply to follow Commerce’s instructions in collecting deposits of estimated duties and in assessing antidumping duties, together with interest, at the time of liquidation. See Fujitsu Ten Corporation of America v. United States, 21 C.I.T. 104, 107 (1997); and American Hi-Fi International, Inc. v United States, 19 C.I.T. 1340, 1342-43 (1995). In Mitsubishi, the Court held that “CBP has a merely ministerial role in liquidating antidumping duties.” 44 F.3d at 977. Thus, CBP simply applies the antidumping duty rates determined by Commerce to entries of merchandise in accordance with Commerce’s liquidation instructions. Accordingly, CBP must follow Commerce’s instructions with regards to the entries of Product at issue in this case.

Whether CBP failed to adhere to the APA’s, notice and comment rulemaking requirements and therefore, denied Protestant due process:

Protestant states that “Customs has not adhered to the administrative procedure acts [sic] (APA) notice and comment rulemaking requirement and arbitrarily denied [Protestant] due process. The actions alleged in violation of the APA’s required rulemaking procedure include: The promulgation of Customs’ ‘Analytical (2)’ Formula used to calculate [Protestant’s] heightened bonding requirement. The absence of a compromise or mitigation process for duty bills issued by customs and the failure of customs to provide notice regarding the factors it might consider when evaluating an offer in compromise The promulgation of Customs’ rule for determining the accrual period for interest assessment; and Customs arbitrary use of an undefined term, ‘transaction date’ to assign the date on which [Protestant] interest began to accrue.”

Protestant relies on the rulemaking requirements of § 4(a) of 5 U.S.C. § 553(b) to protest all 693 entries. Protestant contends that CBP’s bond, offer in compromise, and interest calculation policies violate the APA’s notice and comment requirements. Protestant does not elaborate on how it was denied due process. We can only assume that Protestant is complaining that its right to procedural due process was denied and that its interest involved here is a property right in the duty it owes CBP. Because Protestant identifies no specific notice that it finds faulty, we address the APA contentions generally.

The Administrative Procedure Act, Pub. L. 79–404, 60 Stat. 237, enacted June 11, 1946, governs the way in which federal government agencies propose and establish regulations. Section 553 requires government agencies to provide public notice of the proposed rule and the opportunity to provide comment on the proposed rule. See 5 U.S.C. § 553(b) & (c). In HQ H030606, dated August 12, 2008, we explain that where CBP issues a regulation under the procedural rigors dictated by the APA, that regulation has the enforceability of law. HQ H030606 (Aug. 12, 2008) (citing Chrysler Corp. v. Brown, 441 U.S. 281, 295, (1979)). A regulation that endures the APA process carries the full weight of Customs’ rulemaking authority. Id. see also, Parker v. Office of Personnel Management, 974 F.2d 164, 166 (Ct. App. Fed. Cir. 1992) (recognizing that by enacting regulations, agencies put a “gloss” on their statutory interpretations).

Section 553(b) of the APA specifically exempts from these procedures “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice . . . .” 5 U.S.C. § 553(b)(A). “Regarding the difference between a substantive rule and a policy statement the D.C. Circuit stated: The critical distinction between a substantive rule and a general statement of policy is the different practical effect that these two types of pronouncements have in subsequent administrative proceedings. . . . . A properly adopted substantive rule establishes a standard of conduct which has the force of law.

HQ 230409 (Oct. 26, 2004) (quoting Pacific Gas & Elec. Co. v. FPC, 506 F.2d 33, 38 (U.S. App. DC 1974). “In contrast to a substantive rule, a general statement of policy ‘is not finally determinative of the issues or rights to which it is addressed.’” Id. Additionally, precedence demonstrates that if agency action is challenged in court, under the APA the CIT will uphold CBP actions unless “found to be—(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law . . . [or] (D) without observance of procedure required by law.” 5 U.S.C. § 706(2); see also, Tabacos de Wilson, Inc. v. United States, 324 F. Supp. 3d 1304, 1311 (Ct. of Int’l Trade 2018). Moreover, in order to invalidate an agency’s action, a plaintiff would need to prove that it suffered substantial prejudice, as a result of the agency’s failure to follow the APA notice requirements. See Great American Insurance Co. of NY v. United States, 738 F.3d 1320 (Ct. App. Fed. Cir. 2013) (holding that CBP’s failure to provide a notice of suspension of liquidation pursuant to 19 U.S.C. § 1504(c) will only invalidate the suspension if the surety can demonstrate that CBP’s error caused it substantial prejudice) (internal citations omitted).

