Federal Circuit reviews appeal from U.S. Court of International Trade, which held that improper customs' procedure had been followed in reclassification of Plaintiff's imported product, but dismisses appeal for lack of jurisdiction
International Custom Products, Inc. (Plaintiff) imports and distributes products sold to makers of processed food. In April 1999, Plaintiff began importing "white sauce," a milkfat-based product used in sauces, salad dressings, and other food products. Plaintiff had gotten an advance ruling from the U.S. Bureau of Customs and Border Protection (Customs) on the classification of the sauce; it issued on January 20, 1999, as New York letter ruling D86228.
The ruling categorized 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. Relying on the ruling, Plaintiff formed a three-year purchase contract with its foreign supplier and a three-year supply agreement with its largest U.S. customer. Plaintiff also relied on the advance ruling by preparing to set up a manufacturing business. This consisted of buying a plant site and carrying on product research and development.
In March 2004, Customs told Plaintiff that it was starting a tariff rate investigation. Based on it and without providing notice and comment, Customs issued a Notice of Action (NOA) dated April 18, 2005. In it, Customs declared that it would classify 86 unliquidated entries of white sauce under subheading 0405.20.3000, substantially boosting the tariff. On May 6, 2005, 60 of the 86 subject entries were liquidated.
Plaintiff then sued the U.S. (Defendant) in the Court of International Trade (CIT). The suit alleged that Customs' actions violated 19 U.S.C. Section 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. Section 1581(I)(4) and held the NOA null and void for noncompliance with 19 U.S.C. Section 1925(c)(1).
The CIT also ordered Customs to reliquidate the entries, and ordered that the advance ruling remain in full force until properly modified or revoked by Customs. The Defendant. appealed. The U.S. Court of Appeals for the Federal Circuit held, however, that the CIT lacked subject matter jurisdiction. In an October 17 ruling, it reverses the CIT's jurisdictional holding, vacates its judgment on the merits, and remands for dismissal of the complaint.
"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). ... 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 [CIT]. Here, [Plaintiff] did not file a protest and avail itself of jurisdiction under subsection (a)."
"[Plaintiff] contends, ... that jurisdiction nevertheless existed under section 1581(I)(4). Although we have described subsection 1581(I)(4) as a "broad residual jurisdictional provision,' [cite], and even a "catch-all provision,'[cite], the unambiguous precedents of this court make clear that its scope is strictly limited, 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) ....' [Cites]."
"Indeed, we have repeatedly held that subsection (I)(4) "may not be invoked when jurisdiction under another subsection of Section 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. Here, the [Plaintiff] 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, therefore, the [CIT] lacked jurisdiction under subsection 1581(I)(4)."
"First, [Plaintiff] 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."
"Equally unavailing is [Plaintiff's ] contention that the lack of prospective relief under subsection (a) renders it manifestly inadequate. [Cite]. 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."[Slip op. 2].
"[Plaintiff] 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. [Cite]. Moreover, Congress has provided for an accelerated protest disposition process, 19 U.S.C. Section 1515(b), and this accelerated process was available to [Plaintiff] for some of its entries."
"Finally, [Plaintiff] 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."
"The [CIT] 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."
"Because the [CIT] lacked jurisdiction over the case, we have no jurisdiction to reach [Plaintiff'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."
Citation: International Custom Products, Inc. v. United States, 2006 WL 2949151 (Fed. Cir. 2006).
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