Slip Op. 07–26 

UNITED STATES COURT OF INTERNATIONAL TRADE 

VOLKSWAGEN OF AMERICA, INC., 

 Before: Richard W. Goldberg, 

 Plaintiff, Senior Judge 

 v. Court No. 06-00222 

UNITED STATES, 

 Defendant. 

OPINION

[Defendant’s motion to dismiss is granted; Plaintiff’s motion to 

consolidate is denied.] 

Dated: February 21, 2007 

Law Offices of Thomas J. Kovarcik (Thomas J. Kovarcik), for 

Plaintiff Volkswagen of America, Inc. 

Peter D. Keisler, Assistant Attorney General; Barbara S. 

Williams, Attorney in Charge, International Trade Field Office, 

Commercial Litigation Branch, Civil Division, U.S. Department of 

Justice; Yelena Slepak, Office of Assistant Chief Counsel, 

International Trade Litigation, U.S. Customs and Border 

Protection, Of Counsel, for Defendant United States. 

GOLDBERG, Senior Judge: This matter is before the Court on the 

defendant’s motion to dismiss for lack of subject matter 

jurisdiction pursuant to USCIT Rule 12(b)(1) and for failure to 

state a claim upon which relief can be granted pursuant to USCIT 

Rule 12(b)(5). The plaintiff Volkswagen of America, Inc., 

(“Volkswagen”) alleges in its complaint that U.S. Customs and 

Border Protection (“Customs”) failed to grant Volkswagen an 
Court No. 06-00222 Page

 

2

allowance in value for imported merchandise that was later found 

to be defective. Volkswagen asserts jurisdiction under 28 

U.S.C. § 1581(i). Volkswagen has also filed a cross-motion to 

consolidate this case with the test case Volkswagen of America, 

Inc. v. United States, Court No. 96-132 (CIT filed Jan. 17, 

1996). 

I. BACKGROUND

In this action, Volkswagen seeks an allowance in the 

appraised value of automobiles entered in 1994 and 1995. 

Customs liquidated those entries in 1994 and 1995. After 

importation, Volkswagen discovered that some of the automobiles 

were defective. Volkswagen filed protests with Customs arguing 

that under 19 C.F.R. § 158.12, it was entitled to an allowance 

in the appraised value of the automobiles because they were 

“damaged at the time of importation.” 19 C.F.R. § 158.12 

(2006). Customs denied these protests, and Volkswagen brought 

an action before this Court under 28 U.S.C. § 1581(a). The 

parties filed cross-motions for summary judgment. In deciding 

these motions, this Court held that it did not have jurisdiction 

over automobiles repaired after the date Volkswagen filed its 

protests because Volkswagen was not aware of the defects at the 

time the protests were made. See Volkswagen of Am., Inc. v. 

United States, 27 CIT 1201, 1206, 277 F. Supp. 2d 1364, 1369 

(2003) (“Volkswagen I”); accord Saab Cars USA, Inc. v. United 
Court No. 06-00222 Page

 

3

States, 434 F.3d 1359, 1368 (Fed. Cir. 2006) (affirming the 

lower court’s dismissal because Saab provided no evidence that 

it was aware of defects at the time of protest). The Court 

found § 1581(a) jurisdiction over the automobiles that were 

repaired before the date of protest. See Volkswagen I, 27 CIT 

at 1203-06, 277 F. Supp. 2d at 1367-69. 

 On January 31, 2006, Volkswagen sent letters to Customs 

requesting an allowance in the value of the automobiles whose 

repairs occurred after the date of protest. As mentioned above, 

these claims had been dismissed in Volkswagen I. Customs did 

not respond to these letters, and indicated that it would never 

issue a decision concerning the letters. Volkswagen 

subsequently filed this action. 

II. STANDARDS OF REVIEW

Once a defendant moves to dismiss for lack of subject 

matter jurisdiction under USCIT Rule 12(b)(1), the plaintiff has 

the burden of establishing the basis for jurisdiction. See

Duferco Steel, Inc. v. United States, 29 CIT __, __, 403 F. 