In HQ H097501, dated July 14, 2014, we explained that the courts have held that “[a]n agency’s violation of a statutory procedural requirement does not necessarily invalidate the agency action, especially where Congress has not expressed any consequences for such a procedural violation.” HQ H097501 (July 14, 2014) (quoting Diaz v. Dep’t of Air Force, 63 F.3d 1107, 1109 (Ct. App. Fed. Cir. 1995)). The Supreme Court has also concluded: “[w]e would be most reluctant to conclude that every failure of an agency to observe a procedural requirement voids subsequent agency action, especially when important public rights are at stake.” Id. (Quoting Brock v. Pierce Cnty., 476 U.S. 253, 259-60, (1986)). In HQ H097501, we held that CBP’s failure to provide notice of the suspension of liquidation did not necessarily invalidate the suspension of liquidation for the entries at issue and require the entries to be deemed liquidated. “Rather, as explained by the Court of Appeals for the Federal Circuit in Great American Insurance Co. of NY, the rule of prejudicial error under the Administrative Procedure Act must be applied and [the importer] must demonstrate that it suffered substantial prejudice as a result of CBP’s procedural error before the suspension attached to the entries can be invalidated. See Id (quoting Great American Insurance Co. of NY, 738 F.3d at 1329-30 (Ct. App. Fed. Cir. 2013). Protestant does not provide any arguments or evidence that it was substantially prejudiced by these policies merely that CBP erred in the application of its ministerial duties applying its ADD.

As explained in detail below, CBP applied regulations and statutes to liquidate Protestant entries. Protestant’s bond contentions are moot and, moreover, the guidelines and formula used to set bond amounts are specifically exempted APA procedures because they constitute “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice . . . .” 5 U.S.C. § 553(b)(A). The assessment of interest on the underpayment of antidumping duties is the result of regulation and statute. The printing of the “transaction date” on the CBP bill is immaterial. In addition, the absence or lack of a process, in this case, for compromise of mitigation of antidumping duties, is not subject to the APA. And, even if the APA was violated, for which Protestant had provided no evidence, there is also no evidence of substantial prejudice with is required to invalidate an agency’s action. Finally, the facts here reflect that not only has Protestant had multiple interactions with various CBP offices, it has had the liquidation of these entries reviewed, and Protestant participated in Commerce’s lengthy administrative review of the order and then litigated the result. Accordingly, we are at a loss to explain how Protestant was denied due process. Accordingly, we find that Protestant’s contentions that CBP violated the APA and denied due process are fundamentally flawed.

Bond Sufficiency Policy

On February 12, 2018, CBP notified Protestant that its $50,000 continuous import bond was insufficient and required a replacement bond at a higher amount. Protestant challenges the formula used to calculate heighted bond requirements. Protestant contends that CBP’s use of the “Analytical (2)” formula explained in the “Current Bond Formulas” found on cbp.gov, and based on CBP’s Bonding Directives, violate the APA’s notice and comment rulemaking requirement, and that CBPs enhanced bonding determination was arbitrary and capricious. However, we find that the issue is moot in that there is no current controversy. Protestant admits that CBP reinstated its $50,000 continuous import bond on February 14, 2018. Nonetheless it argues that CBP could “re-impose the elevated bonding requirement” and that the amount of the bond would be based on the “Analytical Formula.”

While CBP frequently issues prospective rulings based on facts posited by interested parties, (see 19 C.F.R. § 177.1) the regulations prohibit the issuing of rulings based on hypotheticals, which we find is the case here. In addition, prospective rulings are based on a specific set of facts. See 19 C.F.R. §177.1(d). Protestant asserts that an action CBP may or may not take in the future is unlawful. Moreover, a protest is not the proper form in which to submit a ruling request. See 19 C.F.R. § 177.2. Therefore, we decline to address Protestant’s assertions with regard to an action that CBP may or may not take in the future. However, in the interest of transparency, we discuss CBP bonding policy below.

Section 623 of the Tariff Act of 1930 (as amended 19 U.S.C. § 1623), gives CBP the broad authority to require a bond or other security to protect the revenue of the Unites States. More specifically, 19 U.S.C. §1499 mandates the posting of a bond prior to the release of merchandise from Customs custody. See also 19 C.F.R §142.4 (CBP regulations provide that merchandise shall not be released from CBP custody unless a bond meeting regulatory requirements and issued by an approved surety is on file with CBP.) Where no bond is required by law, CBP at its discretion, may require a bond to protect the revenue. See 19 U.S.C. § 1623. Bond Conditions are established in 19 C.F.R. Part 113 Subpart G. Nineteen C.F.R. § 113.13 provides regulatory guidelines for determining bond sufficiency. See 19 C.F.R. § 113.13. The regulations also require CBP to review each bond on file to determine whether the bond is adequate to “protect the revenue and ensure compliance with applicable law and regulations.” 19 C.F.R. § 113.13(c).

