SLIP OP. 05-152
UNITED STATES COURT OF INTERNATIONAL TRADE
KOYO CORPORATION OF U.S.A.,
Plaintiff, Before: Jane A. Restani, Chief Judge
v. Court No. 02-00800
UNITED STATES,
Defendant.
OPINION
[On importer’s protest, deemed liquidation inapplicable to merchandise entered at higher rate of
duty than determined in antidumping duty proceedings.]
Dated: December 1, 2005
Sidley, Austin, Brown & Wood LLP (Richard M. Belanger and Leigh Fraiser) for plaintiff.
Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, Attorney in Charge,
International Trade Field Office, Commercial Litigation Branch, Civil Division, United States
Department of Justice (James A. Curley) for defendant.
Restani, Chief Judge: This matter is before the court on cross motions for summary
judgment. The essence of the dispute is the failure of Customs1 to liquidate various of plaintiff’s
entries of merchandise at the lowered rate of duties determined as a result of antidumping duty
proceedings. Rather, Customs liquidated the entries at the original higher rates, which plaintiff was
required to claim at entry and make deposit therefor while the antidumping proceedings were
ongoing. The government alleges that as a result of its own failure to obey the public notice of
1
The Bureau of Customs and Border Protection (“Customs”) is within the United States
Department of Homeland Security.
Court No. 02-00800 Page 2
reduced duties and liquidation instructions of the United States Department of Commerce
(“Commerce”), it may obtain the benefit of the “deemed liquidation” statute, 19 U.S.C. § 15042,
which gives Customs a set period of time to liquidate an entry and which, absent liquidation during
that time period, treats the entry as having been liquidated at the entered rate. Thus, the government
asserts it may retain the monies deposited at the erroneous entered rate. The court disagrees.
FACTS
Before the court are various entries of roller and ball bearings made in 1990 and 1991. At
the time of entry, antidumping duty orders issued by Commerce were in effect. The orders required
duty deposits to cover estimated antidumping duties between 48 and 74 percent ad valorem. The
importer had no choice as to the rate of antidumping duty it was required to assert upon entry
pursuant to Commerce’s orders. Because administrative reviews and litigation ensued, liquidation
of the entries was suspended. The litigation was largely successful for importers and the rates were
2
The applicable version of 19 U.S.C. § 1504 (Supp. 1993) reads in pertinent part:
(a) Liquidation
Unless an entry is . . . suspended as required by statute or court order,
an entry of merchandise not liquidated within one year from:
(1) the date of entry of such merchandise;
....
shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties
asserted at the time of entry by the importer of record.
....
(d) Removal of suspension
When a suspension required by statute or court order is removed, the Customs
Service shall liquidate the entry within 6 months after receiving notice of the
removal from the Department of Commerce, other agency, or a court with
jurisdiction over the entry. Any entry not liquidated by the Customs Service within
6 months after receiving such notice shall be treated as having been liquidated at the
rate of duty, value, quantity, and amount of duty asserted at the time of entry by the
importer of record.
Court No. 02-00800 Page 3
lowered substantially. In most cases, the antidumping duty rates were finalized at under ten percent.
In 1998, Commerce began issuing instructions to Customs to liquidate the entries at the lower rates.
Some months earlier notices of the results of the litigation were published and suspension of
liquidation was lifted. Customs, however, did not comply with the published notices or Commerce’s
instructions to liquidate promptly at the lower rates. In fact, Customs did nothing. Approximately
one year later, Koyo Corporation of U.S.A. (“Koyo”), the plaintiff herein, contacted Customs about
five of its entries. Customs immediately found these entries to have been “deemed liquidated,” and
Customs posted an “active” liquidation at the original higher antidumping duty rate based on the
“deemed liquidation.”
Another batch of entries were similarly liquidated some months later. As to the final entry,
once again, contact by the importer triggered the final manual liquidation at the higher rate based on
the earlier “deemed liquidation.” Koyo protested the liquidations, which protests were denied. This
action followed.
