Read the trade court’s decision [PDF 524 KB]
The importer did not seek preferential treatment at the time of entry, but instead sought preferential treatment after entering the merchandise by filing a (traditional) NAFTA post-import refund claim.
A requirement of a post-import refund claim is that the importer must present certificates of origin to CBP to demonstrate that the goods qualify for duty-free treatment under NAFTA. The importer in this case, however, did not present the required certificates of origin, and CBP did not waive this requirement (as it could have). CBP, therefore, denied the importer’s claim because of this deficiency.
The case was previously appealed from the trade court to the Federal Circuit, which remanded the case based on a finding that CBP had failed to adequately explain why it treats NAFTA post-import refund claims differently for purposes of waiver depending on whether the claims were submitted traditionally or pursuant to a reconciliation program. The Federal Circuit instructed CBP to explain whether it “applies different interpretations to the statute depending on the manner in which claims for refunds are submitted.”
On remand, CBP explained that the difference in treatment “is the result of the reasonable application of two different statutory schemes, one controlling the reconciliation process and the other controlling post-entry NAFTA claims only.”
With the case once again before the trade court, the importer maintained that the CBP explanation for treating the two classes of claims differently for purposes of waiver was an unreasonable interpretation of the statute and, therefore, contented that CBP must approve all disputed NAFTA post-import claims and must refund customs duties paid (plus interest).
The trade court sustained CBP’s remand results. CBP explained that the Federal Circuit’s remand inquiry appeared to be based upon an incorrect assumption that CPB authority to waive presentation of the certificate of origin with regard to NAFTA reconciliation claims stems solely from the NAFTA and 19 U.S.C. section 1520(d). However, CBP explained that the basis for this waiver stems from a wholly different set of statutes that govern the reconciliation process. Thus, the fact that CBP waived the presentation of all certificates of origin in the reconciliation context, but did not grant a waiver to Ford in the 19 U.S.C. section 1520(d) claim, was not the result of two different interpretations of section 1520(d), but was the result of the reasonable application of two different statutory schemes—one controlling the reconciliation process and the other controlling post-entry NAFTA claims only.
For more information, contact a professional with KPMG’s Trade & Customs practice:
John L. McLoughlin
Todd R. Smith
Luis A. Abad
Or your local KPMG Trade & Customs professional.