International Custom Products, Inc. v. United States

United States Court of Appeals for the Federal Circuit
05-1444
INTERNATIONAL CUSTOM PRODUCTS, INC.,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellant.
Simeon M. Kriesberg, Mayer, Brown, Rowe & Maw LLP, of Washington, DC, argued
for plaintiff-appellee. With him on the brief were Andrew A. Nicely and Priti Seksaria
Agrawal.
Barbara S. Williams, Attorney in Charge, International Trade Field Office,
Commercial Litigation Branch, Civil Division, United States Department of Justice, of New
York, New York, argued for defendant-appellant. With her on the brief were Peter D.
Keisler, Assistant Attorney General, and David M. Cohen, Director, of Washington, DC; and
Edward F Kenny, Trial Attorney of New York, New York. Of counsel on the brief was Yelena
Slepak, Attorney, Office of Assistant Chief Counsel, International Trade Litigation, United
States Customs and Border Protection, of New York, New York.
Appealed from: United States Court of International Trade
Judge Gregory W. Carman
United States Court of Appeals for the Federal Circuit
05-1444
INTERNATIONAL CUSTOM PRODUCTS, INC.,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellant.
__________________________
DECIDED: October 17, 2006
__________________________
Before NEWMAN, MAYER, and BRYSON, Circuit Judges.
MAYER, Circuit Judge.
The United States appeals from the final decision of the United States Court of
International Trade, which asserted jurisdiction under 28 U.S.C. § 1581(i)(4) and held
that the United States Bureau of Customs and Border Protection (“Customs”)* violated
19 U.S.C. § 1625(c)(1). Int'l Custom Prods. v. United States, 374 F. Supp. 2d 1311 (Ct.
Int'l Trade 2005). Because we conclude that the court lacked jurisdiction, we reverse its
*
Effective March 1, 2003, the United States Customs Service was renamed
the United States Bureau of Customs and Border Protection. Homeland Security Act of
2002, Pub. L. No. 107-296, § 1502, 116 Stat. 2135, 2308-09 (2002).
jurisdictional holding, vacate its judgment on the merits, and remand for dismissal of the
complaint.
Background
International Custom Products, Inc. (“ICP”) is an importer and distributor of
products sold to processed food manufacturers. In April 1999, it began importing “white
sauce,” which is a milkfat-based product used in sauces, salad dressings, and other
food products. Prior to commencing white sauce importation, ICP sought and received
a ruling from Customs on the classification of the sauce, which issued on January 20,
1999, as New York letter ruling D86228. This classified the product under subheading
2103.90.9060 of the Harmonized Tariff Schedule of the United States (“HTSUS”), which
has since been renumbered as subheading 2103.90.9091. In reliance on this letter
ruling, ICP entered into a three-year purchase agreement with its foreign supplier and a
three-year supply contract with its largest customer. ICP also relied on the advance
ruling by making preparations to commence a manufacturing business, including
purchasing a plant site and conducting product research and development. However,
the manufacturing plant has been operated by ICP’s sister corporation since October 1,
2004.
In March 2004, Customs notified ICP that it was initiating a tariff rate
investigation. Based on its investigation, and without providing notice and comment,
Customs issued a Notice of Action dated April 18, 2005, stating that 86 unliquidated
entries of white sauce would be classified under subheading 0405.20.3000, which
substantially increased the tariff. On May 6, 2005, 60 of the 86 subject entries were
liquidated. ICP filed suit in the Court of International Trade asserting that Customs’
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actions violated 19 U.S.C. § 1925(c)(1) or (2) by effectively revoking the advance letter
ruling without following proper procedures.
The trial court held that it had jurisdiction under 28 U.S.C. § 1581(i)(4) and
declared the notice of action null and void for failure to comply with 19 U.S.C.
§ 1925(c)(1). It also ordered Customs to reliquidate the entries, and ordered that the
advance ruling must remain in full force and effect until properly modified or revoked by
Customs. The United States appeals.
Discussion
“As an appellate body, we have inherent jurisdiction to determine whether a
lower tribunal had jurisdiction.” Interspiro USA v. Figgie Int'l, 18 F.3d 927, 930 (Fed. Cir.
1994) (citing C.R. Bard, Inc. v. Schwartz, 716 F.2d 874, 877 (Fed. Cir. 1983)). Because
jurisdiction is an issue of law, our review is de novo. Xerox Corp. v. United States, 289
F.3d 792, 793-94 (Fed. Cir. 2002).
“It is a ‘well-established principle that federal courts . . . are courts of limited
jurisdiction marked out by Congress.’” Norcal/Cosetti Foods, Inc. v. United States, 963
F.2d 356, 358 (Fed. Cir. 1992) (quoting Aldinger v. Howard, 427 U.S. 1, 15 (1976)).
The Court of International Trade’s jurisdiction is set out at 28 U.S.C. § 1581. In
subsection 1581(a), Congress set an express scheme for administrative and judicial
review of Customs’ actions. The system provides for a protest before Customs, and
review of protest denials in the Court of International Trade. 19 U.S.C. §§ 1514, 1515;
28 U.S.C. 1581(a). Here, ICP did not file a protest and avail itself of jurisdiction under
subsection (a).
05-1444 3
ICP contends, and the trial court agreed, that jurisdiction nevertheless existed
under section 1581(i)(4). Although we have described subsection 1581(i)(4) as a
“broad residual jurisdictional provision,” Miller & Co. v. United States, 824 F.2d 961, 963
(Fed. Cir. 1987), and even a “catch-all provision,” Norcal/Cosetti Foods, Inc., 963 F.2d
at 359 (Fed. Cir. 1992), “the unambiguous precedents of this court make clear that its
scope is strictly limited,” id., and that the protest procedure cannot be easily
circumvented, see, e.g., Am. Air Parcel Forwarding Co. v. United States, 718 F.2d
1546, 1549 (Fed. Cir. 1983) (“[W]here a litigant has access to [the Court of International
Trade] under traditional means, such as 28 U.S.C. 1581(a), it must avail itself of this
avenue of approach by complying with all the relevant prerequisites thereto. It cannot
circumvent the prerequisites of 1581(a) by invoking jurisdiction under 1581(i) . . . .”