Supp. 2d 1281, 1284 (2005); Nufarm America’s, Inc. v. United 

States, 29 CIT __, __, 398 F. Supp. 2d 1338, 1342 (2005). On a 

motion to dismiss for failure to state a claim pursuant to USCIT 

Rule 12(b)(5), the defendant is entitled to dismissal where it 

appears beyond doubt that no set of facts can be proven that 
Court No. 06-00222 Page

 

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would entitle the plaintiff to relief. See Nufarm America’s, 29 

CIT at __, 398 F. Supp. 2d at 1342. 

III. DISCUSSION

A. Jurisdiction under 28 U.S.C. § 1581(i)

In its complaint, Volkswagen alleges that it “was affected 

and aggrieved by” Customs’ failure to recognize Volkswagen’s 

claims for a § 158.12 allowance, and “accordingly, has standing 

to prosecute this action.” Pl.’s Compl. ¶ 4. For the purposes 

of considering Customs’ motion to dismiss, the Court will 

construe this language as alleging a cause of action under § 702 

of the Administrative Procedure Act (“APA”). See Tokyo Kikai 

Seisakusho, Ltd. v. United States, 29 CIT __, __, 403 F. Supp. 

2d 1287, 1292 (2005) (construing complaint as bringing an APA 

cause of action when complaint did not expressly state that 

plaintiffs were suing under the APA, but relied on the APA in 

its allegation of standing). 

The APA is not a jurisdictional statute. See Califano v. 

Sanders, 430 U.S. 99, 107 (1977) (“[T]he APA does not afford an 

implied grant of subject-matter jurisdiction permitting federal 

judicial review of agency action.”). In order for Volkswagen’s 

case to proceed, this Court must have an independent basis for 

jurisdiction under 28 U.S.C. § 1581. Volkswagen claims subject 

matter jurisdiction over its APA cause of action pursuant to 28 

U.S.C. § 1581(i), which is this Court’s “residual” 
Court No. 06-00222 Page

 

5

jurisdictional grant. See Motions Sys. Corp. v. Bush, 437 F.3d 

1356, 1370 (Fed. Cir. 2006) (en banc) (per curiam) (quoting H.R. 

Rep. No. 96-1235, at 47 (1980), reprinted in 1980 U.S.C.C.A.N. 

3729, 3745). Section 1581(i) states that this Court has 

exclusive jurisdiction over 

[A]ny civil action commenced against the United 

States, its agencies, or its officers, that arises out 

of any law of the United States providing for— 

(1) revenue from imports or tonnage; 

(2) tariffs, duties, fees, or other taxes on the 

importation of merchandise for reasons other than the 

raising of revenue; 

(3) embargoes or other quantitative restrictions on 

the importation of merchandise for reasons other than 

the protection of the public health or safety; or 

 

(4) administration and enforcement with respect to the 

matters referred to in paragraphs (1)—(3) of this 

subsection and subsections (a)—(h) of this section. 

28 U.S.C. § 1581(i) (2000). Because Volkswagen’s action 

challenges the administration and enforcement of the 

collection of import duties, it falls under the language in 

paragraphs (1) and (4) of § 1581(i).1

 

1

 Customs is correct to point out that § 1581(i) was not intended 

to create new causes of action. See Asociacion Colombiana de 

Exportadores de Flores v. United States, 13 CIT 584, 586, 717 F. 

Supp. 847, 849-50 (1989), aff’d 903 F.2d 1555 (1990). In this 

case, Volkswagen has elected to assert an APA cause of action. 

This Court can have 1581(i) jurisdiction over an APA cause of 

action. See, e.g., Shinyei Corp. of Am. v. United States, 355 

F.3d 1297, 1312 (Fed. Cir. 2004). In fact, the Federal Circuit 

has suggested that a plaintiff is required to assert an APA 

cause of action or some form of nonstatutory review in order to 
Court No. 06-00222 Page

 

6

 Customs argues that there is no jurisdiction under § 

1581(i) because Congress specifically intended that an importer 

may only challenge the appraised value of merchandise in 

accordance with the procedures set forth in 19 U.S.C. § 1514. 

