Application for Further Review of Protest number 2304-23-102744; USMCA Preference Claim; 19 U.S.C. § 1514; 19 U.S.C. § 1520(d); Denial of Preference Claim

H331318
May 10, 2023
OT:RR:CTF:VS H331318 ARU
CATEGORY: Valuation Center Director Automotive and Aerospace Center of Excellence and Expertise U.S. Customs and Border Protection 477 Michigan Ave, Suite 200 Detroit, MI 48226 Attn: Aisosa Avboraye, Import Specialist RE: Application for Further Review of Protest number 2304-23-102744; USMCA Preference Claim; 19 U.S.C. § 1514; 19 U.S.C. § 1520(d); Denial of Preference Claim Dear Center Director: This is in response to the Application for Further Review (“AFR”) of Protest number 2304-23-102744 received on March 24, 2023. Our decision follows. FACTS: This protest was filed by Victor Gonzales LLC, on behalf of Kunhwa Mexico S DE RL DE CV (“Protestant”), against U.S. Customs and Border Protection’s (“CBP”) decision to deny a claim for preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”) as improperly filed. The Protestant claims that it properly protested its claim for USMCA preference and that the imported merchandise is entitled to preferential tariff treatment under the USMCA. The merchandise subject to this protest was imported by Kunhwa on February 16, 2022 from Mexico. At the time of filing of the entry summary, the importer did not claim preferential tariff treatment pursuant to the USMCA. Therefore, the entry subject to this protest was liquidated as entered at the applicable general rates of duty on October 14, 2022. On March 24, 2023, the Protestant claimed preferential tariff treatment by filing a protest under 19 U.S.C. § 1514.

The Center argues that the Protestant improperly filed a 19 U.S.C. § 1514 protest instead of a 19 U.S.C. § 1520(d) post-importation claim. The Protestant claims that the part numbers (49541P951C, 49541P8220, 49541P001C, and 49542PL020) for suspension systems imported from Mexico, qualify for preferential tariff treatment under the USMCA agreement and that the importer was in possession of a valid USMCA certificate at the time of entry. A USMCA Certification of Origin covering the time period of January 1, 2022 to December 31, 2022 was provided with the protest. ISSUE: Whether the importer’s claim for USMCA preference under 19 U.S.C. § 1514 was properly denied. LAW AND ANALYSIS: As the importer did not claim USMCA preference at the time of entry, their claim is governed by 19 U.S.C. § 1520(d), concerning post-importation claims of USMCA preference. Section 520(d), Tariff Act of 1930, as amended (19 U.S.C. § 1520(d)), provides as follows: Notwithstanding the fact that a valid protest was not filed, the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess duties (including any merchandise processing fees) paid on a good qualifying under the rules of origin set out in … section 4531 of this title, 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 certificates or certifications of origin; and (3) such other documentation and information relating to the importation of the goods as the Customs Service may require. (Emphasis added). The CBP regulations implementing 19 U.S.C. § 1520(d) are found in 19 C.F.R. § 182.31- 182.33. For preference programs that have a post-importation provision, including the USMCA, a § 1520(d) post-importation claim is the only mechanism to seek preference when not claimed at the time of importation. See HQ H193959, dated July 30, 2012. Here, the Protestant did not file a § 1520(d) post-importation claim within 1 year after the date of importation, but rather filed a § 1514 protest following liquidation and more than 1 year after the date of importation. In Xerox Corporation v. United States, 423 F.3d 1356 (2005), the importer claimed classification of the goods at 3.7 percent ad valorem rate under subheading 9009.12, HTSUS.