CBP Directive Number 3510-004 “Monetary Guidelines for Setting Bond Amounts,” dated July 23, 1991 and 3510-005 “Bond Sufficiency”, dated May 17, 1993 (collectively “the Bond Directives”), provide more guidance on bond sufficiency determinations. We note the Bond Directives are available to the public on cbp.gov. In general CBP sets a non-discretionary, minimum continuous entry bond amount of $50,000. However, as indicated in the Bond Directive, CBP has a longstanding established formula for continuous bonds, which states “the bond limit of liability shall be fixed in multiples of $10,000 [or $100,000] nearest to 10 percent of duties, taxes and fees paid by the importer . . . during the calendar year preceding the date of the application.” CBP Directive No. 3510-004. The Bond Directives continue that “[h]owever, when little or no duties, taxes and fees are involved and the $50,000 bond minimum is not deemed sufficient, as an option, the bond limit of liability amount may be fixed at one-half of 1 percent of the value of importations made during the previous bond year.” CBP Directive No. 3510-005. See also HQ 113979 (July 2, 1997)(in setting continuous bond amounts for established importers of conditionally free or reduced duty merchandise who pay little or no duties, it would be erroneous to base the liability limit on duties that would accrue on an ordinary consumption entry.” If there are reservations due to an importers past inability to pay, “then the bond amount may be fixed at one-half of 1 percent of the value of importations made during the previous bond year, if this is greater than the $50,000 minimum.”)

Part 113, subpart B lists regulatory criteria which, when read in conjunction with the Bond Directives, provides guidance to CBP and the trade on what factors are considered when determining the amount of a bond and the policy behind this calculation. See 19 C.F.R. § 113.13 (b). Additionally, available on cbp.gov are the “Current Bond Formulas,” last updated October 24, 2013, which amends the Bond Directives and provides a formula worksheet as further guidance on formula bond calculations. Also on October 24, 2006, CBP published a request for public comments in the Federal Registry entitled “Monetary Guidelines for Setting Bond Amounts for Importations Subject to Enhanced Bonding Requirements” which outlined CBP’s intention to amend the Bond Directives to provide “enhanced customs bonding requirement for those continuous bonds that secure the promise to pay all duties finally determined to be due on certain merchandise subject to AD/CVD.” 71 Fed. Reg. 62,276 (Oct. 24, 2006).

The CIT, in National Fisheries Institute, Inc., et al., v. United States Bureau of Customs and Border Protection, 637 F. Supp. 2d 1270 (Ct. of Int’l Trade 2009) and 714 F. Supp. 2d 1231 (Ct. of Int’l Trade 2010) (collectively “National Fisheries”), analyzed CBP’s bond sufficiency determination as assessed against shrimp importers. In National Fisheries, shrimp importers challenged a 2004 policy, in which CBP specifically targeted shrimp importers, requiring a 100% bonding requirement on the industry, to protect the collection of ADD imposed by Commerce. The CIT found that while the statutory provisions do not preclude CBP from considering potential ADD liability exceeding the amount of the required cash deposit, CBP is constrained to its ministerial role in the administration of ADD laws. National Fisheries, 637 F. Supp. 2d at 1282; 1291. CBP’s bond enhancement, as assessed against the shrimp industry, was found arbitrary and capricious and in violation of the APA. On remand, the CIT confirmed that CBP has the authority to assess bond liability on continuous bonds, according to the 10% formula set forth in the Bond Directives, with the inclusion of potential ADD liability in the calculation. National Fisheries, 714 F. Supp. 2d at 1239. Holding “[b]ecause Customs is granted a measure of discretion by 19 U.S.C. § 1623 (2000) to set bond liability limits to protect the revenue, the court disagrees with plaintiffs’ argument that Customs lacks authority to include potential antidumping duty liability when applying the 10% formula of the Bond Directive.” Id. The Court in National Fisheries, confirmed the reasonableness of the bond formulas outlined in the Bond Directives, and determined these policies well within CBP’s authority. Id.

As, such, the Bonding Directives formulas based on a 10% calculation of the duties paid in the previous year, including potential ADD liability is reasonable and well within CBP’s statutory bond authority, as discussed in National Fisheries, and in HQ 113979. CBP’s bonding policy is not contrary to the APA. As the CIT found in National Fisheries, CBP’s bonding formulas found in the Bond Directives, including the guidance in “The Current Bonding Formulas,” with the inclusion of ADD liability, is reasonable and well within the authority of CBP to protect the revenue of the United States.

b. CBP’s process for offers in compromise.

Protestant next contends that, outside of penalty actions, CBP “offers no process for compromise or mitigation of its duty bills, which is a violation of the APA and due process.” Protestant asserts that as such, it was not afforded a fair opportunity to seek mitigation, as it lacked a “clear understanding of the factors” that would be considered by CBP, and “thus must use the protest process for contesting” its Customs bills. We do not see how mitigation of customs bills is addressed by the protest procedure. The procedure is an administrative mechanism for review of decisions by CBP and cannot address compromise or mitigation of CBP bills.

Section 617 of the Tariff Act of 1930 (as amended 19 U.S.C. § 1617) provides for offers in compromise; however, under the law the deciding officer for these offers is CBP’s Chief Financial Officer and the authority to make such recommendation is with the Office of General Counsel (“OGC”) and its duly authorized delegates. See HQ 287014 (Nov. 8, 2019). CBP Regulations found in Subpart D of 19 C.F.R. Part 171 provide guidance on offers in compromise. Lastly, CBP provides an informed compliance publication on cbp.gov, which outlines in details mitigation guidelines.

