Detroit Zoological Soc. v. United States

• Decision Date: 28 February 1986
• Docket Number: No. 85-2-00275.,85-2-00275.
• Citation: 10 CIT 133,630 F. Supp. 1350
• Parties: DETROIT ZOOLOGICAL SOCIETY, Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

630 F. Supp. 1350

10 CIT 133

DETROIT ZOOLOGICAL SOCIETY, Plaintiff, v. The UNITED STATES, Defendant.

No. 85-2-00275.

United States Court of International Trade.

February 28, 1986.

COPYRIGHT MATERIAL OMITTED

Edmund Maciorowski, Detroit, Mich., for plaintiff.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Jerry P. Wiskin and Judith M. Barzilay, Civil Div., U.S. Dept. of Justice, New York City, for defendant.

OPINION AND ORDER

RESTANI, Judge:

Plaintiff, the Detroit Zoological Society, is the consignee of five entries made between November 21, 1983, and March 12, 1984.¹ Plaintiff sought to have the imported merchandise classified under a duty free item, TSUS 862.10: "Articles imported for exhibition by any institution or society established for the encouragement of ... education or science...." The United States Customs Service (Customs), however, classified the entries under TSUS items 690.05, 690.15 and 806.20 and required the deposit of duties in accordance with the rates applicable to those items. See 19 U.S.C. § 1505(a) (1982 & West Supp.1985) (requiring deposit of estimated duties at the time of entry). Plaintiff filed a protest concerning classification of the first entry on February 18, 1985,² and filed another protest on February 25, 1985, covering the second through fourth entries.³ The following day, plaintiff filed a complaint with this court, asserting jurisdiction under 28 U.S.C. §§ 1581(i), 1585 and 2202, seeking to have all five entries deemed liquidated by operation of law under 19 U.S.C. § 1504(a).⁴ Subsequently, plaintiff filed a protest, dated May 14, 1985, covering the last of the five entries.⁵ Plaintiff now seeks to amend its complaint to include an assertion of jurisdiction under 28 U.S.C. § 1581(a) (1982). This matter is before the court on plaintiff's motion to amend its complaint and on defendant's motion to dismiss for lack of subject matter jurisdiction.⁶

Section 1581(a) provides the Court of International Trade with "exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930. 19 U.S.C. § 1515." 28 U.S.C. § 1581(a) (1982). The prerequisites of section 1581(a) jurisdiction are that a protest has been filed as to protestable subject matter; that the protest has been denied; and that the protest was timely filed. The court will examine each of these requirements in turn to determine whether section 1581(a) jurisdiction is appropriate in the case at bar. A protest may be filed to contest, among other things, "the classification and rate and amount of duties chargeable," 19 U.S.C. § 1514(a)(2) (1982), or "the liquidation ... of an entry...." 19 U.S.C. § 1514(a)(5) (1982). Thus, it is evident that plaintiff's dispute as to the alleged deemed liquidation, classification and duties to be paid on its entries is protestable subject matter under section 1514(a).

The parties agree that plaintiff's first protest was denied on May 15, 1985, and there has been no allegation that either of plaintiff's other two protests were denied earlier than that date. Plaintiff, however, filed its complaint on February 26, 1985. Thus, plaintiff's complaint preceded the denial of any of its protests. This failure to exhaust the requisite administrative review process of protest and denial of protest before filing the complaint would have prevented this court from invoking section 1581(a) jurisdiction when the complaint was filed. See Wear Me Apparel Corp. v. United States, 1 CIT 194, 195, 511 F.Supp. 814, 816 (1981) (denial of protest as prerequisite to invoking section 1581(a) jurisdiction) (citing United States v. Reliable Chemical Co., 66 CCPA 123, C.A.D. 1232, 605 F.2d 1179 (1979) (denial of protest as jurisdictional prerequisite under predecessor to section 1581(a)); H.R.Rep. No. 96-1235, 96th Cong., 2d Sess. 44, reprinted in 1980 U.S.Code Cong. & Ad.News 3729, 3755 (indicating intent in enacting the Customs Courts Act of 1980 to preserve requirement of protest and denial as prerequisites to jurisdiction under section 1581(a))). Plaintiff claims in its motion for leave to file an amended complaint, however, that its protests covering each of the entries have been denied or will be denied during the course of this litigation, thus conferring section 1581(a) jurisdiction on this court.

