CAFC Again Rules Heartland Entries are Subject to Higher TRQ-Rate
In Heartland By-Products, Inc., v. U.S., the Court of Appeals for the Federal Circuit reversed the Court of International Trade, ruling that the CIT erred by not allowing retroactive classification treatment at the higher Tariff Rate Quota (TRQ) rate on imports of sugar syrup from Canada in accordance with an earlier decision by the CAFC (Heartland II CAFC 00-1287-1289).
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(Background. This is the third time this dispute between Heartland and Customs has come before the CAFC. In 1995 Heartland sought an advance ruling as to the tariff classification and rate of duty that would apply to imports of sugar syrup from Canada. The advance ruling which was issued on May 15, 1995, indicated that the sugar syrup would be classified under subheading 1702.90.40 in the U.S. Harmonized Tariff Schedule at the non-TRQ duty rate.
In 1999, Customs, under 19 USC 1625(c) revoked its ruling and classified the sugar syrup imports as subject to higher TRQ duty rates This re-classification was adverse to Heartland, increasing the duty on its sugar syrup imports. The revocation ruling was effective on November 8, 1999, sixty days after it was issued.
Before the revocation ruling became effective, however, Heartland filed suit requesting pre-importation review of the revocation ruling under 28 USC 1581(h) and seeking to enjoin Customs from enforcing the revocation ruling under 28 USC 1581(i).
Heartland I. On October 19, 1999, the CIT ruled that Custom's revocation ruling was unlawful, and concluded that Heartland's sugar syrup was properly classified under HTS 1702.90.40 at the non-TRQ rate, as established in the advance ruling. After the CIT's decision Heartland continued importing sugar syrup.
Heartland II. Customs appealed the decision in Heartland I, and on August 30, 2001, the CAFC reversed the CIT's decision in Heartland I. The CAFC upheld the revocation ruling by Customs which re-classified Heartland's sugar syrup imports at the higher TRQ duty rates. After this decision, Heartland stopped importing sugar syrup.
After denying Heartland's petition for rehearing, the CAFC issued its Heartland IIdecision on December 11, 2001. Customs did not wait for the decision to be issued before commencing full scale liquidation and re-liquidations of Heartland's entries at the higher TRQ duty rate based on the August decision.
From 2002 through 2007, the parties litigated a number of technical issues, but finally on October 30, 2007, Heartland VI (Slip Op. 07-157), the CIT ruled that Customs was bound by the decision on classification in Heartland I and must liquidate the entries of sugar syrup at the lower non-TRQ duty rate.)
In the current case, which appealed Heartland VI, the CAFC addressed the issue of whether the classification decision reached in Heartland II applied retroactively to entries before the mandate was issued on December 11, 2001 by the CAFC in Heartland II.
The CAFC stated that the general rule is that judicial decisions are given retroactive effect and to the extent that the CIT held that the decision reached in Heartland II was not retroactive, the CIT was mistaken.
Heartland did not dispute this general rule, but instead, argued that pre-importation review provided by 28 USC 1581(h) creates an exception to the rule. The CAFC stated that the language of 1581(h) does not indicate any congressional intent to create an exception to the retroactivity of judicial decisions, nor does the legislative history of 1581(h) suggest that this provision creates an exception.
(See ITT's Online Archives or 11/09/99 and 09/11/01 news (Ref:99110866B), and 01091130, for BP summary of Heartland I Slip Op. 99-110, Heartland II CAFC 00-1287-1289, and Skidmore deference.
See ITT's Online Archives or 11/27/07 news; 07112640, for BP summary of Heartland VI Slip Op. 07-157.)
CIT CAFC 08-1245 (dated 06/10/09) available at: http://www.cafc.uscourts.gov/opinions/08-1245.pdf
BP Note
- USC 1581(h) reads as follows: The CIT shall have exclusive jurisdiction of any civil action commenced to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury, or a refusal to issue or change such a ruling, relating classification, valuation, rate of duty, but only if the party commencing the civil action demonstrates to the court that he would be irreparably harmed unless given an opportunity to obtain judicial review prior to such importation.