All Duty Drawback Claims Filed Prior to December 2004 Deemed Liquidated by CIT

On January 13, 2015, the Court of International Trade ruled that all duty drawback claims filed prior to December 3, 2004 are to be deemed liquidated at the amount declared by the claimant at the time of the claim.  The CIT, finding in favor of the Ford Motor Company, deemed the claims liquidated pursuant to 19 U.S.C. § 1504(a)(2), which was enacted by Congress in 2004 as part of the Miscellaneous Trade and Technical Corrections Act.  

As stated by the CIT, due to the growing number of aging duty drawback claims, 19 U.S.C. § 1504(a)(2) was enacted in an effort to “both put in place a one-time mechanism for the swift resolution of the then-existing (i.e., pre-December 3, 2004, or pre-enactment) drawback claims and, in addition, establish a framework for the liquidation of all future (i.e., post-enactment) drawback claims.”  Subsection (A) of 19 U.S.C. § 1504(a)(2) establishes the general rule that all duty drawback entries that are not liquidated within one year of its filing are to be deemed liquidated at the amount asserted by the claim.  Subsection (B) offers an exception to subsection (A) that gives the claimant the option to have their drawback claims deemed liquidated, even if the underlying import entries are not yet final.  To have the claim deemed liquidated under subsection (B), the claimant must deposit the estimated duties on the unliquidated merchandise, file a written request for liquidation of the drawback, and file a waiver to the right to refund under the law.  Subsection (C) offers a second exception to Subsection A that applies to all drawbacks filed prior to December 3, 2004.  According to 19 U.S.C. § 1504(a)(2)(c) “An entry or claim for drawback filed before December 3, 2004, the liquidation of which is not final as of December 3, 2004, shall be deemed liquidated on the date that is 1 year after December 3, 2004 [i.e., on December 3, 2005], at the drawback amount asserted by the claimant at the time of the entry or claim.” 

Ford had filed 17 drawback claims prior to December 3, 2004 and obtained accelerated payment, in which Customs paid the estimated drawback amount prior to liquidation.  Although Ford was under the impression that these drawback claims were liquidated under 19 U.S.C. § 1504(a)(2)(c) on December 3, 2005 and finalized, Customs began to approach Ford for refunds where they had determined overpayments were made.  Customs argued that because some of the underlying import entries were not final on the 17 drawback claims by December 3, 2005, subsection (B) should apply.  According to Customs, the drawback claims were not liquidated because Ford had not provided the written request for liquidation and did not provide the waiver to right of a refund required by subsection (B).

The CIT, however, sided with Ford, ruling that 19 U.S.C. § 1504(a)(2)(c) should apply to the 17 drawback claims.  The court determined that the language of subsection (C) is clear, and should apply to all drawback claims made prior to December 3, 2004.  The court concluded that there is no language in 19 U.S.C. § 1504(a)(2) that would limit the application of subsection (C) to only claims that were finalized, and that subsection (B) is to be applied as an exception for drawbacks filed after December 3, 2004. 

(Ford Motor Company v. U.S., Slip Op. 15-02, CIT # 09.00375, dated 01/13/15, Judge Ridgway)

Aaron Ambrite, Extern, Global Trade Expertise, January 16, 2015