A party may file a supplemental complaint to cure a jurisdictional defect of failure to exhaust administrative remedies if the requisite actions are taken after filing a complaint. See Mathews v. Diaz, 426 U.S. 67, 75, 96 S.Ct. 1883, 1889, 48 L.Ed.2d 478 (1976) (jurisdictional prerequisite under Social Security Act of filing application for enrollment was satisfied by supplemental pleadings establishing that application was filed after plaintiff was joined in action); Wear Me Apparel, 1 CIT at 197, 511 F.Supp. at 817 (leave to file an amended complaint under section 1581(a) granted where protest denied after complaint was filed). Although plaintiff did file an amended complaint after two of the three protests were denied, leave to amend is appropriate here only if the amended complaint cures the jurisdictional defect. Thus, the court must determine whether the final jurisdictional requirement of section 1581(a), that the protests themselves be timely filed, has been satisfied.

The time frame for filing a protest under 19 U.S.C. § 1514(a) is specifically provided for by statute:

(2) A protest of a decision, order, or finding described in subsection (a) of this section shall be filed with such customs officer 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)(2) (1982) (emphasis added).

Although 19 U.S.C. § 1504(a) (1982) specifically states that notice of a deemed liquidation need not be provided, the implementing regulations require that Customs provide such notice. 19 C.F.R. § 159.9(c)(2)(ii) (1984). Regardless of this apparent inconsistency, where Customs contends, as here, that entries are not deemed liquidated, notice obviously would not be provided. In this case it is appropriate to allow a protest as to the alleged deemed liquidation to be filed within the time frame of section 1514(c)(2)(B) (above), prior to notice of liquidation.⁷ The propriety of this ruling is made clear by the legislative history of liquidation by operation of law. Congress noted that "under the present law, prior to enactment of the deemed liquidation provision, an importer may learn years after goods have been imported and sold that additional duties are due, or may have deposited more money for estimated duties than are actually due but be unable to recover the excess for years as he awaits liquidation." S.Rep. No. 95-778, 95th Cong., 2d Sess. 32, reprinted in 1978 U.S. Code Cong. & Ad.News 2211, 2243. Congress sought to alleviate this problem by providing for liquidation by operation of law. To require a party to await notice of liquidation before filing a protest as to an alleged deemed liquidation would frustrate the legislative intent here, which was to prevent a party from bearing the burden of an inordinate delay in the liquidation of an entry. Thus the question is whether plaintiffs' protests were timely filed in accordance with section 1514(c)(2)(B).⁸

Defendant argues that the liquidation of the entries in question was extended and that, as a result, plaintiff's protests were filed prior to liquidation of each respective entry. From this, defendant concludes that plaintiff's protests were not timely filed and, as such, the denial of those protests does not provide the basis for section 1581(a) jurisdiction.

Plaintiff filed each protest more than a year after each respective entry, after what it alleges was deemed liquidation of the entries.⁹ Even so, only if the alleged extensions of liquidation were invalid could the protests have been filed within the requisite time frame of section 1514(c)(2)(B). See supra footnote 8. Whether the protests were timely filed, and thus whether this court has jurisdiction under 28 U.S.C. § 1581(a), therefore turns on the validity of the alleged extensions of liquidation. See Computime v. United States, 772 F.2d 874, 875 (Fed.Cir.1985); ITT Semiconductors v. United States, 6 CIT ___, 576 F.Supp. 641, 643 (1983) (both indicating that denial of a timely filed protest is a prerequisite to section 1581(a) jurisdiction).

Plaintiff challenges the validity of the extensions of liquidation on two distinct grounds. First, plaintiff argues that the Customs Service had all the information required to complete the liquidations and therefore Customs was not justified in issuing extensions of liquidation under 19 U.S.C. § 1504(b) (1982). Second, plaintiff contends that notice of the extensions was not provided to plaintiff-consignee and therefore the extensions did not take effect. As to plaintiff's first contention, defendant responds that Customs required additional information to process the classifications. In addition, defendant claims that plaintiff's request that Customs seek internal advice on the classifications constituted an implicit request that liquidation be delayed pending receipt of the advice from Customs Headquarters.¹⁰ Finally, defendant argues that its decision to extend liquidation is not reviewable by this court because there is allegedly no law to apply. At the outset, it must be noted that this court does in fact have limited authority to review Customs' decision to extend the period in which to liquidate entries. There are specific circumstances under which Customs may issue such extensions.¹¹ Customs must interpret the statutes which it administers reasonably, Zenith Radio Corp. v. United States, 437 U.S. 443, 98 S.Ct. 2441, 57 L.Ed.2d 337 (19...