No 'Two-Track' Deemed Liquidation Framework for Drawback Claims, Importer Says
Importer Performance Additives told the U.S. Court of Appeals for the Federal Circuit that the notion that Congress created a "two-track framework" for deemed liquidation of drawback claims where some claims aren't subject to deemed liquidation at all and others aren't subject to any time limit on liquidation is "nonsense." Filing a reply brief last week, the company said this interpretation of the statutory framework is "blatantly contrary to Congress' stated intent" (Performance Additives v. United States, Fed. Cir. # 24-2059).
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Central to Performance Additives' suit are the two procedures by which a drawback claim can be deemed liquidated: 19 U.S.C. Sections 1504(a)(2)(A) and (a)(2)(B).
The first says that unless a drawback claim is suspended or extended, it will be deemed liquidated at the claimed amount if it's not liquidated within one year from the date of entry or filed claim. The second concerns drawback claims on unliquidated imports and says that drawback claims whose import entries haven't been liquidated and become final within the one-year period described in (a)(2)(A) shall be deemed liquidated upon the deposit of estimated duties on the unliquidated imports and filing with CBP of a written request for liquidation of the drawback claim.
Performance filed two drawback claims seeking a 99% refund of duties and fees paid on polymer and plastic chemical imports, one of which covered 48 entries and was filed in March 2020, while the other covered 31 entries and was filed in March 2016. After initially approving the claims, CBP reversed itself and denied the drawback bids. The importer said both claims were deemed liquidated before CBP's decisions.
The Court of International Trade agreed as to one of the claims, finding the March 2016 claim deemed liquidated since the underlying import entries were liquidated and became final within one year of the claim being filed, but it said the other entries didn't become final within one year of the March 2020 filing date. As a result, (a)(2)(B) was the only avenue for deemed liquidation, and since the importer didn't take the steps needed to secure deemed liquidation under this provision, the claim failed (see 2409100055).
Performance Additives appealed, claiming CIT impermissibly lifted the limiting language of (B) into (A) (see 2409100055). The importer said (B) is irrelevant to the suit since all of its entries liquidated prior to the one-year anniversary of the drawback claim. Only (B) required the liquidation of the underlying entries to be final and not (A), as CIT said. The U.S. responded by arguing that the trade court merely read the provisions in concert to give effect to (B) (see 2411220059).
Under the government's interpretation of the statutory framework, a two-track system exists through which drawback claims either automatically liquidate under (A) or liquidate after completing the elements of (B). Performance Additives said in response that this claim is "undercut by the facts of this case and the government's own argument."
The importer said the language of (B) must be read as meaning the import entries were neither "liquidated" nor "final," since (B) is the only means of addressing unliquidated entries. The provision specifies that an applicant must make payment of estimated duties -- a concept only relevant to unliquidated entries, the brief said. Following the government's reasoning, Performance Additives' claims weren't liquidated under either (A) or (B), the brief said.
As a result, the claim "fell out of the operation of Congress' statutory framework" altogether and was "no longer subject to any temporal limitation on liquidation," the importer said. This notion is "nonsense" and cuts against Congress' intent to have CBP liquidate future drawback claims within a specified time period as it already does for merchandise entered for consumption, the brief said.
Performance Additives also claimed that CIT's decision created two statutory "absurdities/anomalies." First, the trade court suggested a drawback claim can go past the one-year period in (A) without any extensions of liquidation, which is a "clear contravention of the one-year liquidation rule spelled out in the statute," the importer said. "Second, if a drawback claim may surpass the one-year limitation on liquidation, it is not subject to the four-year outside limit on liquidation set out in § 1504(b), which only applies to entries and drawback claims whose initial liquidation was extended," the brief said.
The result creates a "class of drawback claims with no limitation on liquidation -- precisely the status quo ante situation the Congress sought to end."