(quoting Am. Air Parcel Forwarding Co. v. United States, 557 F. Supp. 605, 607 (Ct. Int’l
Trade 1983) with approval)); United States v. Uniroyal, Inc., 687 F.2d 467 (CCPA 1982);
accord JCM, Ltd. v. United States, 210 F.3d 1357, 1359 (Fed. Cir. 2000); Nat’l Corn
Growers Ass’n v. Baker, 840 F.2d 1547, 1558 (Fed. Cir. 1988).
Indeed, we have repeatedly held that subsection (i)(4) “may not be invoked when
jurisdiction under another subsection of § 1581 is or could have been available, unless
the remedy provided under that other subsection would be manifestly inadequate.”
Norcal/Crosetti Foods, 963 F.2d at 359 (quoting Miller & Co., 824 F.2d at 963; citing
Nat’l Corn Growers Ass’n, 840 F.2d at 1557). Here, ICP does not contend that
subsection (a) was unavailable, but that it was manifestly inadequate. We conclude that
the remedy provided by subsection 1581(a) is not manifestly inadequate, and that
05-1444 4
therefore the Court of International Trade lacked jurisdiction under subsection
1581(i)(4).
First, ICP alleges many forms of financial hardship that would result from
proceeding under subsection 1581(a), including an imminent threat of bankruptcy. In
American Air Parcel, the importer made similar allegations. 718 F.2d at 1549. We
rejected the argument there, and it is equally insufficient here, to confer residual
jurisdiction. Moreover, our cases make clear that “mere allegations of financial harm, or
assertions that an agency failed to follow a statute, do not make the remedy established
by Congress manifestly inadequate.” Miller, 824 F.2d at 964 (citing Am. Air Parcel, 718
F.2d at 1550-51); see also Nat’l Corn Growers Ass’n, 840 F.2d at 1557. Equally
unavailing is ICP’s contention that the lack of prospective relief under subsection (a)
renders it manifestly inadequate. See National Corn Growers Assoc., 840 F.2d at 1557.
To find the relief under subsection (a) inadequate on this ground, we would have to
assume that Customs would disregard a court ruling on the current imports when
classifying identical imports in the future. We decline to indulge such an assumption.
ICP further contends that the delays inherent in proceeding under subsection
1581(a) would render any available relief manifestly inadequate due to its financial
distress. However, delays inherent in the statutory process do not render it manifestly
inadequate. See Am. Air Parcel, 718 F.2d at 1551 (“[T]he Customs Service regulations
have not built unconscionable delay into the protest procedure.”). Moreover,
05-1444 5
Congress has provided for an accelerated protest disposition process, 19 U.S.C.
§ 1515(b), and this accelerated process was available to ICP for some of its entries.**
Finally, ICP contends that a protest would be futile. In Pac Fung Feather Co. v.
United States, 111 F.3d 114, 116 (Fed. Cir. 1997), we held that residual jurisdiction was
available because the “preordained ruling” available to the importers was a mere
formality in light of Customs’ regulations, which “unmistakably” indicated how it would
determine the issue in dispute. Here, there are no such regulations in place that would
make the protest process futile, and despite the revocation of the advance letter having
involved higher level Customs officials, Congress’ express scheme cannot be
bypassed. See JCM, Ltd., 210 F.3d at 1359 (“To allow a party to elect to proceed under
section 1581(i), without having first availed himself of the remedy provided by section
1581(c), would undermine the integrity of the clear path Congress intended a claimant
to follow.”). The Court of International Trade itself has previously warned parties
against making such assumptions of futility: “Plaintiff cannot take it upon itself to
determine whether it would be futile to protest or not. In order to protect itself, a protest
should have been filed and an accelerated review should have been requested.” Inner
Secrets/Secretly Yours v. United States, 869 F. Supp. 959, 966 (Ct. Int'l Trade 1994).
We reiterate that warning.
**
The accelerated protest review process statute, 19 U.S.C. § 1515(b),
was amended during the period in which the subject entries were made.
Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. No. 108-429,
§§ 2104, 2108, 118 Stat. 2434, 2598 (amending 19 U.S.C. § 1515(b) as effective for
“merchandise entered, or withdrawn from warehouse for consumption, on or after the
15th day after Dec. 3, 2004”). Although some of ICP’s entries are governed by the
pre-amended statute, which required an importer to wait 90 days before requesting
accelerated disposition, at least some of the entries were subject to the revised, more
accelerated, review process.
05-1444 6
Because the Court of International Trade lacked jurisdiction over the case, we
have no jurisdiction to reach ICP’s argument concerning Customs’ purported statutory
violations. Glasstech, Inc. v. Ab Kyro Oy, 769 F.2d 1574, 1577 (Fed. Cir. 1985) (“[A]n
appellate court has no jurisdiction to decide the merits of the case if the court from
which the appeal was taken was without jurisdiction.”). Therefore, we vacate the trial
court’s decision on the merits.
Conclusion
Accordingly, the judgment of the United States Court of International Trade is
reversed with respect to jurisdiction, vacated on the merits, and the case is remanded
with instructions to dismiss the complaint for lack of jurisdiction.
COSTS
Appellant shall have its costs.
REVERSED-IN-PART; VACATED-IN-PART; AND REMANDED
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