JURISDICTION
The court has jurisdiction under 28 U.S.C. § 1581(a), as plaintiff timely protested all of
the published liquidations at issue and then timely filed suit in this court.3
3
There is a question as to whether one can protest a bare “deemed liquidation,” which
occurs by operation of law. See United States v. Cherry Hill Textiles, Inc., 112 F.3d 1550, 1560
(Fed. Cir. 1997) (holding in government enforcement action deemed liquidation in favor of the
importer is a final, unalterable event, which cannot be undone by a later “liquidation”). As in Cherry
Hill, here there was an “actual” liquidation following the purported “deemed” liquidation, but in
contrast to Cherry Hill, the later “liquidation” did not purport to alter the “deemed liquidation.” As
required by Fujitsu General America, Inc. v. United States, 283 F.3d 1364, 1375-76 (Fed. Cir. 2002),
plaintiff, as an importer seeking a refund, protested the “actual liquidations.” Presumably, if protest
is not available an importer could file an action under the court’s residual jurisdiction, 28 U.S.C. §
1581(i) to challenge a non-qualifying “deemed liquidation.”
Court No. 02-00800 Page 4
DISCUSSION
The issue here is whether the deemed liquidations, on which defendant relies, were actually
proper liquidations based on 19 U.S.C. § 1504, in which case the later consistent active liquidations
will stand. On the other hand, if the entries were not properly “deemed liquidated,” then plaintiff’s
protests of the posted liquidations should have resulted in reliquidation at the lowered rates resulting
from the lengthy administrative proceedings and subsequent litigation.
Congress initially enacted § 1504(d) to limit the amount of time which Customs could take
to liquidate entries. The time limit imposed was four years. Customs Procedural Reform and
Simplification Act, Pub. L. No. 95-410, § 209(a), 92 Stat. 888 (1978). In so doing, Congress “sought
to increase certainty in the customs process for importers, surety companies, and other third parties
. . . .” Int’l Trading Co. v. United States, 412 F.3d 1303, 1310 (Fed. Cir. 2005) (internal citations
omitted). The statute also imposed a ninety-day time limit for Customs to liquidate entries after
removal of suspension of liquidation of those entries, otherwise the entries would be deemed
liquidated at the rate asserted by the importer at the time of entry. The statute had an unfortunate
anomaly that made deemed liquidation available for entries for which removal from suspension
occurred within the four-year period, but not for entries for which removal from suspension occurred
even one day after the four-year time limit. In those circumstances, Customs had an unlimited
amount of time in which to liquidate entries.
Congress corrected this anomaly in 1993, making deemed liquidation available to all entries
regardless of when removal from suspension occurs. North American Free Trade Agreement
Implementation Act, Pub. L. No. 103-182, § 641, 107 Stat. 2057, 2204. The 1993 amendment also
Court No. 02-00800 Page 5
increased the deemed liquidation period from ninety days to six months after removal of suspension.
In International Trading Co., 412 F.3d at 1310, the court noted that a primary motivation behind the
1993 amendment “was to remove the government’s unilateral ability to extend indefinitely the time
for liquidating entries.”4
The requirements for deemed liquidation following antidumping proceedings were set forth
in Fujitsu.
Thus, in order for a deemed liquidation to occur, (1) the suspension of liquidation
that was in place must have been removed; (2) Customs must have received notice
of the removal of the suspension; and (3) Customs must not liquidate the entry at
issue within six months of receiving such notice.
283 F.3d at 1376. Under 19 U.S.C. § 1504(d), if these conditions are met, the entry is finally
liquidated at the entered rate. Almost all of the cases dealing with this statute have involved
importers’ attempts to obtain the benefit of the statute by securing the finality of lower entry rates,
but the issue here is whether the statute may also be used to deprive importers of later determined
lower rates.
The government’s interpretation of the statute is that the words are clear. In essence, it states
that it is immaterial if the government benefits from its own neglect or other wrongdoing. The words
of the statute control, and because it inadvertently failed to liquidate on time, it may retain any
money collected. The government argues further that the goal of the statute was to achieve finality,
4
Note that, following the signing one year later by the United States of the Antidumping
Agreement of the Uruguay Round Agreements, Congress again amended § 1504(d), this time to
bring the statute into conformity with obligations imposed by the Antidumping Agreement. See
Uruguay Round Agreements Act, Pub. L. No. 103-165, 108 Stat. 4809 (1994). Congress
described the 1994 amendment as a “conforming amendment,” and did not indicate any change
in the intent behind the deemed liquidation statute. See § 220(c), 108 Stat. at 4865.
Court No. 02-00800 Page 6
and that goal is met as soon as the six-month period elapses. This is absurd. The goal of the statute
was to achieve finality so that importers would not be hit with unexpected duties years later, not so
that Customs would profit by intentional wrongdoing or even mere inattention to duty.
