CIT Issues Show Cause Order After Citing Lack of Progress on Refunds for Fully Liquidated IEEPA Duties, Directs CBP Commissioner to Testify

On May 27, the U.S. Court of International Trade (“CIT”) issued a show cause order instructing the parties in V.O.S. Selections, Inc. v. United States to file briefs addressing why the court should not require immediate compliance with its April 17 order mandating that U.S. Customs and Border Protection (“CBP”) issue refunds for all duties unlawfully collected under the International Emergency Economic Powers Act (“IEEPA”). The court ordered that briefs be filed by June 4, set a hearing for June 9, and directed CBP Commissioner Rodney S. Scott to appear at the hearing to personally answer the court’s questions. 
 
The impetus for the court’s show cause order appears to be a lack of progress by CBP on addressing entries for which liquidation of IEEPA duties is considered “final”—that is, more than 90 days after liquidation. As previously explained (here), “Phase 1” of CBP’s administrative process, called the Consolidated Administration and Processing of Entries (“CAPE”), is limited to unliquidated entries and entries within 80 days of liquidation. CBP previously represented that it will work to expand CAPE’s functionalities to include finally liquidated entries. Although CBP has been processing refund claims since its rollout of CAPE Phase 1 on April 20, CBP has not explained any steps it has taken to expand CAPE to cover finally liquidated entries. For example, its latest status report, filed on May 26, makes no mention of expanding CAPE’s functionalities as promised.
 
In response to this status report, the CIT expressed concern that, rather than willingly issuing refunds for fully liquidated entries as required by the court’s prior orders, the Government will revert to its prior litigation position: refunds for fully liquidated entries will only be issued to those who have filed cases at the CIT and received importer-specific court orders. The court highlighted “the millions of informal entries where liquidation was simultaneous, or nearly simultaneous, with the time of entry, and for which the liquidation is now final.”
 
If the Government takes the position that importer-specific orders from the CIT are required to obtain refunds of IEEPA duties on fully liquidated entries, this situation may lead to an appeal. The CIT is likely to order the Government to immediately comply with its April 17 order to refund all IEEPA duties, regardless of liquidation status. It is unlikely that any appeal will be decided before the two-year statute of limitations expires for most, if not all, IEEPA duty payments. Thus, the most assured way for importers to preserve their rights to refunds is to file an action at the CIT.