Ambassador Div. of Florsheim Shoe v. U.S., 84-814

Citation748 F.2d 1560
Decision Date19 November 1984
Docket NumberNo. 84-814,84-814
Parties, 3 Fed. Cir. (T) 28 AMBASSADOR DIVISION OF FLORSHEIM SHOE, Appellee, v. The UNITED STATES, Appellant, and Footwear Industries of America, Inc., Intervenor. Appeal
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

A. David Lafer, Washington, D.C., argued for appellant. With him on the brief were Richard K. Willard, Acting Asst. Atty. Gen.; David M. Cohen, Director and Francis J. Sailer, Washington, D.C.

Lauren R. Howard, Collier, Shannon, Rill & Scott, Washington, D.C., argued for intervenor, Footwear Industries of America, Inc.; Michael R. Kershow, Collier, Shannon, Rill & Scott, Washington, D.C., of counsel.

Steven P. Sonnenberg, Sonnenberg, Anderson & O'Donnell, Chicago, Ill., argued for appellee.

Donald B. Cameron, Jr., Daniels, Houlihan & Palmeter, P.C., Washington, D.C., was on the brief for Footwear Retailers of America, amicus curiae.

Herbert C. Shelley, Tom M. Schaumber and Alice A. Kipel, Plaia, Schaumberg & Dekieffer, Chartered, Washington, D.C., were on the brief for amicus curiae, The Special Commodity Group on Nonrubber Footwear from Brazil of The American Ass'n of Exporters and Importers.

Before MARKEY, Chief Judge, NICHOLS, Senior Judge, and BALDWIN, KASHIWA and MILLER, Circuit Judges.

NICHOLS, Senior Circuit Judge.

The United States prosecutes this appeal to obtain our review of a summary judgment by the Court of International Trade (CIT) according to which the facts ascertained in a "Periodic Review" of a countervailing duty determination cannot be applied to entries in the period the review relates to, because by law the duties applicable to those entries must have been finally determined before the facts could have been known. We reverse.

Statement of the Case

The decision in question is reported at 577 F.Supp. 1016 (1983), and familiarity with it is assumed in what follows. The relevant facts are few and simple, but the statutes and regulations to be applied equal the complexity of the much-abused Internal Revenue Code. We state what is necessary to understand our decision, leaving the reader who wishes to know all the ramifications to the decision below.

Briefly, then, the involved merchandise was leather footwear from India, either complete or uppers, entered or withdrawn from warehouses in the United States in calendar year 1980. There had been on the books for many years a statute, codified in 19 U.S.C. Sec. 1303, providing for "countervailing duties" against products subsidized by the country of export. On October 26, 1979, the Treasury Department, which then administered the Act, issued a "final determination" that India paid such a subsidy and stated the amounts to be countervailed as 4.24 percent ad valorem for leather footwear and 1.01 percent for uppers. "Liquidations" were ordered suspended. TD 79-275, 44 Fed.Reg. 61588 (1979).

Effective January 1, 1980, the Congress in the Trade Agreements Act of 1979 made extensive revisions in the countervailing and antidumping laws. A completely new countervailing law was written, but India remained under the old one, as the new statute provided, because it had not, as of 1980 at least, become one of the "agreement countries" for which the more lenient new law was written. Of great importance for this case, 19 U.S.C. Sec. 1675(a) provides for annual "reviews" of outstanding countervailing duty orders, both under new and old law. Authority to administer these laws passed to the International Trade Administration (ITA), an entity of the Commerce Department. On May 12, 1980, ITA announced it would review all outstanding, i.e., Treasury, countervailing duty orders. Meanwhile it directed Customs to maintain its suspension of liquidation. On February 17, 1982, ITA published the results of its review of the subject 1980 imports and determined that in that year India paid 15.08 percent ad valorem for footwear and 12.58 percent for lasted leather uppers, as subsidies. It directed Customs to make assessments accordingly, meaning final liquidations. ITA reasoned that by necessary implication the statutory scheme required retroactive assessments, that is, retroactive from the date of fact finding, and suspension of liquidation therefore had been required in the sense of 19 U.S.C. Sec. 1504, which allows suspension "if required by statute," because necessary to carry out this statutory scheme.

This lawsuit followed. We have been aided by able briefs of counsel and of amici on both sides of the issue.