It is not alleged that CBP assessed Protestant any customs penalties, but it instead contends that it was not provided an opportunity to mitigate its lawfully assessed ADD. In fact, Protestant participated in Commerce’s administrative review process for the merchandise and entries at issue; additionally, it litigated the Commerce assessed ADD liability amounts in the CIT and Court of Appeals for the Federal Circuit, which ultimately confirmed Commerce’s decision. Protestant, in its submissions, indicated that during litigation and these review processes, it attempted to settle; however, these settlement attempts were unsuccessful. In addition, Protestant did have a discussion with CBP’s Chief Financial Officer. Accordingly, as Protestant took full advantage of its Commerce provided avenues for mitigation and reduction of ADD liability, and was afforded opportunity to discuss same with CBP, we fail to see how Protestant was not afforded due process under the law.

As such, we find that Protestant’s contention that it was not provided an opportunity to reduce it ADD liability is meritless and is not a protestable CBP decision. See also, HQ 228838 (Sept. 27, 2002) (“rejections of such offers do not fall within a Customs decision enumerated in § 1514(a) and therefore, are not protestable.”) Finally, we note that Commerce and the U.S. International Trade Commission found that Protestant sold its goods in the United States at less than fair market value and continued to do so after the Commerce finding. c. CBP’s method of calculating its duty and interest liabilities.

Protestant asserts that CBP used “an arbitrarily assigned “‘transaction date”’ to commence the assessment of interest, and therefore, CBP violated the APA “by not engaging in notice-and-comment rulemaking process to its rule used to determine accrual period for interest assessment.” Protestant also contends that CBP’s practice is to impose interest ten days after the date of cargo release, and “is not supported by statute or regulations and was not promulgated pursuant to … the APA.” Protestant confirmed the billing and interest calculations of all 693 entries and corresponding bills, and asserts calculation errors related to 71 of those entries. As discussed in detail below, interest on ADD is dictated by statute and regulation. Therefore, we find Protestant’s APA argument unsound.

Whether CBP incorrectly calculated amount of interest due.

Protestant asserts that, as of June 2018, it was overcharged around $6,000 in interest for 71 entries. Protestant provided its calculations for 13 entries. The Center reviewed these 71 interest calculations previously and disputes calculation errors on all but four entries. Specifically, the Center determined that, for entry number xxx-xxxx6299 it based its calculation off of the incorrect principal; and for entry numbers xxx-xxxx6426, xxx-xxxx9655, and xxx-xxxx8360, the incorrect entry summary date was used, these errors have since been corrected by the Center. Inasmuch as Protestant protests the accuracy of CBP’s duty and interest calculations, this matter is protestable and further review afforded. See Xerox Corp. v. United States, 289 F.3d 792 (Ct. App. Fed. Cir. 2002); see also, HQ 221591 (Feb. 13, 1990) (a mistake in the liquidation process can be corrected by one of the statutory methods set forth in 19 U.S.C. § 1514). See also 19 C.F.R. § 174.24(b) (further review shall be accorded a party when the decision against which the protest was filed is alleged to involve questions of law or fact that have not been ruled upon by CBP).

The Tariff Act of 1930 provides when interest is due on the underpayment of duties, generally:

[i]nterest assessed due to an underpayment of duties, fees, or interest shall accrue, at a rate determined by the Secretary, from the date the importer of record is required to deposit estimated duties, fees, and interest to the date of liquidation or reliquidation of the applicable entry or reconciliation.

19 U.S.C. § 1505(c). Additionally, section 677g of the Tariff Act (as amended 19 U.S.C. § 1677g) outlines the assessment of interest with regards to antidumping duties, section 677g, provides:

[i]nterest shall be payable on overpayments or underpayments of amounts deposited on merchandise entered, or withdrawn from warehouse, for consumption on and after - - (1) the date of publication of a countervailing or antidumping order . . . or (2) the date of a finding under the Antidumping Act, 1921.

19 U.S.C. § 1677g(a). In addition, 19 C.F.R. § 351.212(e) states that CBP will “calculate interest for each entry on or after the publication of the order from the date that a cash deposit is required to be deposited for the entry through the date of liquidation of the entry.” Nineteen U.S.C. § 1677g(b) further states that the rate of interest payable, under 19 U.S.C. § 1677g(a), for any period of time, is the rate established by 26 U.S.C. § 6621. Id.

