Precision in Protests Required

Most importers and Customs Brokers know that an importer can contest a Customs' decision relating to the tariff classification and valuation of imported merchandise, assessment of duty, and other issues by filing a protest of the decision with Customs on a Customs Form 19. However, the United States Court of International Trade and the United States Court of Appeals for the Federal Circuit have reaffirmed that a certain amount of care is necessary when drafting a protest under Section 514 of the Tariff Act of 1930, as amended, 19 U.S.C. §1514. In the case of Koike Aronson, Inc. v. United States, the plaintiff filed a protest on the standard Customs Form 19, entitled "PROTEST." On the protest form itself, Koike stated the protest was made " against the assessment of duties against the subject machinery and parts." It was also stated in the protest that the subject liquidations were void since they were beyond the four year limitation mandated by the Customs regulation and that the notices of liquidation were not properly given. This was the substance of the protest. After the protest was denied by Customs, Koike sought to have Customs' decision reviewed in the United States Court of International Trade, which has jurisdiction over lawsuits commenced to contest the denial of protests.

However, once the law suit was commenced in the Court of International Trade, the Court held that the protest was invalid since it did not comport with the provisions of 19 U.S.C. § 1514; and, therefore, the Court did not have jurisdiction over the action. The Court stressed that it has jurisdictions over valid protests, but the deficiencies in the protest at hand caused it to be invalid.

The Court based its decision on Section 514(c)(1) of the Tariff Act of 1930, as amended, 19 U.S.C. §1514(c)(1), which provides:

The Court of International Trade found that protest filed by Koike did not meet the standards set forth in the statute. Therefore, the Court, finding that it did not have jurisdiction to hear the case, dismissed the lawsuit.

Following dismissal of the case, Koike sought to have the Court of International Trade's decision overturned and appealed the case to the United States Court of Appeals for the Federal Circuit. Koike had no better luck before the Court of Appeals. The Court of Appeals also found that the protest did not satisfy the statutory or regulatory requirements for a valid protest. The Court found that the "nature of each objection and the reasons therefore" were not mentioned in the protest as required by the statute. Moreover the "justification for [each] objection set forth distinctly and specifically" was not made as was required by the regulations. The Court noted that the protest did not even specify the tariff classifications that Koike would have Customs adopt in lieu of the classifications adopted.

Koike argued that its protest, when viewed together with its pre-protest correspondence with Customs officials, was enough to ensure that Customs had sufficient information to consider the grounds of the protest and to correct any mistakes it might have made. Koike pointed out that Customs denied the protest on substantive grounds and not because the protest was deficient. Therefore, Koike argued that the circumstances, viewed as a whole, demonstrated that it had provided the necessary information and that Customs had sufficient information to render a decision.

The Court rejected this argument outright. The Court found that regardless of whether Customs knew of the substance of the protest as a result of other communications, the requirements for a valid protest contained in the statute and the implementing regulations are mandatory. Because Koike failed to satisfy those mandatory requirements, the Court found that it had no jurisdiction.

This case points out the pitfalls that may arise when an importer has achieved a comfortable, informal manner of dealing with Customs. It should be noted that Customs denied the protest on substantive grounds, and not because the protest was deficient. However, once an action is commenced in the Court of International Trade, it is Department of Justice attorneys who represent the Government. If those attorneys see a deficiency like in the Koike case, they will file motions to dismiss, regardless of any informal relationship that may exist between the importer and the Import Specialist and regardless of whether the importer complied with the spirit of the law and provided enough information for Customs to understand and rule on the protest. In dealing with Customs, importers must be aware that when they seek relief from a decision by Customs, they must follow the statutory and regulatory requirements relating to the request for relief.

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Martin J. Ward is an attorney with the law firm of Leahy & Ward, LLP and concentrates his practice in the laws dealing with imports and exports. He is a member of the bar of the U.S. Court of International Trade and the United States Court of Appeal for the Federal Circuit. However, the information in this article should not be construed as legal advice or a legal opinion. If you have any questions or issues that you would liked addressed, please sent them to Martin J. Ward, Esq., Leahy & Ward, LLP, Suite 9, 175 Derby Street, Hingham, MA 02043, and we will respond to them in future articles.