Can US Customs and Border Protection (CBP) slap an importer with liquidated damages for failing to redeliver merchandise when CBP does not demand redelivery within the period required by CBP’s own regulations? Well, of course not, you would think. The answer is so obvious that no one in their right mind would waste the time and energy to argue against the point.
Cue US vs. Pressman-Guman, the latest case from the US Court of International Trade. The importer imported textiles. CBP issued a Request for Information (CF 28) to request samples from the importer. CBP wanted to review whether the importer properly classified the imported merchandise. When CBP received the samples, it sent two more CF 28s to the importer, informing the importer that CBP was extending the conditional release period by ninety days while CBP performed lab work on the samples. In other words, CBP claimed that it had an additional ninety days to decide whether to order the importer to return or redeliver the merchandise to CBP. About four months after it received the samples, CBP concluded that the importer misclassified the merchandise and improperly claimed quota. CBP demanded that the importer redeliver the merchandise into its custody, an impossibility given that the merchandise was already with the importer’s clients. CBP decided to impose $120,000 in liquidated damages against the importer’s bond. The importer refused to pay, and the CBP filed a lawsuit in the Court of International Trade.
The Honorable Delissa A. Ridgway wrote the court’s opinion. She methodically reviewed the mountain of evidence in the importer’s favor before dismissing the lawsuit. One of the pieces of evidence is 19 CFR 113.62(d) which states that “any demand for redelivery ... be made no later than ... 30 days after the end of the conditional release period.” Judge Ridgway excoriates CBP for ignoring its own history in interpreting the regulation:
This is an action that never should have been brought ... the Government here contends that individual Customs personnel at ports all across the country are empowered to redefine the concept and duration of the conditional release period “by unilateral fiat” and without explanation, as each individual sees fit, on a case-by-case basis, with no regard for consistency or predictability, effectively over-riding on a “one-off” basis virtually two full decades of Customs Headquarters rulings setting forth Headquarters' official, considered interpretation of the agency's regulations governing the timing of the issuance of demands for redelivery. Merely to state the proposition is to refute it.
Judge Ridgway’s biggest criticism is directed not at the CBP staffer who extended the thirty-day redelivery period. Instead, Judge Ridgway directs her derision at CBP officials and government attorneys who decided to press their claim in court:
However, while ignorance might (in some measure) excuse the actions of an individual Customs staffer working out in the “field,” it does nothing to explain the agency's subsequent determinations, much less the decisions of counsel to press an untenable position in litigation.
Judge Ridgway’s opinion is undoubtedly reverberating within CBP, and it would behoove the agency to be more carefully to actually follow its own regulations, rulings, and public pronouncements. Not only was CBP’s lawsuit bereft of logic, it needlessly consumed a decade’s worth of time and money for all parties involved. Judge Ridgway concedes that CBP, like all other federal agencies, has a right to change its policies and regulations, but can do so only in accordance with the law, presumably by following the public notice and comment procedures that all federal agencies must follow. Judge Ridgway’s opinion should help importers keep CBP honest regarding the interpretation and enforcement of CBP’s regulations.
Principal and a founding member of GRVR Attorneys.