Are You Filing a Valid Protest with CBP?

Last month the U.S. Court of International Trade sided with the importer in Estee Lauder v. United States, Slip Op. 11-23 (CIT March 1, 2011), in a decision that should remind a company fighting with U.S. Customs and Border Protection (CBP) how important it is to sufficiently describe products at issue in a protest.

Estee Lauder protested how CBP liquidated entries of its cosmetic kits. CBP classified the kits according to their individual components, rather than as the single component that gives the kit its essential character under GRI 3(b). In its protest, the company asserted that under GRI 3(b), the kits should be classified under HTSUS heading 3304, a duty-free provision for beauty or make-up preparations. Although the protest identified the contents of only one type of cosmetic kit, Estee Lauder also named entries containing a second type of kit. The second type of kit, which was not described in the protest, included a container for holding make-up brushes and was classified under HTSUS heading 4202, dutiable at 20%.

Pursuant to CBP’s request, Estee Lauder provided samples of both types of kits. CBP denied the protest by non-response under the accelerated disposition procedure. Upon denial, the company filed suit with the CIT, challenging the classification of the kits. CBP moved the court to dismiss the case for lack of subject matter jurisdiction, arguing that Estee Lauder failed to file a valid protest because the second type of kit was not specifically described in the protest.

By statute and regulation, a protest is valid when it “set[s] forth distinctly and specifically . . . each category of merchandise affected” and contains “a specific description of the merchandise affected.” 19 U.S.C. § 1514(c)(1) and 19 C.F.R. § 174.13(a). The U.S. Supreme Court has explained that this requirement exists to “compel the importer to disclose the grounds of the objection at the time when he makes his protest.” Davies v. Arthur, 96 U.S. 148 (1877). A protest must show the importer’s intent and adequately notify Customs of the protest’s “true nature and character.” Id. A century later, the Customs Court also explained that “[h]owever cryptic, inartistic, or poorly drawn a communication may be, it is sufficient as a protest . . . if it conveys enough information to apprise knowledgeable officials of the importer’s intent and the relief sought.” Mattel v. United States, 72 Cust. Ct. 257, 262 (1974).

The CIT denied CBP’s motion to dismiss, holding that Estee Lauder sufficiently described the kits in the protest and filed valid protests. Although the court agreed with CBP that it was unclear which items were included in the protested kits when comparing the protest description with the entry documents, the court found that this discrepancy was not “an insurmountable obstacle” to CBP deciding the protest. The CIT held that “[p]rotest sufficiency does not turn on whether Customs can decide the entire claims based solely on information contained in the papers submitted.” Slip-Op 11-23. Rather, “the protest is the tool whereby the collector seeks the precise facts.” Id. (citation omitted).

What can we take away from this case? Although Estee Lauder successfully defended the government’s attempt to kick the case out of court for lack of jurisdiction, it may have avoided a jurisdictional argument all together had there been no question about the merchandise included in the protests. Estee Lauder now must begin the fight on the substance on its argument: what is the correct classification? The company basically added an additional layer of litigation because it filed an unclear protest.

A good protest thoroughly explains why the classification it seeks is correct as a matter of law and fact, and why the classification CBP applied at entry was incorrect. One should not simply ask for reliquidation under the tariff provision you think is right without providing arguments why you are right. It is important to:
• Describe the product
• Set forth the specific issue
• Provide and analyze the law
• Apply the law to your facts
• Explain why your classification is correct
• Explain why CBP is wrong
• Conclude

Following these simple rules will lead to a better and more successful protest.

Protest Filing Period

Each Friday, the Wizard joins us to share an answer to one of the questions asked during the week. This week’s question is related to a post entry process.

Question:
Our company has a procedure that states the protest period is 180 days from the date of liquidation, but 19 CFR 174.12 state that protests must be filed within 90 days of liquidation. Which one is correct?

Excellent question! You have a sharp eye. This difference could be quite confusing for someone trying to decide whether it was too late to file a protest or for someone studying for the Customs Broker Exam.

HR 1047—Miscellaneous Trade and Technical Corrections Act of 2004, enacted in December 2004, was responsible for this change. Among other things, Sec. 2103 of the Act amends 19 U.S.C. 1514 extended to the time frame in which a protest may be filed from 90 days to 180 days after the date of liquidation or reliquidation or the date of the decision being protested. A protest cannot be submitted before liquidation; however, it must be received by CBP within 180 days of liquidation or reliquidation, or all rights to a potential refund are forfeited. The Wizard does not know why the CFR has not been updated to reflect this change, but you can always refer to HR1047 Sec 2103 as support for the change from 90 days to 180 days. CBP has not asked a question concerning the protest period on the Customs Broker Exam since this change took effect; however, persons studying for the exam should make note of these differences in the copy of the regulations used for the exam.

Do you have a question for the Wizard? Submit your question by clicking on the link in the space for “Ask the Wizard.” See you next Friday!