Power-One Inc. v. U.S., Slip Op. 99-133.

• Decision Date: 14 December 1999
• Docket Number: Slip Op. 99-133.,No. 97-08-01340.,97-08-01340.
• Citation: 83 F.Supp.2d 1300
• Parties: POWER-ONE INC. and Poder Uno de Mexico S.A. de C.V., Plaintiffs, v. UNITED STATES of America, Defendant.
• Court: U.S. Court of International Trade

83 F.Supp.2d 1300

POWER-ONE INC. and Poder Uno de Mexico S.A. de C.V., Plaintiffs, v. UNITED STATES of America, Defendant.

Slip Op. 99-133.

No. 97-08-01340.

United States Court of International Trade.

December 14, 1999.

S.K. Ross & Assoc., P.C., Los Angeles, CA, (Susan Kohn Ross and Melvin L. Chung), for Plaintiffs.

David W. Ogden, Acting Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, (John J. Mahon); Chi S. Choy, Of Counsel, Office of Assistant Chief Counsel, International Trade Litigation, United States Customs Service, for Defendant.

OPINION

WALLACH, Judge.

I INTRODUCTION

This matter is before the Court on the Government's Motion To Dismiss for lack of jurisdiction and/or failure to state a claim upon which relief could be granted. This action arises from the denial of a post-entry North American Free Trade Agreement ("NAFTA") claim. Compl. at para. 1; Answer at para. 1. Plaintiffs, Power-One Inc. ("Power-One") and Poder Uno de Mexico ("Poder Uno"), claim that this Court has jurisdiction over this matter under 28 U.S.C. § 1581(a) and/or (i)(1) and/or (4). Compl. at para. 2. Plaintiffs assert that jurisdiction under § 1581(a) attaches because the post-entry claim was treated by the United States Customs Service ("Customs") as a protest, despite the requirements of 19 C.F.R. § 174.12(e)(2)¹ and 19 U.S.C. § 1514(a)² and (c)(2)(A)³ and (E), and that therefore it became a protest in Customs' hands.⁴ Plaintiffs' Opposition to Defendant's Motion to Dismiss ("Plaintiffs' Opposition") at 10-11. Alternatively, Plaintiffs claim this action arises from the denial of a protest, arguing that the same post-entry NAFTA claim actually was a protest. Compl. at para. 1. Plaintiffs further allege that jurisdiction under § 1581(i) attached because the denial of the post-entry claim did not comply with the regulatory requirements of 19 C.F.R. § 181.75⁵ and § 181.76.⁶ Compl. at paras. 1, 4, 5.

Defendant argues that this action should be dismissed because the Court lacks subject matter jurisdiction. Defendant argues that the Court lacks jurisdiction under 28 U.S.C. § 1581(a) because of Plaintiffs' failure to file timely 19 U.S.C. § 1514 protests regarding the negative origin determinations, the denial of Plaintiffs' 19 U.S.C. § 1520(d) petition for refund of duty under NAFTA, and the liquidation with increased duties of eleven entries liquidated subsequent to the filing of Plaintiffs' § 1520(d) petition. See Defendant's Memorandum in Support of Defendant's Motion to Dismiss for Lack of Jurisdiction and/or Failure to State a Claim Upon Which Relief Could Be Granted ("Defendant's Memorandum") at 8-16, 17. Defendant also argues that the Court lacks jurisdiction under 28 U.S.C. § 1581(i) because an adequate remedy existed under 28 U.S.C. § 1581(a). Id. at 18-20.

For the reasons set forth below, Defendant's Motion To Dismiss is granted.

II BACKGROUND

In 1994, Poder Uno produced and shipped wire harnesses, transformers and power supplies to Power-One. Compl. para. 8, Answer at para. 8. In that year, Power-One, the importer of record, entered the 315 entries which are the subject of the post-entry NAFTA claim. See Defendant's Response to Court's Order of July 26, 1999.⁷ None of the goods received preferential treatment under NAFTA because no NAFTA claim was made at the time of entry. Defendant's Memorandum at 1; Compl. at para. 8; Answer at para. 8. The wire harnesses were entered under HTSUS tariff item 8544.41.00.00 at a duty rate of 5.3% ad valorem. Compl. at para. 8; Answer at para. 8. The transformers were entered under tariff item 8504.31.40.00 at a duty rate of 5% ad valorem. Id. The power supplies were entered under tariff item 8504.40.80 at a duty rate of 3% ad valorem. Id.

On December 20, 1994, Power-One filed a post-entry NAFTA claim for the 1994 entries pursuant to the provisions of 19 U.S.C. § 1520(d), seeking duty-free treatment for its wire harnesses, transformers and power supplies. Compl. at para. 9, Plaintiffs' Opposition, Exh. 1-1, Letter from Sara Gradilla of Power One to District Director of Nogales Customs of 12/20/94; Answer at para. 9.