CBP regulations found at 19 C.F.R. § 24.3a similarly provide guidance on CBP billing and interest assessment. In pertinent part, CBP regulations state: “interest assessed due to an underpayment of duties, taxes, fees, or interest will accrue from the date the importer of record is required to deposit estimated duties, taxes, fees, and interest to the date of liquidation or re-liquidation of the applicable entry or reconciliation.” 19 C.F.R. § 24.3a(b)(2)(i). Additionally, any unpaid balance will bear interest until the balance is paid in full. 19 C.F.R. § 24.3a(b)(2)(ii). Pursuant to 19 C.F.R. § 141.101, estimated duties are deposited at the time of filing the entry documentation, or the entry summary documentation “when it serves as both entry and entry summary. . .” 19 C.F.R. § 141.101. The regulation continues that “in the case of merchandise released under the entry documentation . . . before filing of the entry summary, deposit of estimated duties shall be made at the time the entry summary is filed.” 19 C.F.R. § 141.101(a). Accordingly, interest on underpayments of antidumping duties shall accrue from the date the importer is required to deposit estimated duties to the date of liquidation, and is adjusted in accordance with the rate determined by the Secretary, for the periods the amount is outstanding. Furthermore, under CBP’s two part entry and entry summary procedures, the date estimated duties including antidumping duties are due may differ depending on how entry is made. Accordingly, how entry is made, whether using the two part entry and entry summary procedure or filing the entry and the entry summary simultaneously, will determine the date estimated duties are due and thus when interest is imposed on underpayments. See 19 C.F.R. § 141.101.

As explained in 26 U.S.C. § 6621, the underpayment compounded interest rate calculation is determined by the Federal short-term rate, which is determined by the Secretary of Treasury the first month in each calendar quarter, plus three percentage points. See 26 U.S.C. § 6621(a) and (b). The Federal short-term rate determined for any month shall apply during the first calendar quarter beginning after such month. Id.; see also, U.S. Customs and Border Protection Quarterly IRS Interest Rates Used in Calculating Interest on Overdue Accounts and Refunds on Customs Duties, 85 Fed. Reg. 19,002 (Apr. 3, 2020). In HQ 223539, dated May 4, 1992, we explain that the Tarff Act provides “interest is compounded and payable at the IRS rate for any period of time during which entries are suspended. Pursuant to this method, the interest payable varies in accordance with interest set forth under the previous section 6621 for the periods of suspension.” See also, Treasury Decision (“T.D.”) 85-93 (May 21, 1985) (under 19 U.S.C. §§ 6621 and 6622, interest shall be adjusted in accordance with the period that the money is outstanding, and shall be compounded daily where applicable). In HQ 220975, dated May 10, 1991, CBP held that the amount of interest due on the importer’s underpayment of antidumping duties, was calculated from the date of entry, which was also the date the estimated duties were paid, until the date of liquidation. See HQ 220975 (May 10, 1991). As explained in HQ 229410, dated September 27, 2002, the amount of interest is the difference between the required cash deposit of estimated antidumping duties, actually deposited, and the final amount of assessed duties, on the date of liquidation. See HQ 229410 (Sep. 27, 2002). Accordingly, interest on underpayments of antidumping duties shall accrue from the date the importer is required to deposit estimated antidumping duties to the date of liquidation, and is adjusted in accordance with the rate determined by the Secretary, for the periods the amount is outstanding.

Specifically for entry number xxx-xxxx8360, in accordance with statutory and regulatory guidance, we agree that CBP erred in its interest calculation. In ACE, entry number xxx.xxxx8360 has an entry and cargo release date of January 3, 2011. Additionally, entry number xxx-xxxx8360 has an entry summary date of January 13, 2011, ten days after entry and cargo release. Lastly, CBP liquidated the entry on February 2, 2018. On the bill generated at liquidation and sent to Protestant, CBP used a transaction date of January 3, 2011, to commence the calculation of interest. CBP also included the applicable interest rate of 5%. However, as the Center concedes, and pursuant to 19 C.F.R. § 141.101, the correct transaction date would have been January 13, 2011, to correspond with the date of entry summary and the deposit of estimated duties. This ten day error caused an increase of $351.58 in interest above the statutorily allowed amount. Accordingly, we find that CBP erred when it used the entry date instead of the entry summary date, when it calculated Protestant’s interest liability.

Using this entry as guidance, CBP should ensure that the correct transaction date, corresponding with Protestant’s deposit of duties was used when calculating interest, and adjust any calculations as appropriate. In the instant case, at the time of entry Protestant made ADD cash deposits of []% ad valorem. The final ADD rate applicable, per DOC Message xxxxxxx, was []% ad valorem. Consequently, CBP should have calculated interest on the underpayment of ADD, an amount equal to []% ad valorem, from the date the duty was required to be deposited to the date of liquidation. To the extent that interest was not calculated from the date the duty was required to be deposited to the date of liquidation, or that interest was calculated on an amount different than the difference between [] percent deposited at entry and the [] percent final ADD rate, or that interest was calculated at a rate other than that described in 26 U.S.C. § 662, CBP should re-liquidate such entries.

Finally, for billing purposes CBP uses a standard bill form for all entry types, and therefore uses the term “transaction date” to indicate the date the importer of record is required to deposit estimated duties, and thus, the date from which interest is owed. For consumption entries, we do not find, as Protestant asserts, that the use of the term transaction date violates the APA, as all entry and duty deposit procedures are outlined in CBP regulations and statutes, importers are well equipped with the information they need to determine their transaction type, date, and customs duty and interest assessments.

Whether CBP failed to post notices of liquidation for 153 entries, which, as a result, are deemed liquidated by operation of law.

