Cavazos v. United States

• Decision Date: 14 June 2012
• Docket Number: Consolidated Court No. 09-00125
• Parties: ROGELIO SALAZAR CAVAZOS, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

ROGELIO SALAZAR CAVAZOS, Plaintiff,

v.UNITED STATES, Defendant.

Consolidated Court No. 09-00125

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: June 14, 2012

Slip Op. 12-82

Before: Richard K. Eaton, Judge

MEMORANDUM AND ORDER

[Defendant's motion to sever and dismiss granted.]

Debra S. Weiss, Debra S. Weiss, Attorney at Law, for plaintiff.

Tony West, Assistant Attorney General; Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Saul Davis) for defendant.

Eaton, Judge: This matter is before the court on the motion of defendant the United States, on behalf of United States Customs and Border Protection ("Customs"), to sever and dismiss for lack of subject matter jurisdiction plaintiff Rogelio Salazar Cavazos' ("plaintiff") claims challenging the denial of his North American Free Trade Agreement ("NAFTA") post-importation duty refund claims¹ ("NAFTA Claims"). For the reasons stated below, the court grants defendant's motion to sever and dismiss these claims.

BACKGROUND

In his complaint, plaintiff challenges Customs' assessment of tariffs on thirteen entries of nuts from Mexico entered at the Port of Hidalgo/Pharr, Texas, between June 26, 2007 and December 28, 2007. In addition, he challenges Customs' denial of his NAFTA Claims covering the same entries. Compl. ¶ 1.

Plaintiff's entries consisted of two varieties of candied peanuts. Compl. ¶ 9.² Upon liquidation, ³ Customs classified the merchandise under subheading 2008.11.60 of theHarmonized Tariff Schedules of the United States ("HTSUS"), as "[f]ruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit"

As a result of this classification, the goods were assessed a duty rate of 131.8% ad valorem. Plaintiff filed two protests to Customs' classification of his entries, asserting that the merchandise was more appropriately classified as "candied nuts" under HTSUS subheading 1704.90.10. The protests were denied on September 19 and October 17, 2008, respectively.⁴ Had plaintiff's protests been allowed, and the goods reclassified under subheading 1704.90.10, the entries would have been liquidated at a rate of 40% ad valorem.

Following liquidation of the entries, but prior to denial of his protests, plaintiff filed NAFTA Claims seeking duty-free treatment for the merchandise.⁵ Compl. ¶ 61. These NAFTA Claims were timely filed pursuant to 19 U.S.C. § 1520(d) (2006), which provides that Customs may "reliquidate an entry to refund any excess duties . . . paid on a good qualifying" for preferential treatment under 19 U.S.C. § 3332(a) if the importer files a claim at any time within one year from the date of entry. Thus, the statute anticipates that NAFTA claims may be made after liquidation.

By his NAFTA Claims, plaintiff asserted that the merchandise qualified for duty-free entry into the United States as "originating goods" under 19 U.S.C. § 3332(a)(1)(A). Compl. ¶59. Pursuant to section 3332(a)(1)(A), "originating goods" are those that are "wholly obtained or produced entirely in the territory of one or more of the NAFTA countries." 19 U.S.C. § 3332(a)(1)(A). Plaintiff maintains that his merchandise qualified as for duty-free treatment as originating goods because the peanuts used were obtained in the United States and the remaining ingredients were obtained in Mexico.⁶ Compl. ¶¶ 56-58.

Following the denial of his classification protests, plaintiff's NAFTA Claims were denied on November 20, 2008 and March 11, 2009, respectively. Plaintiff did not protest the denial of his NAFTA Claims. Compl. ¶ 6. Plaintiff's Complaint challenging the denial of the classification protests and the corresponding NAFTA Claims was filed on September 1, 2010. See generally Compl.⁷

By its motion to sever and dismiss, defendant contends that, pursuant to 19 U.S.C. § 1514(a) and 28 U.S.C. § 1581(a) (2006), plaintiff was required to protest the denial of his NAFTA Claims as a precondition to the court's jurisdiction. Accordingly, defendant contends that the court lacks jurisdiction over the NAFTA Claims because plaintiff failed to protest their denial. Def. Mem. Supp. Mot. Dismiss ("Def.'s Mem.") 3.

STANDARD OF REVIEW

Whether jurisdiction exists is a question of law for the court. Shah Bros., Inc. v. United States, 35 CIT ___, ___, 770 F. Supp. 2d 1367, 1370 (2011) (citing Sky Techs. LLC v. SAP AG, 576 F. 3d 1374, 1378 (Fed. Cir. 2009)). The party seeking to invoke this Court's subject matter jurisdiction bears the burden of establishing it. AutoAlliance Int'l, Inc. v. United States, 29 CIT 1082, 1088, 398 F. Supp. 2d 1326, 1332 (2005). To meet its burden, the plaintiff must plead facts from which the court may conclude that it has subject matter jurisdiction with respect to each of its claims. Schick v. United States, 31 CIT 2017, 2020, 533 F. Supp. 2d 1276, 1281 (2007) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)).

