US Tells CIT Unpaid Duties From 17 Years Ago Must Still Be Paid
The U.S. responded March 20 to surety company Aegis Security Insurance’s motion for judgment (see 2501310069). It said that CBP hadn’t intended to wait eight years before seeking outstanding duties in 2016, but provided several arguments as to why the duties still must be paid (United States v. Aegis Security Insurance, CIT # 22-00327).
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CBP “was reasonable in seeking payment of outstanding duty obligations because when the entry at issue, which had been misfiled and lost for a time, was subsequently discovered, … CBP complied with section 1505(b) and billed the importer for the outstanding duties,” it said.
The six-year statute of limitations also didn’t prevent it from seeking the unpaid duties in court, it said, because the countdown didn't start ticking until CBP issued the bill in 2016.
It claimed the Supreme Court has ruled in multiple prior cases that a statute of limitations doesn’t begin to run until a plaintiff has a “complete and present cause of action.” The statute of limitations on unpaid duty collection can’t begin at the moment of liquidation, as one CIT judge has held, because importers have 30 days after liquidation to pay their bills. The government wouldn’t be able to bring a cause of action until CBP had actually sent the exporter a demand for the duties after those 30 days had passed, it said. Even then, the importer would have 30 more days after the demand to pay up.
It pushed back again against a Court of International Trade finding that CBP must seek payment within “a reasonable time” (see 2403180059). Nothing in the law -- nor in Aegis’ contract as a surety -- implied such a requirement, it said.
Even if something did, waiting eight years to bill for unpaid duties wasn’t unreasonable, the government said. What constitutes a “reasonable time” depends on the purpose of a contract, it said -- because surety bonds are intended to protect an importer’s revenue.
“Indeed, collection of duties from importers, as well as collection of lost revenue pursuant to 19 U.S.C. 1592(d), could theoretically occur 100 years after liquidation without any statute-of-limitations impediment,” it said.
It claimed that the prior case that established the reasonableness requirement, Aegis 3628, had been based on the 1972 the D.C. Circuit case Nyhus v. Travel Management Corp. But that case dealt with “the issue of claim accrual, not contract interpretation,” it argued.
Even if there is an implied contractual reasonable time requirement for collection of duties, and even if it had passed within eight years, breaching that term wouldn’t be material, so the duties still need to be paid, it said.
Further, it said, Aegis had waived the argument by not raising it in its opening brief or as an affirmative defense in its answer.