Protestant next asserts that pursuant to 19 U.S.C. §1504(d), 153 of its entries liquidated as a matter of law, six months after Commerce’s December [] 2017, publication of liquidation instructions. Inasmuch as Protestant protests the timing and accuracy of these liquidation, this matter is protestable and further review afforded. See Xerox Corp. 289 F.3d 792; see also, HQ 221591 (Feb. 13, 1990) and 19 C.F.R. § 174.24(b). Here, the removal of the suspension of the liquidation and the proper notice of the removal of the suspension are not at issue. Protestant only contends that CBP failed to properly publish notice of its liquidation, and therefore CBP did not accomplish a lawful liquidation of the entries within the six months after receiving notice of the removal of the suspension. We agree.

Section 1504(d) of Title 19 requires that CBP liquidate entries within six months after receiving “notice” that a suspension of liquidation of such entries has been removed. If CBP fails to timely liquidate the entries after receiving notice, the entries are “deemed” liquidated at the rate asserted at the time of entry. See Fujitsu Gen. Am., Inc. v. United States, 283 F.3d 1364, 1376 (Ct. App. Fed. Cir. 2002). “In order for a deemed liquidation to occur, (1) the suspension of liquidation that was in place must have been removed; (2) Customs must have received notice of the removal of the suspension; and (3) Customs must not liquidate the entry at issue within six months of receiving such notice.” Id.

On December [] 2017, Commerce issued liquidation instructions for all shipments of Product produced and exported by Protestant between the POR. Accordingly, CBP had 6 months or until June [] 2018, to liquidate the entries of Product subject to DOC Message Number xxxxxxx. CBP liquidated the subject 153 entries on February 2, 2018, and February 16, 2018, and posted notice of these liquidations on cbp.gov on September 18, 2018.

Lawful liquidation of entries, includes the posting of public notice of such liquidation. Section 1500(e) of Title 19 provides for such notice of liquidation, and requires that CBP “give or transmit, pursuant to an electronic data interchange system, notice of such liquidation to the importer, his consignee, or agent in such form and manner as the Secretary shall by regulation prescribe.” 19 U.S.C. § 1504(e). Pursuant to Customs regulations:

Notice of liquidation of formal entries will be provided on CBP’s public Web site, www.cbp.gov.

The notice of liquidation will be posted for the information of importers in a conspicuous place on www.cbp.gov in such a manner that it can readily be located and consulted by all interested persons.

Date of liquidation - (1) Generally. The notice of liquidation will be dated with the date it is posted electronically on www.cbp.gov for the information of importers. This electronic posting will be deemed the legal evidence of liquidation. The notice of liquidation will be maintained on www.cbp.gov for a minimum of 15 months from the date of posting.

19 C.F.R. § 159.9. Accordingly, the evidence of the date of liquidation is the date that notice of liquidation is posted electronically on cbp.gov. See also, 81 Fed. Reg. 89375 (Dec. 12, 2016).

The importance and sufficiency of notice of liquidation is a longstanding requirement, and has been the subject of several court cases. The CIT explained in SRR v. Robles, 853 F. Supp. 451 (Ct. Int’l Trade 1994), “the basic statutory scheme provides that in order to achieve effective liquidation, notice must be given and it must be given in the manner specified by the Secretary of the Treasury.” SRR v. Robles, 853 F. Supp. at 453. The CIT expounded that 19 § U.S.C. § 1500(d), which provides for liquidations and § 1500(e), which provides for notice, must be read together.

To read the two provisions so separately, as do defendants, that liquidation may be said to occur even if a Customs official simply places an entry stamped ‘liquidated’ in a locked filing cabinet, is untenable. As defendants state, defective notice of liquidation does toll the period for protesting a decision incorporated into the liquidation, but if no notice of liquidation is provided within the time periods allowed by 19 U.S.C. § 1504, liquidation by operation of law as provided in the entry papers occurs.

Id. at 475. The Court continues “[r]eading 19 U.S.C. § 1504 to allow for ‘secret’ liquidation eviscerates its purpose. 19 U.S.C. § 1500 and § 1504 must be read together. To be effective, liquidation must be noticed in a way that advises parties who are bound by the liquidation that it has occurred.” Id. See also, Washington Int'l Ins. Co. v. United States, 707 F. Supp. 561, 565 (Ct. Int’l Trade 1989) (noting that secret liquidation is not a liquidation; “it is the act of giving notice which gives legal stature to the event of liquidation. Without a public declaration, the liquidation has no legal effect.”).

Because CBP failed to post timely notice of liquidation of 153 of Protestant’s entries, as required pursuant to 19 U.S.C. § 1500(e) and 19 C.F.R. § 159.9, the liquidations of these 153 were not legally effective until notice was posted. Specifically, we find that any liquidation of Protestant’s entries that was not posted to cbp.gov prior to June [] 2018, did not constitute a lawful liquidation. Therefore, such entries were not liquidated within 6 months of the notice that the suspension of liquidation of the protested entries dissolved, and such entries liquidated as a matter of law, at the rate asserted at entry pursuant to 19 U.S.C. § 1504(d). Therefore, no additional ADD is due on these entries and any bills for additional ADD must be cancelled.

