CIT Says Statute of Limitations to Demand Customs Bond Payment Runs From Liquidation
The Court of International Trade on June 11 held that the government's claim for unpaid duties against a surety company on an entry liquidated in 2009 violates both the statute of limitations for seeking payment and an implied requirement in the bond that demand for payment be made in a reasonable time.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Judge Jane Restani became the third CIT judge to opine on the issue of the government seeking to collect unpaid duties from surety companies years after the underlying entry has liquidated, adopting the views of both courts to have thus opined on the issue.
At issue in the present case is the government's bid to collect unpaid antidumping duties and interest, totaling $100,700, under a customs bond from Aegis Security Insurance relating to a lone entry of honey from China that was deemed liquidated in 2009. CBP billed the importer, Presstek, for the entry in 2016, though the company failed to pay. CBP then demanded Aegis pay the unpaid duties on the entry in 2017.
After the U.S. filed suit to collect the duties, Aegis argued that CBP waited too long to demand payment. When previously faced with similar facts in two separate cases, the trade court granted judgment for the surety company, though it split as to why. Judge Richard Eaton said the statute of limitations had run its course, ruling that the statute of limitations runs six years from the date of the underlying entry's liquidation (see 2308220054). Judge Stephen Vaden disagreed, finding the six-year statute of limitations to run from the date CBP makes its payment demand, though he said CBP violated the implied statutory term of "reasonableness" in waiting too long to make the demand (see 2403180059).
In her decision, Restani granted judgment for Aegis on both grounds, finding that the suit was brought after the statute of limitations had run and that CBP waited an unreasonable amount of time before issuing its payment demand.
On the statute of limitations, Restani said Vaden correctly read the relevant statute, 19 U.S.C. 1505(b), to facially suggest the statute of limitations runs from the date CBP issues a bill, though Restani added that this interpretation "runs contrary to Congressional intent and would lead to untenable results." If Congress meant to shift the statute's triggering event from the "clear and defined date of liquidation to the muddled date of whenever Customs decides to issue a bill, it would have stated so more clearly" when it amended the applicable statute, the judge said.
"Rather, in amending the statute, apparently Congress attempted to bring clarity to the collection process and encourage prompt payment by providing a grace period," the opinion said. Restani supported this conclusion with the "remaining text" of the statute, which says any unpaid balance shall be considered delinquent "from the date of liquidation or reliquidation."
Restani said this "indicates that Congress considered the date of liquidation, not the date of issuance of the bill, as the moment at which liability attaches." The judge added that this read is "particularly apparent when considered alongside 28 U.S.C. 2415(a), which aims to level the playing field between the government and private litigants by ensuring that the government may not indefinitely postpone the running of the statute of limitations."
The court also found that CBP violated the implied contractual term of reasonableness in the customs bond. CBP "failed to act diligently and allowed the contract to fall into no man's land where the parties' expectations could be thwarted easily" by not making a timely demand, Restani said.
The judge said that while there's no "bright-line rule for what constitutes a reasonable time to make a demand, a nearly eight-year delay in issuing the first demand for no reason other than that Customs lost the relevant documents is both unreasonable and violates the duty of good faith and fair dealing."
Jason Kenner, counsel for Aegis, said he is "very pleased with the Court’s decision. It is very well reasoned and confirms our position on the law."
(United States v. Aegis Security Insurance Co., Slip Op. 25-73, CIT # 22-00327, dated 06/11/25, Judge: Jane Restani; Attorneys: Beverly Farrell for plaintiff U.S. government; Jason Kenner of Sandler Travis for defendant Aegis Security Insurance Co.)