The Federal Circuit explained in detail in Cherry Hill, 112 F.3d at 1559, that the purpose of
the statute is not simply finality as such, but finality to prevent later harm to a particular class of
persons, i.e., importers and their sureties.
The “deemed liquidated” provision of section 1504 was added to the
customs laws in 1978 to place a limit on the period within which
importers and sureties would be subject to the prospect of liability for
a customs entry. See St. Paul Fire & Marine Ins. Co. v. United States,
6 F.3d 763, 767 (Fed. Cir.1993); Ambassador Div. of Florsheim Shoe
v. United States, 748 F.2d 1560, 1565 (Fed. Cir. 1984); Pagoda
Trading Co. v. United States, 617 F. Supp. 96, 99 (CIT 1985), aff'd,
804 F.2d 665 (Fed. Cir. 1986); S. Rep. No. 95-778, at 31-32 (1978),
reprinted in 1978 U.S.C.C.A.N. 2211, 2242-43 (“Under the present
law, an importer may learn years after goods have been imported and
sold that additional duties are due, or may have deposited more
money for estimated duties than are actually due.”).
The purpose of section 1504 was to bring finality to the duty
assessment process. As the Commissioner of Customs said in his
statement to the House committee that reported out the 1978
amendments to the Tariff Act, the provision that became section 1504
was designed to “eliminate unanticipated requests for additional
duties coming years after the original entry.” Customs Procedural
Reform Act of 1977: Hearings on H.R. 8149 and H.R. 8222 Before
the Subcomm. on Trade of the House Comm. on Ways and Means,
95th Cong., 1st Sess. 56 (1977) (statement of Robert E. Chasen,
Commissioner of Customs). The effect of a “deemed liquidation” is
therefore to fix the liability of the importer or surety and, once that
liability is discharged, to terminate the government’s cause of action
for the entry in question. Thus, a “deemed liquidation” under section
1504 has the same effect as the expiration of the time for
reliquidation in [United States v. Sherman & Sons Co., 237 U.S. 146
(1915)]: it subjects any further collection efforts by the government
in connection with the same entry to dismissal for failure to state a
claim upon which relief can be granted.
Court No. 02-00800 Page 7
The same principle was recited in Cemex, S.A. v. United States, 279 F. Supp. 2d 1357 (CIT
2003), aff’d, 384 F.3d 1314 (Fed. Cir. 2004) (finding domestic parties have no right to challenge a
deemed liquidation by administrative protest).
The purpose of [19 U.S.C. § 1504(d)] was to give importers finality
as to their duty obligations by providing for deemed liquidation at the
rate claimed by the importers, unless actual liquidation occurred
within specified time limits. See Int’l Trading Co. v. United States,
281 F.3d 1268, 1272 (Fed. Cir. 2002) . . .; see also United States v.
Cherry Hill Textiles, Inc., 112 F.3d 1550, 1559 (Fed. Cir. 1997) (The
‘deemed liquidated’ provision of section 1504 was added to the
customs laws in 1978 to place a limit on the period within which
importers and sureties would be subject to the prospect of liability for
a customs entry.”).
....
As indicated, 19 U.S.C. § 1504(d) was meant to benefit importers.
Therefore, it fits neatly into the Customs protest of liquidation
scheme. If a deemed liquidation or any liquidation is adverse to an
importer, it has its protest remedies under 19 U.S.C. § 1514 and
access to judicial review under 28 U.S.C. § 1581(a). Domestic
parties have no specific avenue of relief for improper liquidation.
The Byrd Amendment5 might have been accompanied with a new
administrative remedy provision for domestic parties, but it was not.6
Cemex, 279 F. Supp. 2d at 1360, 1362 (footnotes omitted).
Thus, the goal of § 1504 was not to allow Customs to ignore the outcome of years of
litigation and to thumb its nose at Commerce and the courts. Customs cannot ignore Federal
Register notices or throw liquidation instructions in a drawer and wait for six months to elapse from
5
The Byrd Amendment, which allows members of the domestic industry to claim
portions of the antidumping duties collected in a particular year, is found in the Continued
Dumping and Subsidies Offset Act of 2000, 19 U.S.C. § 1675c (2000) (amending the Tariff Act
of 1930), enacted as part of the Agriculture, Rural Development, Food and Drug Administration,
and Related Agencies Appropriations Act, Pub. L No.. 106-387, § 1003, 114 Stat. 1549 (2000).
