From NIOP General Counsel, Olsson Frank Weeda:
Yesterday (March 26), six plaintiffs asked the Court to unfreeze their cases (all “me too” cases are frozen under a CIT standing order) to allow them to explain to the Court why CBP must immediately refund IEEPA tariffs for AD/CVD entries. Liquidation of AD/CVD entries is suspended (sometimes for years) by order of the Commerce Department. This is an issue because both Judge Eaton’s orders directing CBP to refund IEEPA tariffs and the CAPE procedure which CBP is constructing in response make liquidation (or reliquidation) the necessary trigger to receive IEEPA refunds. Judge Eaton’s order does not simply direct CBP to provide IEEPA refunds; instead, it directs CBP to liquidate or reliquidate entries “without regard to IEEPA tariffs.” Similarly, CBP has stated that CAPE refunds will only be provided once entries liquidate (or reliquidate) – and that certain entries as to which liquidation is suspended or extended (AD/CVD, drawback entries, warehouse withdrawals, other entries where the liquidation status is suspended, extended, or under review) will not be included in phase one of CAPE processing.
Providing IEEPA refunds only after liquidation is especially problematic because it could result in substantial cuts in the IEEPA refunds received if the entries become subject to AD/CVD increased rates during the suspension period (or become subject to AD/CVD at all), as CBP will almost certainly offset IEEPA refunds due against any increased duties due at eventual liquidation. The problem of delay in receiving refunds, and possible offset against any duty increases occurring during the liquidation delay, is not limited to AD/CVD; in addition to the other entry types specifically flagged by CBP (drawback entries, warehouse withdrawals, other entries where CBP has extended entry liquidation under its own authority), it could also impact FTZ withdrawals and reconciliation entries.
The motion has been assigned to Judge Eaton, who has shown little patience thus far for other plaintiffs which have tried to intervene/inject themselves into the Atmus Filtration case (the case which is the current vehicle for the IEEPA refund process) and more broadly into the process of CAPE construction. Even if Judge Eaton denies it, though, the motion has served its purpose, i.e. it has gotten the AD/CVD problem in front of Judge Eaton and has made the argument (complete with citations to prior cases) as to why Judge Eaton has the power to order CBP to issue IEEPA refunds for AD/CVD entries without waiting for them to liquidate as apparently contemplated by CBP.
More broadly, this motion reinforces our advice that importers protect all potential avenues to IEEPA refunds by filing suit at the CIT. CBP is extremely unlikely to provide IEEPA refunds prior to entry liquidation for AD/CVD and other “complicated” entries unless ordered to do so by the CIT. Moreover, the Government has the right to appeal the CIT’s order directing CBP to provide refunds to all importers until May 3; while it is unclear whether the Government will appeal, it has recently taken the position that only importers which have filed their own CIT suits have the right to IEEPA refunds.
If your imports involve AD/CVD entries, drawback entries, warehouse withdrawals, other entries where the liquidation status is suspended, extended, or under review the safest strategy remains “belt and suspenders”: file CIT suits now and protest liquidated IEEPA entries nearing deadlines. We continue to actively file refund lawsuits at the CIT and protest entries on behalf of clients who have elected to proceed now, rather than waiting for CAPE (CBP’s proposed ACE refund functionality) to be fully implemented.