Ford Motor Co. v. United States

• Decision Date: 03 May 2013
• Docket Number: No. 2012–1186.,2012–1186.
• Citation: 715 F.3d 906
• Parties: FORD MOTOR COMPANY, Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

715 F.3d 906

FORD MOTOR COMPANY, Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee.

No. 2012–1186.

United States Court of Appeals, Federal Circuit.

May 3, 2013.

Stephanie A. Douglas, Bush Seyferth & Paige PLLC, of Troy, MI, argued for plaintiff-appellant. Of counsel on the brief were Robert B. Silverman, Ned H. Marshak, Joseph M. Spraragen and Frances P. Hadfield, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of New York, NY. Of counsel was Paulsen K. Vandevert, Ford Motor Company, of Dearborn, MI.

Edward F. Kenny, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of New York, NY, argued for defendant-appellee. Of counsel on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director; Barbara S. Williams, Attorney in Charge, International Trade Field Office, New York, NY. Of counsel was Beth C. Brotman, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs and Border Protection, of New York, NY.

Before NEWMAN, PROST and REYNA, Circuit Judges.

Opinion for the court filed by Circuit Judge REYNA.

Dissenting opinion filed by Circuit Judge NEWMAN.

REYNA, Circuit Judge.

Ford Motor Company (“Ford”) appeals from a final judgment of the Court of International Trade (the “Trade Court”) upholding the denial by the U.S. Customs and Border Protection (“Customs”) of Ford's claims for post-entry duty refunds. See Ford Motor Co. v. United States (“ Ford III ”), 800 F.Supp.2d 1349 (C.I.T.2011). We agree with the Trade Court that 19 U.S.C. § 1520(d) requires Ford to file the relevant certificates of origin (“COs”) within one year, and that its failure to do so could not be excused by 19 C.F.R. § 10.112. Nevertheless, because Customs has failed to adequately explain why it treats post-entry claims for refunds under § 1520(d) differently depending on whether they were filed on paper or through the reconciliation program, ¹ we vacate the Trade Court's judgment and remand for further proceedings.

Background

A

The North American Free Trade Agreement (“NAFTA”) seeks to “eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between” the United States, Canada, and Mexico. NAFTA art. 102(1). One way in which it accomplishes this is by allowing NAFTA origin qualifying goods to enter into the United States duty free. See NAFTA art. 502. To obtain this preferential tariff treatment, an importer must:

a) make a written declaration, based on a valid Certificate of Origin, that the good qualifies as an originating good;

b) have the Certificate in possession at the time the declaration is made; [and]

c) provide, on the request of [Customs], a copy of the Certificate....

NAFTA art. 502(1). The NAFTA also provides a mechanism by which parties who, for whatever reason, do not seek preferential treatment on entry may nevertheless obtain it later:

Each Party shall provide that, where a good would have qualified as an originating good when it was imported into the territory of that Party but no claim for preferential tariff treatment was made at that time, the importer of the good may, no later than one year after the date on which the good was imported, apply for a refund of any excess duties paid as the result of the good not having been accorded preferential tariff treatment, on presentation of:

a) a written declaration that the good qualified as an originating good at the time of importation;

b) a copy of the Certificate of Origin; and

c) such other documentation relating to the importation of the good as that Party may require.

NAFTA art. 502(3). Congress codified this provision in § 1520(d):

Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess duties ... paid ... for which no claim for preferential tariff treatment was made at the time of importation if the importer, within 1 year after the date of importation, files, in accordance with those regulations, a claim that includes—

(1) a written declaration that the good qualified under the applicable rules at the time of importation;

(2) copies of all applicable NAFTA Certificates of Origin (as defined in section 1508(b)(1) of this title), or other certificates or certifications of origin, as the case may be; and

(3) such other documentation and information relating to the importation of the goods as the Customs Service may require.

19 U.S.C. § 1520(d) (emphases added). The requirements of the statute are essentially identical to the requirements set forth in the NAFTA. Pursuant to this statute, Customs has promulgated regulations setting forth the procedures for filing post-entry claims for refunds and requiring additional documentation:

A post-importation claim for a refund shall be filed by presentation of the following:

(1) A written declaration stating that the good qualified as an originating good at the time of importation and setting forth the number and date of the entry covering the good;

(2) Subject to § 181.22(d) of this part, a copy of each Certificate of Origin ... pertaining to the good;

(3) A written statement indicating whether or not the importer of the good provided a copy of the entry summary or equivalent documentation to any other person....