Here, Customs conflates its jurisdictional argument with its 

claim that Volkswagen did not state a valid cause of action. 

Section 1514 is not a jurisdiction-granting statute; it defines 

the types of actions that are potentially reviewable under § 

1581(a). Cf. Trs. in Bankr. of N. Am. Rubber Thread Co. v. 

United States, Slip Op. 06-154, 2006 Ct. Intl. Trade LEXIS 158, 

at *22-23 (CIT Oct. 18, 2006) (“NART Co.”) (preclusion of a 

cause of action due to an amendment of § 1516a does not divest 

the CIT of subject matter jurisdiction). The fact that a cause 

of action is not specified in § 1514 does not completely strip 

this Court of subject matter jurisdiction because jurisdiction 

under § 1581(i) could still be available. Rather, it simply 

means there is no § 1581(a) jurisdiction. Volkswagen’s claim 

falls within the plain language of § 1581(i), which supports the 

existence of jurisdiction. See Conoco, Inc. v. United States 

Foreign-Trade Zones Board, 18 F.3d 1581, 1590 (Fed. Cir. 1994) 

(exercising jurisdiction when action is “facially embraced” by § 

1581(i)). 

 

invoke § 1581(i) jurisdiction. See Motions Sys., 437 F.3d at 

1359. 
Court No. 06-00222 Page

 

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There is one more obstacle that Volkswagen must overcome to 

establish jurisdiction under § 1581(i). Jurisdiction is not 

appropriate under § 1581(i) when “another subsection of § 1581 

is or could have been available, unless the remedy provided 

under that other subsection would be manifestly inadequate.” 

Miller & Co. v. United States, 824 F.2d 961, 963 (Fed. Cir. 

1987). In the present case, no other proceedings under other 

subsections of § 1581 could have provided effective review of 

Volkswagen’s APA claim. Section 1581(a) is the traditional 

route for challenging a Customs decision concerning the 

appraisement of goods. In order to invoke jurisdiction under 

subsection (a), Volkswagen would have had to file a valid 

protest within ninety days of liquidation and Customs would have 

to deny the protest. See 19 U.S.C. §§ 1514(c)(3) & 1515(a) 

(2000). Volkswagen could not have protested the liquidation 

within ninety days of liquidation, because the defects were not 

discovered until after this time limit had passed. In fact, 

Volkswagen already attempted to bring this action under § 

1581(a) in Volkswagen I, but this Court dismissed the case for 

lack of jurisdiction. See 27 CIT at 1206, 277 F. Supp. 2d at 

1369. 

In light of the above, the Court has subject matter 

jurisdiction over Volkswagen’s claim pursuant to § 1581(i). 

Congress has not foreclosed judicial review of Volkswagen’s 
Court No. 06-00222 Page

 

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claim by divesting this Court of jurisdiction, but it can 

preclude judicial review of a specific cause of action. See

NART Co., 2006 Ct. Intl. Trade LEXIS 158, at *20 (citing Whitman 

v. DOT, 126 S. Ct. 2014, 2015 (2006)). We now turn to the 

question of whether Congress has precluded judicial review of 

this particular cause of action.2

B. Failure to State a Claim upon which Relief Can Be Granted 

The APA grants a right of review to “[a] person suffering 

legal wrong because of agency action, or adversely affected or 

aggrieved by agency action . . . .” 5 U.S.C. § 702 (2000). This 

right of review is not available if judicial review is precluded 

by another statute. See id. § 701(a). There is a general 

presumption in favor of judicial review that can be overcome by 

 

2

 The existence of judicial preclusion results in a Rule 12(b)(5) 

dismissal for failure to state a claim upon which relief can be 

granted as opposed to a Rule 12(b)(1) dismissal for lack of 

subject matter jurisdiction. The Supreme Court has recently 

“instruct[ed the] courts of appeals to properly distinguish 

between subject-matter jurisdiction and other limits on a 

court’s authority.” Cobb v. Contract Transp., Inc., 452 F.3d 

543, 550 (6th Cir. 2006) (citing, inter alia, Arbaugh v. Y & H 

Corp., 546 U.S. 500 (2006)). For example, res judicata, or 

claim preclusion, “while having a somewhat jurisdictional 

character, does not affect the subject matter jurisdiction of 

the district court.” Smalls v. United States, No. 05-5052, 2006 

U.S. App. LEXIS 31130, at *6 (D.C. Cir. Dec. 19, 2006) 

(quotation marks and citations omitted). Additionally, the 

Supreme Court has noted that “congressional preclusion of 

judicial review is in effect jurisdictional . . . .” Block v. 