6
See supra note 3 regarding challenge to purported “deemed liquidation” unaccompanied
by an “active” liquidation.
Court No. 02-00800 Page 8
the time of public notice of new rates, so that it thereby collects duties to which it is not entitled.
When the literal words of a statute create an absurd result, such a literal interpretation must be
rejected. See Holy Trinity Church v. United States, 143 U.S. 457, 460 (1892).
The government argues, however, that the statute is not absurd. It says finality is achieved
and plaintiff had ways to protect itself from its inattention. Defendant, however, can identify no way
provided by statute or regulation for an importer to do that.
If the statutory scheme for deemed liquidation works as defendant alleges, the importer who
sued as soon as “deemed liquidation” by operation of law occurred would have no remedy because
the deemed liquidation, being final, could not be undone. See Cherry Hill, 112 F.3d at 1559. If the
importer sued earlier, suspecting the government might not act timely, its suit would not be ripe. The
government is expected to act in a regular manner and obey statutes. See United States v. Chem.
Found., 272 U.S. 1, 14-15 (1926) (“The presumption of regularity supports the official acts of public
officers, and, in the absence of clear evidence to the contrary, courts presume that they have properly
discharged their official duties.”) (citations omitted).
Mandamus is another remedy proposed by the government, but how does one obtain
mandamus before the failure to carry out the statute has occurred? Mandamus is available for clear
violations of the law. See Maier v. Orr, 754 F.2d 973, 983 (Fed. Cir. 1985) (“Before a writ [of
mandamus] may properly issue, three elements must exist: (1) a clear right in the plaintiff to the
relief sought; (2) a clear duty on the part of the defendant to do the act in question; and (3) no other
adequate remedy available.”) (citations omitted). If the six months period has not elapsed, Customs
has not yet violated the law.
Finally, the government faults plaintiff for not reminding it earlier to do its duty. Of course,
Court No. 02-00800 Page 9
there is no statutory or regulatory requirement that an importer petition Customs during the six-
month period to heed the Federal Register notice of the changed rates or the instructions from
Commerce to liquidate properly. Furthermore, there is no formal permissive process to accomplish
this. Customs has no obligation to comply with any request at any particular time, and importers
have no rights to contest a failure to comply with such a request.
While the Federal Circuit noted in Cemex that domestic parties seeking to enforce higher
duties could take some steps to increase the likelihood that entries would be properly liquidated, that
fact did not determine the holding of the case. 384 F.3d at 1325. That is, Congress simply did not
give domestic parties liquidation enforcement rights through protest procedures. Particularly before
the Byrd Amendment (providing a mechanism for distributing unfair trade duties to domestic
parties), domestic interests and Customs’ interest in collecting duties were aligned, and they remain
fairly well aligned now. Perhaps Congress found it unnecessary in such circumstances to give
domestic parties a private enforcement right. Not so as to importers. Their interests are counter to
those of Customs, and they therefore maintain the right to challenge duties assessed against them
through a timely protest of liquidation. See 19 U.S.C. § 1514 (West Supp. 2005).
In sum, the court cannot accept an interpretation of 19 U.S.C. § 1504(d) which encourages
Customs simply to forget or refuse to liquidate and to ignore a court victory favoring an importer as
to antidumping duties. The incentive would be perverse and the opposite of what Congress intended.
Congress wished to spur on Customs to liquidate timely. This distinguishes this matter from all
other cases in which § 1504 may produce difficult results, such as Cemex. The court is not
substituting its notions of good policy for those of Congress. It is interpreting the statute to do what
Congress intended, not the opposite. Congress intended to encourage prompt liquidation, not
Court No. 02-00800 Page 10
delayed liquidation. Congress did not intend to urge Customs to sit back, not obey its directions,
Commerce’s directions, and the courts’ directions, and thereby retain funds to which it no longer had
valid claim.
Accordingly, Customs must reliquidate the entries at hand at the appropriate duty rates, as
instructed by Commerce, and refund the duties owed with interest as required by law. Judgment will
be entered accordingly.
/s/ Jane A. Restani
Jane A. Restani
Chief Judge
Dated: New York, New York.
This 1st day of December, 2005.