Xerox Corporation v. United States

Citations: 423 F.3d 1356; 27 I.T.R.D. (BNA) 1609; 2005 U.S. App. LEXIS 20055; 2005 WL 2264972Docket: 05-1076

Court: Court of Appeals for the Federal Circuit; September 19, 2005; Federal Appellate Court

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Xerox Corporation appeals the dismissal of its protest regarding the liquidation of imported goods by the United States Customs Service, which was conducted at the rate indicated by Xerox upon entry. The Court of International Trade ruled that the liquidation 'as entered' was not protestable under 19 U.S.C. § 1514 because Xerox did not present the issue of NAFTA eligibility to Customs at the time of entry. Consequently, the court found that Xerox's protest was invalid and did not establish jurisdiction under 28 U.S.C. § 1581(a). Furthermore, Xerox failed to claim preferential treatment under NAFTA as required by 19 C.F.R. § 181.21 at the time of entry and did not submit a post-importation claim within the mandated one-year period per 19 U.S.C. § 1520(d). The case stems from Xerox's unsuccessful attempt to obtain NAFTA benefits for certain imports, specifically electrostatic photocopiers and wire harnesses. NAFTA aims to facilitate trade among the U.S., Canada, and Mexico by reducing tariffs and trade barriers, and was implemented through the NAFTA Implementation Act passed by Congress in 1993.

Between January 19 and March 2, 1998, Xerox imported 22 entries of photocopiers and wire harnesses into the U.S., classifying them under the Harmonized Tariff Schedule (HTSUS) at rates of 3.7% and 5.3%, respectively. Xerox did not claim NAFTA's duty-free treatment due to a lack of necessary NAFTA Certificates of Origin. Customs liquidated these entries at their claimed rates in late 1998 and early 1999. Subsequently, the Mexican exporter issued the required NAFTA Certificates, and on March 2, 1999, Xerox submitted a protest to Customs asserting NAFTA eligibility. Customs reviewed the situation and concluded that only the last entry was timely for a post-importation NAFTA claim under 19 U.S.C. 1520(d), resulting in a refund for that entry while denying the other 21 entries.

Xerox appealed this partial denial, but Customs moved to dismiss for lack of subject matter jurisdiction, arguing there was no protestable decision denying NAFTA treatment. Xerox contended that a protest under 19 U.S.C. 1514(a) was sufficient to assert the right to a preferential rate. On October 7, 2004, the Court of International Trade ruled that sections 1514(a) and 1520(d) address different circumstances and determined that Customs did not make a decision to deny NAFTA treatment, thus dismissing Xerox's protest for lack of jurisdiction. Xerox subsequently appealed this dismissal, and the appellate court retains jurisdiction over the case based on 28 U.S.C. 1295(a)(5). The appellate court will review the jurisdictional ruling and statutory interpretation de novo.

Xerox appeals the Court of International Trade's ruling that Customs did not make a protestable decision when it liquidated Xerox's entries 'as entered.' Xerox argues that this liquidation implies Customs had earlier determined that the entries were ineligible for NAFTA's duty-free preference, and thus the liquidation itself should be treated as a protestable decision. Xerox cites 19 C.F.R. 10.112, which allows importers to submit necessary documentation for reduced duties prior to final liquidation if their previous failure to file was not deliberate or fraudulent.

The government counters that Customs's liquidation was correct based on the provided information at entry and that any claim for NAFTA preference had lapsed by the time Xerox filed its protest, rendering the protest invalid due to the absence of an actual protestable decision. Consequently, the Court of International Trade's dismissal of the case is deemed appropriate, as invalid protests do not create jurisdiction under 28 U.S.C. 1581(a).

Under 19 U.S.C. § 1514(a), importers may protest certain Customs decisions, including the liquidation of entries, within 90 days of the decision. If no timely protest is filed, Customs's decisions become final and binding. Should Customs deny a valid protest, the Court of International Trade has exclusive jurisdiction to hear civil actions contesting that denial.

Xerox filed a section 1514(a) protest regarding the liquidation of entries for electrostatic photocopiers and wire harnesses, seeking preferential treatment under NAFTA. The Court of International Trade focused on whether Customs denied this NAFTA preference. If Customs did deny it either at entry or liquidation, Xerox's protest regarding liquidation 'as entered' rather than at a preferential NAFTA rate would be valid, establishing jurisdiction for the Court.

Importers do not automatically receive preferential tariff treatment under NAFTA upon entry; they must submit a written declaration and a NAFTA Certificate of Origin for the goods. This Certificate certifies that the goods qualify as originating for preferential treatment. Importers are not required to submit these documents immediately upon entry but can apply for a refund of excess duties paid if they missed claiming preferential treatment at the time of import, within one year of importation.

To align with Article 502(3) of NAFTA, which allows this refund claim process, Congress amended the Tariff Act of 1930, enabling Customs to refund excess duties if a claim for preferential treatment is filed within one year of entry. The amended provision specifies that Customs can reliquidate an entry to refund excess duties if a valid claim includes a written declaration and applicable NAFTA Certificates of Origin, along with any other necessary documentation.