On or about December 12 and 13, 1995, Customs, as part of its processing of the NAFTA claim, conducted a NAFTA verification audit at Poder Uno's facilities in Mexico to verify the origin of the goods at issue. Compl. at para. 10; Answer at para. 10; Defendant's Memorandum, Exh. B., Letter from District Director Rudy Cole of Nogales Customs to Poder Uno of 11/9/95. On December 19, 1995, a request for information was sent to Poder Uno seeking more documents to verify the NAFTA claim. Defendant's Memorandum at 2 and Exh. D, Request for Information.

On January 18, 1996, Customs advised Poder Uno that there had been no response to Customs' requests for specific documentation and that failure to respond within 20 days of the date of the letter would result in the issuance of a "Negative Origin Determination," meaning that the NAFTA claim would be denied. Defendant's Memorandum at 2-3 and Exh. E, Letter from Import Specialist Jorge Salazar to Poder Uno of 1/18/96. When the requested documentation was not received, Customs issued a written determination on February 20, 1996 that the wire harnesses did not qualify as originating goods under NAFTA. Defendant's Memorandum at 3, 10 and Exh. F, Notice of Action. On November 21, 1996, Customs issued a written determination to the same effect in regard to the transformers and power supplies. Defendant's Memorandum at 3 and Exh. G.

On February 18, 1997, Customs issued a formal Notice of Action denying the Plaintiffs' § 1520(d) petition because the goods "do not qualify as originating under the terms of NAFTA." Compl. para. 11 and Exh. 1-1; Answer at para. 11.

III DISCUSSION

A

The Court Lacks Jurisdiction Over This Matter Under 28 U.S.C. § 1581(a) Because Plaintiffs Failed to File a Protest Against the Negative Origin Determinations Issued by Commerce and the Denial of Their § 1520(d) Petition Pursuant to 19 U.S.C. § 1514.

Pursuant to 28 U.S.C. § 1581(a) (1994), this Court

shall have 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 1930.⁸

Defendant argues that this Court lacks jurisdiction over this matter under 28 U.S.C. § 1581(a) because no timely § 1514 protest was filed against either the initial negative origin determinations or the subsequent denial of Power One's § 1520(d) Petition.⁹

Protests can only be filed in regard to final decisions of Customs. Section 1514(a) states what decisions are final. The Government argues that denial of the post-entry NAFTA refund claim (§ 1520(d) petition)¹⁰ is a final Customs decision as to "classification, rate, and amount of duties chargeable," as listed in § 1514(a)(2). Therefore, that petition denial is a protestable decision under § 1514(a). This means that a § 1514 protest, and a denial of that protest under § 1515, must occur prior to the filing of suit in order for this Court to have jurisdiction under § 1581(a).¹¹ Customs' Treatment of Plaintiffs' Petition Did Not Make it A Protest.

Plaintiffs argue that this Court has jurisdiction under 28 U.S.C. § 1581(a) because Customs considered their NAFTA claim to be a protest, so therefore a protest was indeed filed and denied. Plaintiffs' Opposition at 6 and 10-12. Plaintiffs maintain that they did not file a protest. Transcript of Oral Argument at 22-23; Plaintiffs' Opposition Exh. 1-1. However, Plaintiffs argue that the contemporaneous written evidence clearly shows that Nogales Customs considered Power One's NAFTA claim to be a protest because (1) Customs assigned a protest number to the claim and (2) Customs' Automated Commercial System database states that the entries covered by the claim were in the protest denial stage.¹² Plaintiffs' Opposition at 10. Plaintiffs explain that Customs' denial of their NAFTA refund claim, found in the document attached as Exhibit H to Defendant's Memorandum, constitutes the requisite protest denial because Customs considered the petition to be a protest. Plaintiffs' Opposition at 11.

Plaintiffs provide no legal authority to support this argument.

Defendant addresses Plaintiffs arguments with regard to the protest number and Customs' Automated Commercial System database. Defendant's Reply to Plaintiffs' Opposition to Defendant's Motion to Dismiss ("Reply") at 3-6. Defendant explains that Customs electronic records label both § 1514 claims and § 1520 claims as "protests." Id. at 4. However, by looking at the tracking number and the type of document filed, it is clear which "protests" are actually § 1514 protests, and which are § 1520(d) petitions. The indicators of the different types of claims filed are on reports available through the automated system. Id.

Defendant's explanation demonstrates that Customs treated Plaintiffs' claim as a § 1520(d) petition and not a protest filed pursuant to § 1514. This is also evidenced by the fact that all the entries were reviewed for NAFTA eligibility. See Defendant's Memorandum, Exhibit H, Notice of Action. Had Customs truly considered the § 1520(d) claims to be § 1514 protests, it would not have reviewed the documents on the merits of the NAFTA eligibility. It would have been a non-protestable matter at that point, because no Customs decision had yet been made to be protested. Since Customs did reach the merits of NAFTA eligibility, it clearly treated the claim as a § 1520(d) petition and not as a protest. Therefore, Plaintiffs have neither the legal nor factual basis for the argument that Customs' actions turned a post-entry NAFTA claim into a protest.

Plaintiffs' Alternative Argument That the Petition Was Sufficient to Be a Protest under the Objective Standard for a Protest Fails Because Plaintiffs Made it Clear to Customs That...