United States v. Uniroyal, Inc. , 687 F.2d 467 ( 1982 )

Baldwin, Judge.

This is an interlocutory appeal from a judgment of the United States Court of International Trade, 2 CIT 259, 529 F. Supp. 661 (1981), in which the Court of International Trade denied a motion to dismiss an action challenging a Customs Service ruling issued in response to a request by Uniroyal for internal advice under 19 CFR 177.11.¹ The Court of International Trade, at the government’s request, certified the issue of whether it had subject matter jurisdiction in this case. We reverse and remand, with instructions to dismiss for lack of jurisdiction.

Background

Uniroyal, an importer of leather uppers and rubber soles for shoes, received six “Notices of Redelivery,” ² all dated before April 29, 1980, each concerning a separate entry of merchandise made between January and April of 1980. On March 4, 1980, ten days after the date of the third such notice, Uniroyal filed a “request for internal advice” under 19 CFR 177.11 with the Regional Commissioner of Customs, New York. Uniroyal urged that the imported shoe parts in question need not be marked with the country of origin (Indonesia), because the “ultimate purchaser” exception of 19 USC 1304 applied.³ Until Headquarters Customs rejected Uniroyal’s argument some 16 months later, in a ruling dated July 2, 1981, appellant apparently took no further action regarding the involved Notices of Redelivery.

Proceedings in the Trial Court

After receiving the adverse ruling, Uniroyal brought an action in the Court of International Trade for declaratory and injunctive relief, alleging that Customs Headquarters had erred in requiring that the imported uppers and soles carry “Made in Indonesia” markings. In its complaint, Uniroyal stated that the trial court had exclusive jurisdiction “by virtue of the provisions of 28 U.S.C. 1581(i).” ⁴ The government, however, argued that demands for redelivery were protestable during the relevant time period,⁵ and that, consequently, Uniroyal was restricted to the filing of a protest (and the appeal from a denial of such a protest) as the means for invoking the jurisdiction of the Court of International Trade under 28 USC 1581(a).⁶ Therefore, the government moved to dismiss the action for lack of jurisdiction, Uniroyal having filed no protest.

The trial court, while agreeing with the government that the demands for redelivery had been protestable, cited Wear Me Apparel Corp. v. United States, 1 CIT 194, 198, 511F. Supp. 814, 817 (1981), for the proposition that § 1581(i), unlike § 1581(a), does not require the filing and denial of a protest as a prerequisite for the trial court’s exercising its jurisdiction. Moreover, the trial court characterized the filing of a protest by Uniroyal as “purposeless” in light of the extant ruling under 19 CFR 177.11. Hence, Uniroyal was not required to exhaust administrative remedies in satisfaction of 28 USC 2637(d).⁷ Accordingly, the trial court denied the motion to dismiss, but on reconsideration granted the government’s request that the jurisdiction issue be certified here for interlocutory appeal pursuant to 28 USC 1541(b).

OPINION

Since we hold that the trial court lacked jurisdiction, regardless of whether demands for redelivery per se were protestable prior to the 1980 amendment of 19 USC 1514(a)(4), we will initially adopt, for exposition purposes, Uniroyal’s position that such demands in fact were not protestable under the old law.⁸ From this premise, we conclude upon review of the legislative history of 28 USC 1581 that Uniroyal cannot obtain judicial review regarding the six completed import transactions, since a protest-related review procedure remains available for resolving the marking issue. In addition, we conclude that Uniroyal has not invoked the jurisdiction of the Court of the International Trade with regard to prospective importations of similar merchandise.

Relief Sought by Uniroyal

Uniroyal’s concern over the impact of the “internal advice” ruling on its rights and liabilities takes two forms. First, Uniroyal fears that, at some time in the future, it will be subject to marking duties, liquidated damages, and, perhaps, a penalty under 19 USC 1592, all stemming from the import transactions already completed. Second, Uniroyal is concerned about the fate of current and planned shipments of unmarked uppers and soles, in light of the implication of the Customs Headquarters ruling that such shipments may be barred from entry.

Uniroyal concedes that it could address the marking issue in a protest, should the Customs Service assess marking duties or liquidated damages as a result of Uniroyal’s failure to redeliver the unmarked merchandise, and that an appeal of a denial of such a protest could then be effected under 28 USC 1581(a).⁹ However, Uniroyal argues that “an action concerning the propriety of requiring country of origin marking is encompassed within the broad jurisdictional parameters” of § 1581(i), thereby allowing the Court of International Trade to exercise its discretionary authority under 28 USC 2643(c)(1) to grant Uniroyal declaratory relief from any further assessments. According to Uniroyal, this route to declaratory judgment is preferable to the alternative of appealing the denial of a protest, since the latter process would “not enable a prompt resolution of the controversy * * * [and would] force Uniroyal either to proceed at its peril with regard to future entries or to succumb to the Government’s interpretation and thus be denied * * * the opportunity of judicial review.”