In addition, as the CIT explained that, Rheem Metalurgica S/A v. United States, 951 F. Supp. 241, (Ct. Int’l Trade 1996), as 19 U.S.C. § 1504(d) clearly states that entries liquidated by operation of law are liquidated at “the rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer.” Id. at 250. “The meaning of ‘asserted’ in § 1504(d) . . . means that which is claimed and indicated by the importer, his consignee or agent on the entry summary or warehouse withdrawal.’” Id. at 249 (internal citations omitted). As such, in Rheem, as here, by operation of 19 U.S.C. § 1504(d), no additional amount was due upon liquidation, or in this case, upon “deemed liquidation” of the entries, and therefore, Protestant is also not liable for interest under 19 U.S.C. § 1677g for these entries, as there were no “underpayments” of estimated antidumping duties. Therefore, no interest is due on these entries and any bills for interest must be cancelled.

Whether CBP liquidated entries to which DOC Message No xxxxxxx did not apply.

Protestant next asserts that four of the protested entries were entered outside the entry period addressed by Message xxxxxxx, i.e., the POR, and therefore, should not have been liquidated in accordance with this Message. Protestant asserts that these entries: xxx-xxxx2611, xxx-xxxx2629, xxx-xxxx3346, and xxx-xxxx3544, were entered on October 30, 2010. Specifically, Protestant contends that is was overcharged ADD and interest on these entries because they entered prior to the POR, but fails to provide any documentation or support for that entry date. The Center disagrees with Protestant’s contention, and asserts that ACE, CBP’s system of record, reflects that these four entries entered on November 1st and 2nd, 2010, and that, therefore, Message xxxxxxx applies to these entries. See Ace System of Record Notice, 71 Fed Reg., 3,109 (Jan. 19, 2006). We agree, the entry record contained in ACE demonstrates these entries were entered during the period i.e., the POR, and therefore, addressed by Message xxxxxxx. Consequently, to the extent that these entries were liquidated as directed by Message xxxxxxx, we do not find that the Center erred in it liquidations of the above listed entries.

Whether CBP arbitrarily suspended liquidation of an entry and therefore, cannot hold Protestant liable for duties, taxes and fees on entry number xxx-xxxx7933.

Protestant lastly contends that CBP “must omit from its claim against Protestant any entry whose liquidation was arbitrarily suspended and that was subsequently excluded from the list of bills.” Further, Protestant contends that it was “discharged from” any liability for this entry because it was liquidated and then liquidation was suspended. Protestant offers no explanation for this conclusion nor legal justification. Protestant asserts that while the original liquidation occurred on April 6, 2018, as of July 5, 2018, the cbp.gov notice listed the liquidation as pending. Because of the various liquidations, re-liquidations, and suspensions, Protestant contends that CBP may not collect any duties over the cash deposits paid at entry. Essentially, Protestant asserts that liquidation of this entry was unlawfully suspended by CBP, and it liquidated as a matter of law, six months after the liquidation instructions and lifting of suspension notice, included in Commerce Message No xxxxxxx, dated December [] 2017. The Port asserts that suspension and liquidation of this entry was lawful, specifically that the entry “deemed liquidated on July 5, 2018,” and re-liquidation was lawfully done within 90 days.

Entry number xxx-xxxx7933 was made on March 5, 2011. As recorded in ACE, entry number xxx-xxxx7933 was originally liquidated on April 6, 2018. However, no notice of this liquidation was published on www.cbp.gov as required. On June 7, 2018, the port noted in ACE that the liquidation was “voided” and liquidation was then suspended. The entry was again liquidated on July 13, 2018. This liquidation was described as a “deemed liquidation” in ACE. Notice of this liquidation was posted on July 13, 2018. The entry was then re-liquidated on July 27, 2018. Lastly, ACE shows that liquidation was again suspended on February 7, 2019.

First we note that there is a difference between operational mechanisms in ACE and the notations accompanying them and the legal effect of these mechanisms. As explained in detail above, in section III, without notice of liquidation, a liquidation has not occurred legally. Therefore, regardless of the operational liquidation reflected in ACE on April 6, 2018, because there was no notice posted, this entry was not legally liquidated. The legal effect is that the entry remained unliquidated. The Port then attempted to “void” the April 6, 2018, liquidation. Notwithstanding that there is no provision in the law to “void” a liquidation, there also was no previous liquidation to void. Consequently, the ACE notation of “voided” liquidation is without legal effect. Subsequently, the Port suspended liquidation of this entry on June 7, 2018. The entry was again liquidated in ACE on July 13, 2018, and notice of liquidation was posted on July 13, 2018. The notation “deemed liquidated” was included in ACE. We note again that “deemed liquidation is a legal conclusion and the notation in ACE is without legal consequence. However, as explained in detail in section III above, the effect of 19 U.S.C. § 1504 on this entry is that it was deemed liquidated 6 months after Commerce’s December [] 2017, publication of liquidation instructions, June [] 2018.

