United States Court of International Trade

Slip Op. 21-73

           Before the Court in ARP Mats., Inc. v. United States, Court No. 20-00144, and Harrison Steel Castings Co. v. United States, Court No. 20-00147, Slip Op. 21-31 (June 11, 2021) were two cases, in which two importers had imported goods which were assessed with Section 301 tariffs imposed on Chinese goods. Id. at 2. The two importers, ARP and Harrison, alleged that they were the importers of record for the merchandise in question and that they paid Section 301 duties on such merchandise. Id. at 20. ARP and Harrison asserted that the U.S. government was “in wrongful possession of the [S]ection 301 duties on [the relevant] merchandise as the USTR has determined that no such duties apply ab initio to the date of implementation of 301 duties.” Id. Plaintiff sought a refund of “monies originally collected beginning on August 23, 2018 pursuant to the authority of [Section 301].” Id. at 20-21. Here, Plaintiffs’ amended complaints invoked 28 U.S.C. § 1581(i) as the basis for subject-matter jurisdiction. Id. at 23.The government moved to dismiss both cases under Rule 12(b)(1) for lack of subject-matter jurisdiction and, alternatively, under Rule 12(b)(6) for failure to state a claim. Id. at 21. The government argued that Plaintiffs challenged “the tariff classification and applicable duty rate that [Customs] applied to these entries at liquidation.” Id. at 24. The government contended that “Customs’ classification of these entries was a protestable decision by Customs, meaning that Plaintiffs could have protested Customs’ classification decisions and then brought this suit under jurisdiction conferred by § 1581(a).” Id. “Therefore, according to the government, because jurisdiction would have existed under § 1581(a) had Plaintiffs timely protested, jurisdiction is absent under § 1581(i).” Id. For the following reasons, the Court granted the government’s motion to dismiss. Id. at 3.

 “When relief is prospectively and realistically available under another subsection of 1581, invocation of subsection (i) is incorrect. Id. at 25. Where another remedy is or could have been available, the party asserting § 1581(i) jurisdiction has the burden to show that the remedy would be manifestly inadequate.” Id. at 25. Thus, determining whether jurisdiction exists under § 1581(i) involves two questions. Id. First, the court must “consider whether jurisdiction under a subsection other than § 1581(i) was available.” Id. “Second, if jurisdiction was available under a different subsection of § 1581, [the court must] examine whether the remedy provided under that subsection is ‘manifestly inadequate.’ Id. If the remedy is not manifestly inadequate, then jurisdiction under § 1581(i) is not proper.” Id. Jurisdiction under § 1581(a) turns on whether Plaintiffs challenge an “actual Customs decision” or instead challenge a decision of the USTR (or something else). To answer that, the court must determine the “true nature of the action, …to discern the particular agency action that is the source of the alleged harm so that [a court] may identify which subsection of § 1581 provides the appropriate vehicle for judicial review.” Id. (emphasis added). This determination “depend[s] upon the attendant facts asserted in the pleadings.” In this case, “based on the USTR’s rescission of the retaliatory tariffs, one of the importers timely protested Customs’ classification decision as to certain of the goods in question.” Id. at 2. “Customs duly reclassified the goods as exempt from the tariffs and the importer received a refund after this litigation began.” Id. As to those goods, the Court found that “the importer’s refund claim is moot and the court lacks constitutional subject-matter jurisdiction.” Id. “As to the remaining goods at issue in these suits, the importers could have timely protested Customs’ classification decisions.” Id. The Court explained that “[i]f Customs had denied such protests, the importers then could have sought relief in this court by invoking its jurisdiction under § 1581(a). Id. at 2-3. “The importers, however, failed to timely protest Customs’ classification decisions. Because jurisdiction would have existed under § 1581(a) had the importers timely protested, the court lacks statutory subject-matter jurisdiction under § 1581(i).” Id. at 3. Here, the Court held that because Customs had made an “actual” classification determination, the duty assessments should have been protested, and any protest denials brought to court pursuant to the CIT’s 28 USC §1581(a) “protest” jurisdiction. Id. at 28. In this regard, the Court noted that the plaintiffs were not challenging the validity of the USTR’s decisions to impose the Section 301 tariffs, but rather Customs’ decision regarding the classification of their goods. Furthermore, the Court noted that the CIT’s residual jurisdiction could be invoked when a challenge is being made to the decision of another agency – even if Customs is charged with executing that decision. Id. at 25. As such, the Court granted Defendant’s Rule 12(b)(1) motions to dismiss and entered judgment dismissing these cases. Id. at 13.