Cmty Nutrition Inst., 467 U.S. 340, 353 n.4 (1984). This 

language suggests that preclusion of judicial review under the 

APA has the same effect as a jurisdictional rule, but is not in 

fact a question of jurisdiction. 
Court No. 06-00222 Page

 

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congressional intent to preclude that is “fairly discernable” 

from the legislative scheme. See Block v. Cmty Nutrition Inst., 

467 U.S. at 351. The Supreme Court has stated that “[w]hether 

and to what extent a particular statute precludes judicial 

review is determined not only from its express language, but 

also from the structure of the statutory scheme, its objectives, 

its legislative history, and the nature of the administrative 

action involved.” Id. at 345. In the present case, 19 U.S.C. § 

1514 expressly precludes judicial review of Volkswagen’s cause 

of action. 

Section 1514 sets forth the procedures governing protests 

against decisions made by Customs. It provides, in relevant 

part, the following: 

[D]ecisions of the Customs Service, including the 

legality of all orders and findings entering into the 

same, as to— 

(1) the appraised value of merchandise; 

. . . 

 

shall be final and conclusive upon all persons . . . 

unless a protest is filed in accordance with this 

section, or unless a civil action contesting the 

denial of a protest . . . is commenced in the United 

States Court of International Trade . . . . 

19 U.S.C. § 1514(a) (2000) (emphasis added). This language was 

added with the enactment of the Customs Courts Act of 1970, and 

fulfilled Congress’s intent to have a “single, continuous 

procedure for deciding all issues in any entry of merchandise, 
Court No. 06-00222 Page

 

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including appraisement and classification issues.” S. Rep. No. 

91-576, at 11 (1969). Additionally, the Customs Courts Act of 

1970 lengthened the time period in which an importer may protest 

a Customs decision from thirty to ninety days. An importer 

would “no longer be pressured by an unrealistically short time 

limit into filing a protest for protective purposes only.” Id. 

Congress apparently believed that an importer would be 

“pressured” into filing a premature protest because it would not 

have the option to file an APA cause of action to challenge an 

appraisement decision. Congress chose to alleviate this 

pressure by increasing the time limits, and not by providing 

importers with an alternative cause of action. By lengthening 

the time period, Congress struck a balance between commercial 

reality and the finality of liquidation. The clear language of 

§ 1514 and its legislative history demonstrate that Congress did 

not envision that an importer could avoid the § 1514 time limits 

and obtain judicial review of a Customs appraisement decision. 

 Volkswagen’s cause of action consists of the following 

claim: After the time limits set forth in 19 U.S.C. § 1514 had 

expired, Volkswagen sent a letter to Customs requesting an 

allowance pursuant to 19 C.F.R. § 158.12. When Customs refused 

to act, Volkswagen “had become a ‘person’ who was ‘aggrieved’ by 

‘final agency action’ in the form of ‘withholding relief.’” 

Pl.’s Br. 13-14 (quoting 5 U.S.C. §§ 551, 702, 704). Volkswagen 
Court No. 06-00222 Page

 

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argues that this cause of action is valid because in order to 

seek an allowance under § 158.12, it is not required to file a 

protest pursuant to § 1514. The relevant language in § 158.12 

reads as follows: 

(a) Allowance in value. Merchandise which is subject 

to ad valorem or compound duties and found by the port 

director to be partially damaged at the time of 

importation shall be appraised in its condition as 

imported, with an allowance made in the value to the 

extent of the damage. 

19 C.F.R. § 158.12 (2006). Volkswagen asserts that § 158.12 

gives an importer an alternative procedure to challenge a 

Customs decision concerning appraisement of imported 

merchandise. Unlike § 1514, § 158.12 includes no time limits. 

