Please see the following message from Roll & Harris LLP regarding the latest updates on IEEPA tariff refunds.
IEEPA Tariffs Refunds / CIT Continues Oversight Over Possible ACE Portal Refund System / CBP to Report to CIT Again Next Week / Immediate Refunds Still Delayed / Government Appeal Still Possible
Yesterday, U.S. Customs & Border Protection (CBP) filed its status report to the Court of International Trade (CIT) regarding refunds of IEEPA tariffs. Recall that previously, the CIT had ordered CBP to refund IEEPA tariffs that were paid on UNLIQUIDATED entries and on entries for which LIQUIDATION IS NOT FINAL, but the CIT later suspended immediate compliance due to CBP reporting to the CIT how difficult such a process would be.
CBP previously advised the CIT that it contemplated building ACE functionality that would create the following refund process:
- The importer files a declaration in ACE that includes a list of entries on which IEEPA duties were paid.
- ACE runs a series of validations on each entry within the declaration and automatically re-calculates the duty owed without the IEEPA tariffs (with applicable interest).
- CBP verifies the declaration and processes refunds as soon as practicable.
- ACE automatically finalizes (liquidates or reliquidates) the entries.
- ACE automatically aggregates the refunds with interest by importer and liquidation date.
- CBP certifies the refunds
- The Department of the Treasury issues IEEPA refunds electronically.
Yesterday’s status report sheds more light on what CBP is doing, although many questions remain unanswered – particularly with regard to liquidated entries. Entries where liquidation is final likely must still be the subject of claims brought by litigation.
Per CBP’s latest status report, the name for the ACE functionality will be “CAPE,” which stands for Consolidated Administration and Processing of Entries. CAPE will have four (4) components to it:
- A Claim Portal in ACE
- Mass Processing
- Review and Liquidation/Reliquidation
- Refund
Importantly, CBP is proposing that importers will have the burden of applying for a refund claim. That is very different from CBP, who knows who has paid and how much was paid, proactively issuing refunds of illegally collected tariffs. Also note that, without an ACE account, the importer will be unable to make a claim, nor to receive a refund. Most importers still do not have their own ACE account with ACH refund functionality enabled.
CBP also contemplates that importers, not CBP, will have the burden of identifying the entries for which the importer wishes a refund. This burden will be met by the importer uploading a data file (in .CSV format) containing those entries and “all required information.” Conspicuously absent from this status report is that CBP did not indicate what information would be required to make the claim. The “claim portal” portion is about 70% developed, per CBP. CBP did not provide a target date for anticipated 100% completion of the claim portal.
Next, the mass processing aspect of CAPE will involve CBP/ACE removing the IEEPA Chapter 99 Harmonized Tariff Schedule of the United States (HTSUS) classifications from the entries that were successfully uploaded in the Claim Portal and ACE will validate the duty calculation variances and accept (or not) the claim. This part of the CAPE process (mass processing) is only 40% complete per CBP. Again, no target date for anticipated 100% completion of the mass processing part of CAPE.
Once the duty calculations are validated, CBP anticipates that the CBP will proceed to liquidate or reliquidate on a specified number of days after the mass processing acceptance date. CBP states the liquidation/reliquidation part of CAPE is already 80% complete, but no target date for 100% completion.
Lastly, the CAPE system will direct refunds to occur on accepted CAPE refund declarations. Refunds will be consolidated per liquidation date/reliquidation date and importer of record. CBP advises this part of the CAPE system is only 60% complete. As above, there is not announced target date for 100% completion.
Per CBP’s status report, the CAPE process, at least initially, will not cover antidumping/countervailing (ADD/CVD) entries, finally liquidated entries, nor entries that have a liquidation status of suspended, extended, or under review. Certain entry types also will not be covered (e.g., warehouse withdrawals and entries identified on drawback claims).
Judge Eaton continues to want to keep CBP on a short leash since he ordered CBP to provide another status report to the CIT on the new ACE functionality implementation by March 19th at 2 pm EST.
What does all of the above mean for importers? In our view, it means importers need still need to proceed with caution and control those aspects of the refund process that they can control, such as filing a refund lawsuit, filing protests, etc. This likely will continue to be our view unless and until the government fails to take a timely appeal and unless and until the government announces the CAPE refund process is “open for business.” Even then, questions will remain around the types of entries that are NOT covered by the CAPE process, as well as what CBP will do with regard to entries that were (and continue to be) subject to bills for IEEPA tariffs, what CBP will do with regard to reconciliation entries, etc.
Practically speaking, it also means importers must be sure to apply for an ACE account and to enable ACH refunds in ACE once they have their ACE account.
If you have any questions, please contact our office.