(4) A written statement indicating whether or not the importer of the good is aware of any claim for refund, waiver, or reduction of duties relating to the good within the meaning of Article 303 of the NAFTA....

(5) A written statement indicating whether or not any person has filed a protest or a petition or request for reliquidation relating to the good under any provision of law....

19 C.F.R. § 181.32(b). In addition to the two documents specified in the statute, these regulations require three additional written statements.

As is evident from the above, the treaty, statute, and regulations each require that a post-entry claim for refund of duties must be filed within one year of importation and must include the relevant COs. The regulations provide a penalty for late filing: a claim may be denied “if the claim was not filed timely, if the importer has not complied with the requirements of [19 C.F.R. §§ 181.31–.33, or] if the Certificate of Origin ... cannot be accepted as valid....” 19 C.F.R. § 181.33(d). Similarly, “[i]f the importer fails to comply with any requirement under this part, including submission of a Certificate of Origin ..., the port director may deny preferential tariff treatment to the imported good.” 19 C.F.R. § 181.23(a) (emphasis added); see also19 C.F.R. § 181.31 (stating that Customs may refund duties subject to § 181.23).

Although Customs may deny claims when the relevant COs are not filed within one year, this requirement may be waived. See NAFTA art. 503(c) (“[A] Certificate of Origin shall not be required for ... an importation of a good for which the Party into whose territory the good is imported has waived the requirement for a Certificate of Origin[.]”). Customs has waived the requirement to present certificates for:

(i) An importation of a good for which the port director has in writing waived the requirement for a Certificate of Origin because the port directoris otherwise satisfied that the good qualifies for preferential tariff treatment under the NAFTA;

(ii) A non-commercial importation of a good; or

(iii) A commercial importation for which the total value of originating goods does not exceed US$2,500....

19 C.F.R. § 181.22(d)(1). This court has acknowledged § 181.22(d)(1) as an exercise of Customs' waiver power, concluding that although no reference to waiver appears in § 1520(d), the regulations provide for waiver either under 19 C.F.R. § 181.22(d)(1) or via the reconciliation program. Ford Motor Co. v. United States (“ Ford II ”), 635 F.3d 550, 555–56 (Fed.Cir.2011). Indeed, Customs' power to waive the timely filing of COs was one of the grounds this court relied on in determining that the filing of COs was not a jurisdictional requirement. See id. at 557.

B

In addition to the waiver provisions found in § 181.22, Customs has implemented the NAFTA's waiver authority via the “reconciliation program.” ² This program is separate from, but coexists with, the procedures described above for obtaining refunds under § 1520(d). Any importer may apply to participate in the program. The only requirements are (1) that participants file entry summaries through the Automated Broker Interface (“ABI”) and (2) that participants possess adequate bond coverage. Millions of entries have been processed through the program.

The reconciliation program was developed through a series of notices in the Federal Register over a period of many years. E.g.,Announcement of National Customs Automation Program Test Regarding Reconciliation, 62 Fed. Reg. 5673 (Feb. 6, 1997). Customs publishes a compliance guide (“the Guide”) that consolidates information about the program. See ACS Reconciliation Prototype: A Guide to Compliance, available at http:// www. cbp. gov/ linkhandler/ cgov/ trade/ trade_ programs/ reconciliation/ reference_ desk/ acs_ recon_ guide. ctt/ acs_ recon_ guide. pdf. The Guide is perhaps the best single source for information about the program.

The reconciliation program is designed to address the problem that at the time of importation, certain information might not yet be known. According to the Guide,

More and more transactions involve final adjustments to an import price that may not be known until months after the merchandise is purchased and imported. Filers and ports previously made their own special arrangements to reduce the administrative burden of such adjustments. However, these local, informal versions of “reconciliation” were problematic because they varied a great deal from place to place, often had no legal basis, and lacked adequate financial controls.

Id. at 4. Relevant to this appeal, one such piece of information is the NAFTA origin...