Legislative History of the “Residual Jurisdiction” Provision of 28 USC 1581

Nevertheless, the legislative history of the Customs Courts Act of 1980 demonstrates that Congress did not intend the Court of International Trade to have jurisdiction over appeals concerning completed transactions when the appellant had failed to utilize an avenue for effective protest before the Customs Service. Both the immediate predecessors in the House and Senate to the bill that became the Customs Courts Act of 1980 contained a section delimiting the scope of a broad “catch-all” jurisdictional provision somewhat like § 1581(i). In effect, these restrictive sections granted the Court of International Trade jurisdiction to review a ruling issued without the prior filing and denial of a protest only when the party seeking review could show “irreparable harm” (or, in the Senate version, “commercial impracticability”) in having to wait and file a protest against later Customs actions based on the ruling.¹⁰

During hearings on the predecessor bills, representatives of the Association of the Customs Bar testified in favor of providing for judicial review of “final” administrative rulings that effectively precluded importation.¹¹ However, there was also substantial testimony by enforcement officials against allowing appeal from a ruling prior to an actual importation, the denial of a protest regarding that importation, and the payment of assessed duties as a prerequisite to filing a civil action.¹²

The bill finally enacted into law did not contain the restrictive provision qualifying the “residual” jurisdiction of the Court of International Trade under § 1581(i). Instead, a new section was inserted affirmatively ceding to the Court of International Trade exclusive jurisdiction “to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury * * *, but only if the [appealing] party * * * demonstrates to the court that he would be irreparably harmed unless given an opportunity to obtain judicial review prior to such importation.” 28 USC 1581(h) (1980). Thus, Congress, while providing in § 1581(h) for judicial review without the denial of a prior protest as to prospective importations, ultimately deleted from the bill the language of its predecessors which could be read as permitting such review when the transaction in question had already taken place.¹³

Conclusion

In light of the foregoing, we conclude that Uniroyal’s effort to obtain judicial review of the “internal advice” ruling regarding marking must fail.¹⁴ The jurisdiction of the Court of International Trade under § 1581(i) is expressly “in addition to the jurisdiction conferred * * * by subsections (a)-(h),” and the legislative history of § 1581 further evidences Congress’ intention that subsection (i) not be used generally to bypass administrative review by meaningful protest.¹⁵ Accordingly, Uniroyal’s concern over anticipated assessments arising from the six completed entries must be addressed by means of timely protests filed when and if such assessments are made, as Congress intended.¹⁶ In addition, to the extent that Uniroyal’s prayer for relief is directed to future importations of uppers and soles, Uniroyal has not demonstrated the “irreparable harm” Congress has required before the trial court can exercise jurisdiction over an appeal of a ruling prior to the importation of goods and the filing and denial of a protest.¹⁷

The judgment of the United States Court of International Trade is, therefore, reversed. The case is hereby remanded for the vacating of the trial court’s Memorandum and Order of December 4, 1981, and the dismissal of Uniroyal’s action.

Reversed and Remanded

1 19 CFR 177.11(a) states, inter alia, that "(a)dvice or guidance as to the interpretation or proper application of the Customs or related laws with respect to a specific Customs transaction may be requested by Customs Service field offices from the Headquarters Office at any time whether the transaction is prospective, current, or completed.”

2 19 CFR 134.51(a) provides:

(a) Notice to mark or redeliver. When articles or containers are found upon examination not to be legaUy marked, the district director shall notify the importer on Customs Form 4647 to arrange with the district director’s office to properly mark the article or containers, or to return all released articles to Customs custody for marking, exportation, or destruction.

3 The relevant portions of § 1304 read as follows:

(a) Except as hereinafter provided, every article of foreign origin (or its container, as provided in subsection (b) thereof) imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. The Secretary of the Treasury may by regulations-

(3) Authorize the exception of any article from the requirements of markings if™

(H) An ultimate purchaser, by reason of the character of such article or by reason of the circumstances of its importation, must necessarily know the country of origin of such article even though it is not marked to indicate its origin.

4 28 USC 1581(i) provides:

(i)In addition to the jurisdiction conferred upon the Court of International Trade by subsections (aHh) of this section and subject to the exception set forth in subsection (j) of this section, the Court of International Trade shall have exclusive jurisdiction of any civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for—

(I) Revenue from imports or tonnage;

(2) Tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue;

(3) Embargoes or other quantitative restrictions on the importation of merchandise for reasons other than the protection of the public health or safety; or

(4) Administration and enforcement with respect to the matters referred to in paragraphs (1M3) of this subsection and subsections (aHh) of this section.

5 When the demands for redelivery at issue were made, 19 USC 1514(a) (1979) did not specifically include such demands among the Customs Service decisions that were final unless subject to a timely protest. But see Wear Me Apparel Corp. v. United States, 1 CIT 60, Slip Op. 80-13 (Dec. 15,1980) (demands for redelivery deemed indistinguishable from protestable decisions to exclude merchandise from entry). However, effective November 1, 1980, § 1514(aX4) expressly provided for the protest of “a demand for redelivery to customs custody under any provision of the customs laws.” 19 USC 1514(a)(4) (1980).

6 19 USC 1581(a) provides that:

(a) The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930.