The reasoning of the CIT judge was exactly the reverse of the ITA. He scrutinized every possible statute and regulation, nowhere finding authority for suspension in the peculiar circumstances of this case, however it might be in other circumstances. He therefore interpreted the statutory scheme as envisioning that the results of periodic reviews, unlike original determinations, and unlike dumping cases, could have "prospective" application only, the entries in the period under study having been long since liquidated if the law had been complied with. It would apparently follow that the first entries or withdrawals from warehouse to which the 1980 investigation could apply; would be those after February 17, 1982, over a year after the close of the period investigated.

Discussion

The CIT judge probably was writing for a more technically knowledgeable readership than are we, and therefore took for granted some things we deem to require expression here. First, a liquidation is, as Customs Regulation 159.1 defines it--

* * * the final computation or assessment of the duties or drawback accruing on an entry.

All the duties, we stress. None can be liquidated until all of them are. The merchandise entered normally has passed into the commerce of the United States on the deposit of estimated duties, a figure which binds neither side, and is the sum of regular and special duties, as estimated.

A liquidation is "final and conclusive upon all persons (including the United States and any officer thereof)," 19 U.S.C. Sec. 1514(a). By subsection (b) this also applies to other judicially reviewable determinations in countervailing duty cases even if not liquidations. There are, of course, exceptions to finality in case of a timely application for judicial review. In case of a countervailing duty, this occurs under 19 U.S.C. Sec. 1516a. The only other exceptions that come to mind are 19 U.S.C. Sec. 1520, correction of inadvertent error, and Sec. 1521, fraud.

By 19 U.S.C. Sec. 1504(a), except as provided in subsection (b), an entry not liquidated in one year is "deemed" liquidated, i.e., made final, at the rate claimed on entry. Subsection (b) allows the Secretary to extend the time allowed for liquidation by formal notice of extension to the importer if--

(1) information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer;

(2) liquidation is suspended as required by statute or court order * * *.

(3) [Not here relevant.]

This was enacted in 1978, thus only a year before the 1979 Trade Agreements Act, Pub.L. No. 95-410, 92 Stat. 902. The prior law had been that Customs might delay liquidation as long as it pleased, and with or without a formal suspension notice. Peugot Motors v. United States, No. 84-103 (slip op. CIT Sept. 13, 1984, Ford. J.). See S.Rep. No. 778, 95th Cong., 2d Sess. 1, 31, reprinted in 1978 U.S.Code Cong. & Ad.News 2211, 2242 (Finance Committee Report). The Committee stated the reason for now requiring prompt liquidation was the uncertainty importers were being kept in, often for years, as to whether they might face further exactions, or when the refunds to which they might be entitled would be paid. It noted that several countries participating in the multilateral trade negotiations had requested a change in this.

In our view, Sec. 1504 is the key to the puzzle we have to answer. If the ITA was right in thinking it could find an implied statutory requirement, absent an express one, where the statute could not be implemented without suspension, then the CIT judge was in error.

If the ITA's reasoning is not compelling, it is plausible, and its own almost contemporaneous interpretation of Sec. 1504 is an important consideration. Zenith Radio Corp. v. United States, 437 U.S. 443, 450, 98 S.Ct. 2441, 2445, 57 L.Ed.2d 337 (1978); Smith-Corona Group v. United States, 713 F.2d 1568 (Fed.Cir.1983). It does not seem so very unreasonable or farfetched to say that the law "requires" you to do something, if it is something you have to do to obey the law.

On the other hand, the interpretation favored by the CIT judge and the appellee may be right as matters of cold textual analysis, but produces absurd results, results that were not and could not have been within the contemplation of Congress. It is absurd to say that the ITA must investigate annually the subsidies in effect in India or anywhere else, yet to say it cannot act on its factual findings with respect to the very year to which they apply. Why then the concern for annual review? Since by Sec. 1504 the entry, unless suspended, must be liquidated within one year, or if not, is "deemed" liquidated, i.e., is final, the government has no means of adding to the liquidated amount whatever the facts, absent an inadvertent error. The importer would have been in a like plight if, as is surely not unimaginable, the effect of the original determination had been to cause the offending nation to stop its unfair trade practice. The importer then must go on for over a year paying a countervailing duty that countervails an unfair practice that was not in effect in that year. It might be suggested the importer could avoid this result by appealing to the CIT. This suggestion would assume the CIT had not made it legally irrelevant what subsidies were actually in effect at the time of importation. Surely the Congress could not have intended to prohibit the ITA from...

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