Thus, Volkswagen argues, § 158.12 creates a cause of action to 

directly challenge the appraisement of its merchandise without 

resorting to a challenge to Customs’ decision to liquidate.3

 

3

 To support its argument that § 158.12 claims are not intended 

to have time limits, Volkswagen points out that in contrast to § 

158.12, other regulations that deal with damaged or defective 

merchandise contain specific time limits. For example, 19 

C.F.R. § 158.14 deals with perishable merchandise that has been 

condemned by health officers. This regulation requires the 

importer to file written notice of the condemnation with the 

port director within five days of the condemnation. 19 C.F.R. § 

158.14(a). If the port director is satisfied that the claim is 

valid, an allowance in duties will be made in the liquidation. 

See id. § 158.14(b). The five-day time limit is due to the 

perishable nature of the goods. Customs succinctly points out 

that “the time limitations are necessary in [158.11, 158.13, and 

158.14] in order to base the allowances on the condition of such 

goods at importation, not at some later point in time when the 

condition of the goods deteriorates even further.” Def.’s Reply 

8. These regulations do not conflict with 19 U.S.C. § 1514 and 
Court No. 06-00222 Page

 

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 Volkswagen’s expansive interpretation of § 158.12 is 

incorrect. Any decision made by Customs concerning the 

appraisement of imported merchandise merges with liquidation. 

See United States v. Utex Int'l, Inc., 857 F.2d 1408, 1410 (Fed. 

Cir. 1988) (“‘All findings involved in a district director's 

decision merge in the liquidation. It is the liquidation which 

is final and subject to protest, not the preliminary findings or 

decisions of customs officers.’” (quoting R. Sturm, Customs Law 

& Administration § 8.3 at 32 (3d ed. 1982)); Dal-Tile Corp. v. 

United States, 24 CIT 939, 945 n.12, 116 F. Supp. 2d 1309, 1315 

(2000) (stating that “all decisions and findings [made] by 

Customs are merged in and become part of the liquidation or 

reliquidation against which a protest will lie”). Congress 

specifically permits an importer to challenge the appraised 

value of merchandise by filing a protest. See 19 U.S.C. § 

1514(a) (2000). If no protest is filed, the Customs decision 

concerning appraisement, and all other decisions, become final. 

See id.; Shinyei Corp., 355 F.3d at 1311 (noting that § 1514 is 

“fairly construed to prohibit a challenge to ‘decisions’ of the 

Customs Service ‘as to’ liquidation outside the protest 

provisions of § 1514(a)” and that the “statute’s discussion of 

finality relates to decisions of Customs” (quoting 19 U.S.C. § 

 

they do not support Volkswagen’s contention that an action based 

on § 158.12 is not governed by § 1514. 
Court No. 06-00222 Page

 

13

1514)). This congressional mandate of finality cannot simply be 

overridden by a Customs regulation that does not specifically 

include time limitations.4

 Volkswagen cites to Swisher International, Inc. v. United 

States, 205 F.3d 1358 (Fed. Cir. 2000), to support its assertion 

that § 158.12 creates a separate cause of action to challenge an 

appraisement decision beyond the procedures set forth in § 1514. 

The Swisher decision is not in any way applicable to the present 

case. The Swisher court held that the denial of a Harbor 

Maintenance Tax refund request is protestable, despite the fact 

that 19 C.F.R. § 24.24 did not contain any time limit for 

requesting the refund. Id. at 1368-69. As a result, 

jurisdiction was proper under 19 U.S.C. § 1581(a). Swisher does 

not provide support for the proposition that a Customs 

regulation can permit a plaintiff to challenge the appraisement 

of merchandise outside of the procedures set forth in § 1514. 