7 Section 2637(d) (1980) states that "[i]n any action not specified in this section, the Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies.”

8 See note 16 and accompanying text infra. The question of whether demands for redelivery were protestable prior to November 1, 1980, is not easily resolved. The Court of International Trade has concluded that they were, reasoning that a demand for redelivery is really no different than a protestable decision to exclude merchandise. Wear Me Apparel Corp. v. United States, 1 CIT 60, Slip Op. 80-13 (Dec. 15, 1980). However, the Congress, in amending 19 USC 1514(a) to render demands for redelivery protestable, indicated that the amendment "expanded” the jurisdiction of the Court of International Trade. See, e.g., H.R. REP. NO. 1235, 96th Cong., 2d Sess. 68 (1980). Moreover, Customs Headquarters agreed to render a ruling under 19 CFR 177.11 in this case, even though such a ruling would be precluded as to "questions [that] can subsequently be raised by the importer * * * in the form of a protest.” 19 CFR 177.11 (bX5).

9 Similarly, government counsel indicated during oral argument that Uniroyal could obtain judicial review of the Customs Service’s disposition of the "ultimate purchaser” question by "protesting the demand for redelivery, or * * * [by] protesting the refusal of the Customs Service [upon redelivery] to allow delivery of the merchandise * * *, or * * * [by protesting] the assessment of marking duties * * * if they were assessed, or * * * [by protesting] the assessment of liquidated damages,” when and if they were assessed. Thus,* there is apparently no controversy between the parties on this aspect of the case.

10 S. 1654,96th Cong., 1st Sess. § 15810X2) (1979); H.R. 6394, 96th Cong., 2d Sess. § 1581(3X2) (1980).

11 For example, advice [from Customs Headquarters] on marking could be such as to effectively foreclose importation without an opportunity therefore, to test the validity of the “advice.” The court should be available to a business man who wishes to contest the Customs Service's advice as to a marking requirement which would effectively foreclose importation and is arguably contrary to statutory or regulatory requirements.

Customs Courts Act of 1979: Hearings on S.1654 Before the Subcomm. On Improvements in Judicial Machinery of the Senate Comm, on the Judiciary, 96th Cong., 1st Sess. 48 (1979) (statement of Andrew P. Vance).

12 We strongly believe that this current method of obtaining review [via the filing of a protest] ought to be maintained. The keystone under existing law is the existence of an actual importation. It is essential for the stability of the ruling process that the treatment of an actual importation be at issue, otherwise the court will be overburdened with hypothetical cases. Judicialization of the Customs informal ruling process will discourage it from providing useful guidance to the public. We also do not believe the Congress would want the new Court of International Trade to replace the administrative agency now assigned the ruling responsibility. In addition, very few importers would import merchandise, protest and pay the duties in order to challenge Customs Service treatment of certain merchandise if they could obtain judicial review without an actual importation and without the payment of duties.

Customs Courts Act of 1980: Hearings on HR. 6394 Before the Subcomm. on Monopolies and Commercial Law of the House Comm, on the Judiciary, 96th Cong., 2d Sess. 40 (1980) (statement of Richard J. Davis, Asst. Treasury Secretary (Enforcement & Operations)).

13 Notably, Congress did not follow the suggestion by representatives of the American Importers Association that the Court of International Trade be given jurisdiction to review directly rulings relating “to potential as well as actual import transactions” when some standard of injury through delay was satisfied. Customs Courts Act of 1979: Hearings on S. 1654 Before the Subcomm. on Improvements in Judicial Machinery of the Senate Comm, on the Judiciary, 96th Cong., 1st Sess. 79 (1979) (statement by John B. Pellegrini & Barry Nemmers).

14 The only error averred by Uniroyal in its complaint before the Court of International Trade was that “Customs Headquarters erred in holding [in its ruling] that the uppers and soles are required to be marked with the country of origin.” In its brief to this court, Uniroyal stated that it “sought declaratory relief * * * with regard to a Customs Headquarters ruling * * * which would apply not only to the entries * * * covered by the * * * Notices of Redelivery but also to all further entries of such merchandise by whomsoever imported.” During oral argument, Uniroyal’s counsel stated that “what there is [before this court] is a ruling * * * which we have sought to have reviewed * * * in a declaratory judgment action.” Accordingly, Uniroyal is understood to be seeking relief from both the past and prospective impact of the Customs Service ruling and, therefore, to be challenging the ruling per se.

15 As the concurring opinion indicates, this construction of § 1581(i) is consistent with pre-1980 percedent from the district courts.

16 If the notices of redelivery in this case were protestable during the relevant time period, it still follows from our rationale that Uniroyal would have had to avail itself of the opportunity for protest and denial of protest before the jurisdiction of the trial court could be invoked. In this regard, we decline to follow Uniroyal’s suggestion that its request for internal advice itself be deemed a protest to the Customs Service’s decision to issue the Notices of Redelivery.

17 We express no opinion on whether a ruling under 19 CFR 177.11 could ever constitute a "ruling” within the meaning of 28 USC 1581(h).