Opinion ID: 209941
Heading Depth: 2
Heading Rank: 3

Heading: Deemed Liquidation and Customs Error

Text: As an alternative to its Commerce-error claim, Shinyei alleges that Commerce's liquidation instructions did correctly reflect the Amended Review Results regarding the disputed entries, and therefore the error somewhere in the instruction/liquidation process was Customs' error. To preserve this argument, Shinyei filed protests of Custom's actual liquidations under 19 U.S.C. §§ 1514 and 1515, and then filed suit when many of those protests were denied. These Customs-Error cases were not before us in Shinyei-CAFC(I), but were consolidated with Shinyei's '130 case on remand and were dismissed in Shinyei-CIT(II). On appeal, Shinyei argues that the Court of International Trade was wrong to hold that the deemed liquidation of Shinyei's entries was final in the sense that it barred Shinyei from pursuing its Customs-error claim, and was wrong to hold that Customs need not give an importer notice of a deemed liquidation of which Customs itself is not aware. We agree with Shinyei, and hold that the Court of International Trade must reach the merits of the Customs-error claim. We recently explained in Koyo that a deemed liquidation may properly be protested to obtain reliquidation in accordance with Commerce's final review results. Like an unlawful actual liquidation, the deemed liquidation can be protested and the final review results can have effect if the importer timely invokes its post-liquidation protest remedy under 19 U.S.C. § 1514. 497 F.3d at 1234, 1237 (There is no language in § 1514(a) that bars an importer from formally protesting the amount of duties or the liquidation of entries that result by operation of § 1504(d).). Any protest of a deemed liquidation must be filed within a time limit, however. If the importer forgoes filing a timely protest, then the deemed liquidation stands and is final against the importer. Koyo, 497 F.3d at 1243. The time limit for filing is prescribed by statute, and at the relevant time read as follows. (3) A protest of a decision, order, or finding described in subsection (a) shall be filed with the Customs Service within ninety days after but not before  (A) notice of liquidation or reliquidation, or (B) in circumstances where subparagraph (A) is inapplicable, the date of the decision as to which protest is made. 19 U.S.C. § 1514(c)(3) (1994) (emphases added). In Koyo, we noted that the United States conceded that this statute provides two time periods within which an importer may protest a liquidation. The first 90-day protest period, under § 1514(c)(3)(B), commences six months after Customs receives notice of removal of the suspension of liquidation, i.e., commences on the date on which the entry is automatically deemed liquidated by operation of law under 19 U.S.C. § 1504(d), while [t]he second protest period commences on the date that Customs gives notice of the deemed liquidation or notice of a liquidation reflecting the deemed liquidation and expires ninety days thereafter. Koyo, 497 F.3d at 1241. The notice from Customs to the importer which triggers this second ninety-day protest period is not optional. As we explained in Norsk Hydro Canada, Inc. v. United States, 472 F.3d 1347 (Fed.Cir. 2006), [i]n the process of liquidating entries, Customs must give parties proper notice, and this is so whether the liquidation is actual or deemed. Id. at 1351 (emphasis added). Indeed, Customs has adopted a regulation in harmony with section 1514(c)(3)(A), providing that Customs shall give bulletin notice to an importer when an entry is deemed liquidated, and that this notice starts the clock running on the importer's time to protest the liquidation. (i) Entries liquidated by operation of law at the expiration of the time limitations prescribed in section 504. Tariff Act of 1930, as amended (19 U.S.C. 1504), and set out in [19 C.F.R.] §§ 159.11 and 159.12, shall be deemed liquidated as of the date of expiration of the appropriate statutory period. (ii) The bulletin notice of liquidation shall be posted or lodged in the customhouse within a reasonable period after each liquidation by operation of law and shall be dated as of the date of expiration of the statutory period. (iii) A protest under section 514, Tariff Act of 1930, as amended (19 U.S.C. 1514), and part 174 of this chapter shall be filed within 90 days from the date the bulletin notice of liquidation of an entry by operation of law is posted or lodged in the customhouse. 