Over a year later, the importer asserted, in a protest of the liquidation pursuant to 19 U.S.C. §1514(a), that its entries were entitled to preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”). The Federal Circuit determined that liquidation by the U.S. Customs and Border Protection (“CBP”) of the goods as entered, rather than at the more preferential rate pursuant to NAFTA, was not a protestable decision under 19 U.S.C. §1514 because the issue of whether the subject merchandise was eligible for the NAFTA preference was never timely placed before CBP. Thus, Federal Circuit held that “in the absence of a proper claim for NAFTA treatment, either at entry or within a year of entry, Customs cannot make a protestable decision to deny an importer preferential NAFTA treatment.” In addition, the Federal Circuit found that an importer may not use 19 CFR §10.112 to circumvent the clear mandate of NAFTA and 19 U.S.C. §1520(d) that allowed the importer in Xerox only one year to file a claim in the first instance for NAFTA treatment. Simply put, the Federal Circuit declined to construe 19 CFR §10.112 to increase the one-year time period for making a post-importation NAFTA claim and thus increase the Court of International Trade’s jurisdiction under 28 U.S.C. §1581(a). Similarly, in Corrpro Companies, Inc. v. United States, 433 F.3d 1360 (2006), the Federal Circuit also held that there was no protestable decision conferring jurisdiction on the Court of International Trade under 28 U.S.C. §1581(a) because CBP could not have and did not consider the merits of the importer’s claim in its initial classification decision or liquidation. Rather, the plaintiff filed a protest challenging CBP’s liquidation of its entries at a general rate, which CBP denied. In Corrpro, the plaintiff claimed that its imported goods were entitled to NAFTA treatment even though it did not make a NAFTA claim at the time of entry or within one year of entry under 19 U.S.C. §1520(d). Citing Xerox, the Federal Circuit noted that the importer’s entries were not a protestable decision with respect to preferential treatment under NAFTA because “Customs at no time considered the merits of NAFTA eligibility, nor could it [have] without a valid claim by the [importer] for such eligibility.” See Corrpro, 423 F.3d at 1364. Thus, in dismissing the case on jurisdictional grounds, the Federal Circuit determined that CBP could not have engaged in any sort of decision-making as to NAFTA eligibility in liquidating the goods because Corrpro had not yet raised the NAFTA issue. In this case, Kunhwa did not make a claim for preferential tariff treatment at the time of filing of the entry summary in 2022 as required by 19 CFR § 182.31, and the entry was liquidated at the applicable general rate of duty. Under the guise of a 19 U.S.C. § 1514 protest of CBP’s liquidation of the subject entry and over 1 year after filing the entry summary, Kunhwa seeks to claim preferential tariff treatment under the USMCA. The Xerox and Corrpro cases stand for the general proposition that CBP may not render a protestable decision on FTA eligibility until a valid FTA claim is submitted to CBP. Indeed, in Xerox, the Federal Circuit expressly rejected the idea that the mere assessment of general rates at liquidation amounted to a protestable decision to deny preferential treatment if no claim was filed with CBP prior to the non-preferential rate being assessed. Since Kunhwa did not make a claim for preferential treatment at the time of entry or file a § 1520(d) post-importation claim within 1 year of importation, CBP’s liquidation of the imported merchandise at the general rates of duty was correct based on the information provided at entry, and this protest should be denied. Because the USMCA specifically provides for post- importation claims, the importer may not claim preferential tariff treatment under the USMCA

by filing a protest under 19 U.S.C. §1514. See Zojirushi America Corp v. U.S., 180 F. 3d 1354 (2016). In Zojirushi, the preference program at issue was the Generalized System of Preference (GSP) which does not have a statutory post-importation mechanism for claiming preference. Accordingly, we find that CBP’s liquidation of the imported merchandise at the general rates of duty was proper, and the entry subject to this protest was properly liquidated because the importer failed to file a claim for preferential tariff treatment at the time of entry or within 1 year of importation. HOLDING: The importer’s claim for USMCA preference under 19 U.S.C. § 1514 was properly DENIED. You are instructed to notify the protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the publish on the Customs Ruling Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, which can be found on the CBP website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
For Yuliya Gulis, Director Commercial and Trade Facilitation Division