CIT Rules Against Customs for Trying to Delay Redelivery Period with 2nd CF 28
In a September 16, 2010 decision, Pressman-Gutman Co. Inc. and American Motorists Insurance Company v. U.S., the Court of International Trade ruled that the importer did not breach its customs bond by failing to redeliver certain goods, as Customs’ demand for redelivery was untimely.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
As a result, the Government was not entitled to collect $120,000 in liquidated damages.
Classification Dispute Involved Two Entries of Fabric
This case arose from a classification dispute involving two entries of textile fabrics made in September 1999.
CF 28 issued for samples. Customs issued two Customs Form 28s (Request for Information) to Pressman-Gutman, requesting samples of the merchandise to determine the proper classification and quota category for the goods.
2nd CF 28 issued to extend conditional release period. After the samples were supplied, a Customs official issued additional CF 28s, stating that the samples had been sent to the lab for analysis and that the conditional release period had been extended for an additional 90 days pending the analysis. The forms also stated that the failure to retain the merchandise during the conditional release period can result in liquidated damages.
Redelivery demanded. Customs demanded redelivery of the merchandise from both entries, more than 90 days after its acknowledged receipt of the samples. According to the demands for redelivery, the fabric had been misclassified upon entry, and had entered the U.S. under the wrong quota category.
Importer Argued Redelivery Notice was More Than 30 Days After CBP Received Samples, and Untimely
Pressman-Gutman argued that as Customs’ demands for redelivery were untimely, there was no breach of the company’s customs bond and no basis for any claim for liquidated damages.
According to Pressman-Gutman, 19 CFR 113.62(d) requires any demand for redelivery to be made no later than 30 days after the end of the conditional release period.
And it has been Customs’ position for more than two decades that this conditional release period (1) begins when Customs requests a sample of the merchandise, and (2) ends when Customs receives the requested sample, Pressman-Gutman stated.1
Government Says Redelivery Notice Less Than 30 Days After End of Extended Conditional Release Period, and Timely
The Government argued that because the demands for redelivery were issued within 30 days after the end of the extended conditional release periods, the demands were timely.
The Government explained that a port-based Customs staffer extended the conditional release periods within 30 days of Customs’ receipt of the samples, by sending notices to Pressman-Gutman stating the samples had been forwarded to the lab for analysis and that the conditional release periods were being extended for 90 days pending lab analysis.
The Government argued that because the demands for redelivery were issued within 30 days after the end of the extended conditional release periods, the demands were therefore timely.
CIT Rules CBP Redelivery Demand were Untimely and Invalid
The CIT dismissed all of the government’s arguments, citing 19 CFR 113.62(d) and approximately 20 years of rulings by Customs Headquarters which consistently interpreted the regulations to find that the conditional release period, in cases such as this, ended upon receipt of the requested samples.
Further, the CIT stated that if the problem of untimely demands for redelivery could be prevented as readily as the Government here suggested (i.e., by the issuance at an individual Customs official’s discretion of a CF 28 imposing a further conditional release period beyond the agency’s receipt of a requested sample), one would expect that the point surely would have been raised in at least one of the many Customs Headquarters rulings on this issue over the last 20 years. However, the Government could not cite even one such ruling.
The CIT concluded by stating that the Government’s theory for this case was bankrupt, and that the action should never have been brought to court.
1Pressman-Gutman also cited rulings issued by Customs on the two governing regulations in which Customs explained 19 CFR 113.62(d) and 19 CFR 141.113(c) must be read in conjunction with each other concerning the timing to issue demands for redelivery. The first regulation 19 CFR 141.113(c) requires Customs to issue any demand for redelivery promptly, but does not define the term. Rulings from Customs Headquarters stated regulation 19 CFR 113.62(d) provides meaning to the term “promptly” by stating that any demand for redelivery must be made no later that 30 days after the date that the merchandise was released, or 30 days after the end of the conditional release period (whichever is the later.)
(See ITT's Online Archives or 09/16/10 news, 10091614, for BP summary of CBP letter stating that CBP Forms 28 and 29 may be "commencement" documents that prevent prior disclosures.)
CIT Slip Op 10-105 (dated 09/16/10)