DISCUSSION

Plaintiff acknowledges that he did not separately protest Customs' denial of his NAFTA Claims, but argues that the court nevertheless has jurisdiction over those claims for three reasons. First, he maintains that his arguments in favor of the NAFTA Claims constitute "new grounds" in support of his claims challenging Customs' classification of the entries pursuant to 28 U.S.C. § 2638. Second, because 19 U.S.C. § 1514(c) permits only one protest to be filed for each entry, plaintiff insists that he was precluded, and therefore excused, from filing a second protest challenging the denial of the NAFTA Claims, which concern the same entries that were the subject of his classification protests. Finally, plaintiff claims he was excused from protesting the denial of his NAFTA Claims because the Port Director failed to mark a box in the letter denying the NAFTA Claims next to a sentence reading "the denial is protestable within 180 days of the date of this letter." Pls.' Resp. to Def.'s Mot. Dismiss ("Pl.'s Resp.") 10.

A. Plaintiff's NAFTA Claims Are Not New Grounds Under Section 2638

Under 28 U.S.C. § 1581(a), a prerequisite to this Court's jurisdiction over actions challenging Customs' decisions is the denial of a timely-filed protest. See Epoch Design LLC v. United States, 36 CIT ___, ___, 810 F. Supp. 2d 1366, 1370 (2012) ("The proper, timely filing of a protest is thus a jurisdictional requirement; and, further, the denial, in whole or in part, of a protest is a precondition to the commencement of an action under 28 U.S.C. § 1581(a).") (citations omitted). Pursuant to 28 U.S.C. § 2638, however, the court "may consider any new ground in support of [a] civil action if such new ground - (1) applies to the same merchandise that was the subject of the protest; and (2) is related to the same administrative decision listed in [19 U.S.C. § 1514] that was contested in the protest." In other words, when a plaintiff has protested a decision by Customs for at least one reason, it may challenge that same decision in this Court for any other reason, even if such other reason was not raised in the protest, so long as the same merchandise is involved.

Plaintiff maintains that the court has jurisdiction over the denial of his NAFTA Claims because "[p]laintiff's assertions for duty-free treatment pursuant to a trade agreement relate to the same administrative decision that was contested in the protests, i.e., the liquidation of the covered entries determining the tariff classification and assessing the rate of duty and amount of duty chargeable." Pl.'s Resp. 5. Thus, plaintiff argues that, pursuant to section 2638, his NAFTA Claims constituted "new grounds" in support of his protests of Customs' classification decisions. Based on this position, plaintiff insists that he was not required to separately protest the denial of his NAFTA Claims.

A claim constitutes new grounds for the purposes of section 2638 when it "fall[s] within the same category of decision raised by protests under 19 U.S.C. § 1514(a)." See Atari Caribe,Inc. v. United States, 16 CIT 588, 594, 799 F. Supp. 99, 106 (1992). As a result, in order for the NAFTA Claims to be considered as new grounds for the previously-filed classification protests they must relate to the same category of decision as the protests themselves. Thus, if Customs' decisions to deny preferential treatment under NAFTA for plaintiff's goods are distinct from its classification of those goods, the NAFTA Claims cannot be said to constitute new grounds for challenging Customs' classification decisions. In that case, plaintiff would be required to protest the denial of the NAFTA Claims as a prerequisite to this Court's jurisdiction over the issue of whether the merchandise qualified for the NAFTA tariff preference.⁸

In considering this case, the court is guided by the holdings in three Federal Circuit opinions. First, in U.S. Shoe Corp. v. United States, the Court found that a "decision" is required by Customs before a proper protest can be filed, and jurisdiction in this Court under section 1581(a) can be based on a denial of that protest. U.S. Shoe, 114 F.3d 1564, 1570 (Fed. Cir. 1997).

Next, in Xerox Corp. v. United States, the Federal Circuit found that this Court lacked jurisdiction over a plaintiff's claim for a preferential tariff rate under NAFTA where the plaintiff's claim for NAFTA preference was raised for the first time in the protest itself. The Federal Circuit held that the denial of a protest cannot confer jurisdiction on this Court unless the complaint challenges a decision Customs has made prior to the protest being filed. The Court explained that "Customs at no time expressly considered the merits of NAFTA eligibility, nor could it without a valid claim by Xerox for such eligibility. We thus hold that it did not make a protestable decision to deny Xerox NAFTA treatment in this case." Xerox, 423 F.3d at 1363.

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