19 C.F.R § 159.9(c)(2) (emphasis added). Here, Shinyei's entries were deemed liquidated in August of 1998, six months from the date Commerce published notice of the Amended Review Results in the Federal Register. At that time, however, the fact of the deemed liquidation may not have been clear to the parties, because we had not yet decided that publication in the Federal Register was sufficient to start the deemed-liquidation clock running under 19 U.S.C. § 1504(d). See Int'l Trading Co., 281 F.3d at 1276-77 (Fed.Cir.2002). Thus, Shinyei apparently never filed protests directed at the deemed liquidation per se, and Customs apparently never posted bulletin notice of the deemed liquidation. Instead, Shinyei filed the original '130 case in 2000, seeking a writ of mandamus to force actual liquidation of its entries, and then filed protests directed to Customs' actual liquidations (pursuant to Commerce's clean up instructions). Shinyei now argues that because Customs never posted bulletin notice of the deemed liquidation, Shinyei's protest period under 19 U.S.C. § 1514(c)(3)(A) has not yet expired. The United States responds that if this is so, then Shinyei's second protest period has not yet begun, and the Customs-error claim is not ripe, because the statute allows for protest within ninety days after but not before  notice is given. 19 U.S.C. § 1514(c)(3)(A) (emphasis added). The Court of International Trade held that there is no second protest period at all in this case, because Customs was not aware of the deemed liquidation at the time of its occurrence and thus was not required to post notice of it. Shinyei-CIT(II), 491 F.Supp.2d at 1220. The court reasoned that because the deemed-liquidation statute's purpose is to bring finality to the duty assessment process ... allowing the notification regulations set forth in 19 C.F.R. § 159.9(c)(2) to supercede such a finality by prolonging an importer's time to protest would run counter to the statute, and thus Shinyei was not entitled to notice here. Id. This holding turns the deemed-liquidation statute, meant to increase certainty in the customs process for importers, Int'l Trading Co., 281 F.3d at 1272 (emphasis added), on its head. Customs was required by regulation to give Shinyei notice of the 1998 deemed liquidation, and to the extent that Customs did not post notice because it did not appreciate in 1998 that deemed liquidation had occurred (because we had yet to issue International Trading Co. ), it makes little sense to hold that therefore Shinyei may not protest this allegedly unlawful deemed liquidation. Rather, Shinyei would be entitled to protest once Customs were to become aware of the liquidation and were to post notice. [4] However, we need not worry about such counterfactuals, because Customs actually liquidated the disputed entries at the same duty rate at which the entries were deemed liquidated  namely, the deposit rate  and thus the actual liquidations accurately reflected the deemed liquidation (albeit serendipitously). Given this unique circumstance, and given that Shinyei filed timely protests of the actual liquidations, we may treat those protests  as a matter of law  as timely protests of the deemed liquidation. Cf. Koyo, 497 F.3d at 1241 (Second protest period begins on the date that Customs gives notice of the deemed liquidation or notice of a liquidation reflecting the deemed liquidation. ) (emphasis added); Fujitsu Gen. Am. v. United States, 283 F.3d 1364, 1379 (Fed.Cir.2002) (deciding as a matter of law, [when] ... Customs receive[d] notice of the removal of the suspension of liquidation) (emphasis added). Because Shinyei was entitled to protest the deemed liquidation and did so timely, the Court of International Trade was wrong to dismiss Shinyei's Customs-error claims on summary judgment. Only by reaching the merits  i.e., by determining whether the deemed liquidation was unlawful and thus whether Customs should have granted Shinyei's protests  can the court determine whether Shinyei is entitled to reliquidation. Likewise, the Court of International Trade was wrong to grant summary judgment to the United States on its counterclaim for recovery of a refund granted in connection with one of Shinyei's protests. If the deemed liquidation was unlawful, then Customs was likely correct to grant Shinyei's protest and to refund duties. The counterclaim thus requires resolution of the same issues as do Shinyei's claims of Commerce- and Customs-error, issues the court has not yet addressed.