In fact, the Swisher court came to the opposite conclusion in 

dicta: 

 

4

 Additionally, it does not matter that § 158.12 does not mention 

the word “liquidation.” As discussed above, appraisement 

decisions are subsumed in the liquidation. This fact is evident 

from the regulations themselves. 19 C.F.R. § 159 is entitled 

“Liquidation of Duties.” Under that heading, § 159.8 states 

that “[a]llowance in duties for any merchandise which is lost, 

stolen, destroyed, abandoned, or short-shipped shall be made in 

accordance with the provisions in part 158 of this chapter.” In 

other words, the procedures set forth in § 158 must be followed 

in order to for Customs to properly appraise the value of 

imported merchandise and liquidate accordingly. 
Court No. 06-00222 Page

 

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[I]t is not at all clear that refunds on import 

duties, which comprise the vast majority of the money 

collected by Customs, would or could be requested 

outside the bounds of the liquidation or reliquidation 

procedures. With regard to imports, most fees . . . 

are collected at liquidation. Any fee collected at 

liquidation is considered merged with the liquidation. 

A legal challenge to a liquidation decision must be 

made as a protest within 90 days of liquidation. 

Id. at 1368 n.8 (citations omitted) (emphasis added). This 

language reinforces the claim that any challenge to 

appraisement, which is merged with the liquidation, must be 

challenged pursuant to § 1514.5

 

 Volkswagen also claims that the Federal Circuit decision in 

Saab held that “it is not liquidation, but the first repair of 

the defective automobile, that gives rise to a § 158.12 

allowance claim . . . .” Pl.’s Br. 11 (emphasis omitted). The 

Saab court made no such statement. Instead, the Saab court 

affirmed the dismissal of “those claims relating to cars as to 

which no repair existed at the time of protest, because Saab 

provided no evidence that it was aware of those defects at that 

time.” Saab, 434 F.3d at 1368. The fact that Saab was not 

aware of the defects rendered its protests invalid, so no § 

 

5

 Swisher stated that there is not a “generic limitation period 

on requesting refunds generally” because 19 U.S.C. § 1520, which 

sets forth the cases in which refunds are authorized, contains 

no time limits. 205 F.3d at 1368. Volkswagen cannot make use 

of § 1520 because its particular claim does not fit within any 

of the categories listed therein. By contrast, challenges to 

liquidation orders (which includes appraisement decisions) are 

constrained by clear time limits set forth in 19 U.S.C. § 1514. 
Court No. 06-00222 Page

 

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1581(a) jurisdiction existed over those claims. No language in 

the Saab opinion supports the proposition that § 158.12 

allowance claims are not subject to the requirements set forth 

in § 1514. 

In light of the foregoing, Volkswagen has failed to state a 

claim upon which relief can be granted because judicial review 

of its APA cause of action is precluded by 19 U.S.C. § 1514. 

Volkswagen cannot challenge, based on 19 U.S.C. § 158.12, an 

appraisement decision made by Customs outside of the protest 

procedures and time limits set forth in § 1514. 

IV. CONCLUSION

Because Volkswagen has failed to state a claim upon which 

relief can be granted by this Court, this action will not be 

consolidated with Volkswagen of America, Inc. v. United States, 

Court. No. 96-132. Additionally, the Court need not address the 

government’s argument that this action is time-barred by the 

statute of limitations in 28 U.S.C. § 2636(i). Customs’ motion 

to dismiss is granted and judgment will be entered accordingly. 

 /s/ Richard W. Goldberg

 Richard W. Goldberg 

 Senior Judge

Date: February 21, 2007 

 New York, New York
UNITED STATES COURT OF INTERNATIONAL TRADE

VOLKSWAGEN OF AMERICA, INC., 

 

 Plaintiff, 

v. 

UNITED STATES, 

 

 Defendant. 

Before: Richard W. Goldberg, 

 Senior Judge 

Court No. 06-00222 

JUDGMENT ORDER

 Upon consideration of defendant’s motion to dismiss, 

plaintiff’s motion to consolidate, and all accompanying papers, 

and upon due deliberation, it is hereby: 

ORDERED that Defendant’s motion to dismiss is granted; and 

it is also 

ORDERED that Plaintiff’s motion to consolidate is denied; 

and it is also 

ORDERED that this action is dismissed. 

IT IS SO ORDERED. 

 

 /s/ Richard W. Goldberg

 Richard W. Goldberg 

 Senior Judge 

Date: February 21, 2007 

 New York, New York