Congress intended for the NAFTA implementing legislation to allow refunds for excess duties due to incorrect declarations, as noted in legislative reports. However, a strict one-year timeframe is established for filing a NAFTA claim following importation. Importers must submit their claims within one year of the date of importation, as highlighted in multiple congressional reports. The relevant regulations, specifically Section 181.31, reinforce this one-year deadline for claiming NAFTA benefits, allowing importers who failed to claim benefits at the time of importation to seek refunds for excess duties within the same timeframe. The regulations state that importers can file a refund claim within one year of importation for qualifying goods, even if no initial claim was made. Ultimately, the law mandates that any claim for preferential treatment under NAFTA must be initiated within one year from the entry of goods; therefore, Xerox did not comply with this requirement by failing to file within the allotted time.

Customs must engage in a decision-making process for a decision to be protestable. In U.S. Shoe Corp. v. United States, the court highlighted that Customs merely follows Commerce's directives regarding antidumping duties, which are not protestable decisions under section 1514. The Dart Exp. Corp. v. United States case established that duty assessments based on importer-provided information do not constitute a 'decision' under section 1514. In the present case regarding Xerox, Customs liquidated entries at Column 1 Normal Trade Relation Duty rates without considering NAFTA eligibility, as Xerox did not submit a valid post-importation claim within the required one-year period after entry. Customs did not deny a non-existent claim, and thus no protestable decision was made. The decision does not imply that liquidation as entered cannot lead to a protestable decision; however, in this instance, Xerox's failure to timely claim preferential treatment under NAFTA precluded any valid protest. The discussion also references Corrpro Cos. v. United States, where similar jurisdictional issues arose due to the lack of a timely NAFTA claim by the importer.

The Court of International Trade determined that the importer was barred from making a NAFTA claim due to a binding Customs classification ruling, which was later revoked. The court ruled that Customs's initial classification under a non-NAFTA heading was the relevant decision for protest under section 1514, noting that the importer could not raise NAFTA issues because of the binding ruling. Unlike the case of Corrpro, Xerox was not hindered by a Customs ruling but rather by its own failure to obtain necessary NAFTA Certificates of Origin. 

Xerox argued that NAFTA and the NAFTA Implementation Act do not limit an importer's right to protest within 90 days of liquidation for claiming a NAFTA preferential duty rate. The court disagreed, clarifying that the NAFTA Implementation Act does not amend U.S. law and that Congress tailored the Act specifically to adjust trade relations with Mexico and Canada, creating rights to preferential treatment. However, these rights are not absolute, as outlined in Article 502(3) of NAFTA, which allows Congress to define the conditions for claiming NAFTA treatment, including the one-year claim requirement from entry. 

Xerox's entitlement to NAFTA treatment was forfeited by failing to claim within the stipulated period. Additionally, Xerox contended that the court erred by not applying 19 C.F.R. 10.112, which permits late filing of documents if not due to willful negligence or fraud, but the court's interpretation of the relevant regulations and statutory framework upheld the decision against Xerox's claims.

Customs cannot deny an importer preferential NAFTA treatment unless a proper claim is made at entry or within one year thereafter. A protestable decision under 19 U.S.C. 1514(a) is required for the Court of International Trade to have jurisdiction under section 1581(a). Importers cannot use 19 C.F.R. 10.112 to extend the one-year filing period for post-importation NAFTA claims, as this would improperly expand the court's jurisdiction. The court maintains limited jurisdiction and can only hear cases as permitted by statute. Xerox attempted to submit a post-importation claim over a year after entry, mischaracterizing it as a protest under 19 U.S.C. 1514(a). The Court of International Trade correctly deemed the protest invalid and dismissed the appeal for lack of jurisdiction, resulting in the affirmation of its decision.

Effective March 1, 2003, the United States Customs Service was renamed to the United States Bureau of Customs and Border Protection under the Homeland Security Act of 2002. The opinion only addresses 21 entries for which Xerox was denied preferential treatment under NAFTA, as the reliquidation of a single entry for a timely section 1520(d) post-importation NAFTA claim is not contested by either party. Section 1514(a) has been amended to include the refusal to reliquidate under 19 U.S.C. 1520(d) among protestable matters. The Court of International Trade holds exclusive jurisdiction over civil actions contesting the denial of a protest under section 515 of the Tariff Act of 1930, with jurisdiction limited to valid protests listed in section 1514(a). Jurisdiction does not extend to protests beyond the specified categories. NAFTA Article 501(1) mandated the establishment of a Certificate of Origin by January 1, 1994, for certifying qualifying goods exported between parties. Additionally, under section 181.21(a), U.S. importers must declare in writing that goods qualify for preferential tariff treatment under NAFTA, using designated symbols for Canadian and Mexican goods, based on a complete Certificate of Origin.