CBP may voluntarily reliquidate an entry, including an entry that has deemed liquidated by operation of law, notwithstanding the filing of a protest, within 90 days from the date of the original liquidation. See 19 U.S.C. § 1501. Here, the entry was deemed liquidated on June [], 2018; thus, CBP had 90 days from June [], 2018, to reliquidate the entry. Ninety days from June [], 2018, was September [], 2018. Consequently the entry was timely re-liquidated on July 27, 2018, prior to September 2018.

Protestant asserts that this entry liquidated as a matter of law, six months after the liquidation instructions and lifting of suspension notice, included in Commerce Message No xxxxxxx, dated December [] 2017. We agree. Protestant also contends that is was “discharged from” any liability for this entry because of the multiple liquidations and unlawful suspension of liquidation. We find no legal support for this contention and Protestant offers none. Therefore, we find that the timely re-liquidation on July 27, 2018, stands. However, we make note of two additional issues.

First, the suspension of liquidation noted in ACE on February 7, 2019, can have no legal effect because we have determined that the entry deemed liquidated by operation of law on June [], 2018. Further, we determined above that the entry was lawfully reliquidated on July 27, 2018. It is axiomatic that liquidation of an entry cannot be suspended after it has been liquidated. See also, 19 C.F.R. § 159.51. (“Liquidation of entries shall be suspended only when provided by law or regulation, or when directed by the Commissioner of Customs.”) In addition, the Port lacked authority to suspend liquidation of entry number xxx-xxxx7933, after December [] 2017, which was the date that Commerce issued the liquidation instructions in Message xxxxxxx. (See the discussion in section III on notice of removal of suspension of liquidation.)

Pursuant to 19 U.S.C. § 1504, liquidation must be completed in the statutorily prescribed time frames, unless suspension is required by statute or court order, or unless the entry is properly extended when applicable. See 19 U.S.C. § 1504(b) and (d). Section 673b of Title 19 requires that once an affirmative dumping determination is made that merchandise is materially injuring a US industry, any pending liquidation of any subject entries will be suspended, pending further instructions. See 19 U.S.C. § 1673b and 19 C.F.R. § 159.58(a). The CIT has held that the most important part of the United States’ “retrospective” duty assessment system, under which final liability for antidumping duties is determined, is the statutorily implied suspension of liquidation contained in 19 U.S.C. § 1675 (a)(2). See SSAB N. Am. Div. v United States Bureau of Customs & Border Prot., 571 F Supp. 2d 1347, 1350-51 (Ct. Int’l Trade 2008). The suspension of liquidation enables Commerce to calculate the antidumping and countervailing duty rates for the subject entries, which are then applied by CBP, pursuant to liquidation instructions received from Commerce. Id. Accordingly, Protestant’s entries were suspended by statute, as they were subject to a dumping administrative review. Once the administrative review was complete and Protestant’s dumping assessment was finalized by Commerce, the statutory suspension under 19 U.S.C. § 1504 was lifted. However, Protestant next filed suit, and therefore the entries were, additionally, suspended per court order. See DOC Message No. xxxxxxx. At the completion of the litigation and period of appeals, in December 2017, Commerce informed CBP that all suspensions of liquidations were lifted. Accordingly, as of December [] 2017, the entries under protest were neither suspended by statute or court order. As such, after December 2017, CBP lacked authority to continue to suspend liquidation of entry number xxx-xxxx7933.

Finally, there is an issue with regard to whether this reliquidation was timely protested. The entry reliquidated on and the protest was amended, on the same day, July 27, 2018, However, we need not address this issue in that we have determined that Protestant has no legally cognizable argument to set aside the July 27, 2018 reliquidation; it is immaterial as to whether the protest was timely with regard to this entry.

HOLDINGS:

Based on the above discussion, we find that protest numbers 2002-2018-100050 and 4909-18-100018, are DENIED in Part, and GRANTED in Part, as explained per issue.

CBP did not fail to adhere to the Administrative Procedure Act’s notice and comment rulemaking requirements and therefore, did not deny Protestant due process. To the extent that interest was not calculated from the date the duty was required to be deposited to the date of liquidation, or that interest was calculated on an amount different than the difference between [] percent deposited at entry and the [] final ADD rate, or that interest was calculated at a rate other than that described in in 26 U.S.C. § 662, CBP must re-liquidate such entries. CBP failed to post notices of liquidation for 153 entries, which, as a result, were deemed liquidated by operation of law at the rate asserted at entry pursuant to 19 U.S.C. § 1504(d). Therefore, no additional ADD is due on these entries and any bills for additional ADD must be cancelled CBP did not liquidate entries to which DOC Message No xxxxxxx did not apply; and The timely re-liquidation of entry number xxx-xxxx7933 on July 27, 2018, stands.

Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.

Sincerely,

Craig T. Clark, Director
Commercial and Trade Facilitation Division