CBP Provides Important Updates Regarding IEEPA Tariff Refunds

On March 31, U.S. Customs and Border Protection (“CBP”) filed another declaration at the Court of International Trade (“CIT”) in Atmus Filtration v. United States regarding its efforts to establish an administrative process for International Emergency Economic Powers Act (“IEEPA”) tariff refunds.  As with prior declarations, CBP provided updated completion percentages on its development of each component of the Consolidated Administration and Processing of Entries (“CAPE”), the mechanism CBP has developed to administer IEEPA refunds.  CBP’s reported progress as to developing those components for “Phase 1”—the initial development phase—are provided below, as are the reported progress from prior declarations.

In addition to updating the CIT on CBP’s progress, CBP clarifies the scope of CAPE Phase 1 and how it will process “CAPE Declarations,” which are the reports importers must file listing their entries that were subject to IEEPA tariffs and for which importers are due a refund.  Important points from CBP’s declaration are provided below.  Two points of clarification are important for importers to note. 

First, CBP clarifies that CAPE Phase 1 will not be able to process refunds for entries that are more than 80 days past their liquidation date.  This is most likely because the CIT’s March 4 order did not cover entries for which liquidation is final, which CBP evidently understood to mean within the 90-day voluntary reliquidation period under 19 U.S.C. § 1501 (CBP uses an 80-day cut-off so that it can process CAPE Declarations within the 90-day period).  CBP states that it will work on developing CAPE to be able to process refunds on entries that are beyond the 90-day voluntary reliquidation period, but CBP does not provide a timeline for doing so and states it will not be able to do so in CAPE Phase 1.

Second, CBP clarifies that CAPE Phase 1 will not be able to process refunds for entries that are covered by an open protest.  Many importers have been wondering whether filing a protest is a proper vehicle for obtaining IEEPA refunds or preserving their rights.  In addition to the legal uncertainty surrounding whether IEEPA tariffs are protestable, CBP’s declaration clarifies that filing a protest may delay obtaining refunds.  Thus, importers should carefully consider the potential consequences and delays that may result from filing a protest on entries subject to IEEPA tariffs.

Although these developments suggest CBP is going in the right direction, there remains substantial uncertainty regarding CAPE’s abilities and scope.  Thus, the most assured way for importers to protect their rights is to file suit at the CIT.  We will keep you updated on any further developments.

CAPE Completion Status

*see below regarding limitations on the entries that can be processed under CAPE Phase 1.

Additional Important Points

• CBP confirmed that it has been designing the CAPE refund process to cover only those entries that are either unliquidated or for which the 90-day voluntary reliquidation period has not expired. CBP says that CAPE Phase 1 will not include entries for which liquidation is final, as required by the CIT's March 27 order. CBP states that it will expand CAPE's capabilities to include such entries at "a subsequent phase of development," but it does not provide a timeline for such functionalities. CBP estimates that CAPE Phase 1 will be able to process 63% of entries for which IEEPA duties were paid/deposited.
• CBP states that CAPE Phase 1 will be able to process entries for which liquidation is "Suspended," "Extended," or "Under Review," such as in the case where entries are subject to AD/CVD proceedings. CBP explains that CAPE will remove the IEEPA line items from these entries, but will not liquidate them because by statute CBP must wait for the Department of Commerce to instruct it to liquidate before it can do so. Nevertheless, importers can submit CAPE Declarations identifying entries for which IEEPA duties were deposited and they should get a refund of these duties when CBP receives instruction to liquidate these entries. As with other entries, interest should accrue until liquidation.
• CBP states CAPE Phase 1 will accept CAPE Declarations for warehouse and warehouse withdrawal entries, but liquidation will occur in the normal course and will not be performed by CAPE.
• CBP clarifies that the following categories of entries will not be accepted on a CAPE Declaration in Phase 1:
  • Entries flagged for reconciliation (including Entry Type 09);
  • Entries designated for a drawback claim;
  • ENTRIES COVERED BY AN OPEN PROTEST;
  • Entries not filed in ACE, and entries without a liquidation status in ACE;
  • Entries subject to AD/CVD, for which DOC has issued liquidation instructions, that are pending liquidation in accordance with 19 U.S.C. § 1504(d).
• CBP states that it will take up to 45 days from acceptance of a CAPE Declaration to review and liquidate validated entry summaries.
• CBP states CAPE Phase 1 will accept CAPE Declarations containing entries liquidated within the preceding 80 days to ensure processing is complete and the entries are reliquidated by the 90th day, as required under CBP's statutory 90-day voluntary reliquidation period. 19 U.S.C. § 1501.