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Wolff Shoe Co. v. United States

April 14, 1998


Appealed from: United States Court of International Trade Senior Judge Tsoucalas

Before Schall, Circuit Judge, Skelton, Senior Circuit Judge, and Bryson, Circuit Judge.

The opinion of the court was delivered by: Schall, Circuit Judge.

This appeal arises out of the final assessment of duties due on goods imported into the United States by Wolff Shoe Company ("Wolff"). Wolff brought suit in the United States Court of International Trade seeking a full refund of countervailing duties or, alternatively, a discount in the amount of such duties assessed by the United States Customs Service ("Customs"). The Court of International Trade, on cross-motions for summary judgment, granted partial summary judgment in favor of Wolff, holding that Wolff's entries were liquidated by operation of law at the rate asserted by Wolff on entry and that Wolff thus was entitled to a refund of all countervailing duties that it had paid after entry. See Wolff Shoe Co. v. United States, 936 F. Supp. 1084, 1090 (Ct. Int'l Trade 1996). The United States now appeals from the determination that the entries were liquidated by operation of law. In addition, Wolff cross-appeals the Court of International Trade's grant of partial summary judgment in favor of the government. The court held that, when liquidation occurs by operation of law, countervailing duties deposited by the importer at the time of entry are included in the amount of duty required to be paid. See id. at 1088-89. We conclude that the court erred on the first issue but correctly decided the second issue. Accordingly, we affirm-in-part, reverse-in-part, and remand.



The countervailing duty laws impose additional duties on imported products which are subsidized by the country of export or manufacture. See 19 U.S.C. §§ 1303, 1671 (1982). *fn1 These additional duties are called "countervailing" duties. They are levied on subsidized imports to offset the unfair competitive advantages created by foreign subsidies. *fn2 See United States Steel Group v. United States, 96 F.3d 1352, 1356 n.1 (Fed. Cir. 1996). Pursuant to 19 U.S.C. § 1671, the United States Department of Commerce ("Commerce") must impose countervailing duties on subsidized imports if it determines that the subject imports are in fact being subsidized, and the International Trade Commission determines that "an industry in the United States- (i) is materially injured, or (ii) is threatened with material injury . . . by reason of the [subsidized] imports." After the initial determination, Commerce must perform annual reviews of outstanding countervailing duty orders. See 19 U.S.C. § 1675(a) ("At least once during each 12-month period beginning on the anniversary of the date of publication of a countervailing duty order[,]" Commerce shall "review and determine the amount of any net subsidy."). *fn3 After Commerce performs an annual review under § 1675(a), the statute allows an interested party to seek judicial review of the factual findings and legal Conclusions of Commerce in the Court of International Trade. See 19 U.S.C. § 1516a(a)(2).

During an annual review by Commerce, "liquidation" of all entries of merchandise subject to the outstanding countervailing duty order is suspended. See 19 U.S.C. § 1504(a); Ambassador Div. of Florsheim Shoe v. United States, 748 F.2d 1560, 1565, 3 Fed. Cir. (T) 28, 34 (1984). Suspension of liquidation occurs because the annual review scheme established in 19 U.S.C. § 1675(a) would be frustrated unless the final results of the review applied to the entries covered by the review. See Ambassador, 748 F.2d at 1565, 3 Fed. Cir. (T) at 34. In addition, during judicial review of a countervailing duty determination, the Court of International Trade "may enjoin the liquidation of some or all entries of merchandise covered by [the countervailing duty order]." 19 U.S.C. § 1516a(c)(2).

Liquidation is "the final computation or ascertainment [by Customs] of the duties or drawback accruing on an entry." 19 C.F.R. § 159.1 (1997). *fn4 Liquidation of an entry is "final and conclusive upon all persons (including the United States and any officer thereof)." *fn5 19 U.S.C. § 1514(a). An importer makes an "entry" by filing documentation with Customs, which enables Customs, among other things, to "assess properly the duties [due] on the merchandise." 19 U.S.C. § 1484. The importer must also deposit estimated duties with Customs. See 19 U.S.C. § 1505(a). After the proper documents are filed and the estimated duties are paid, the imported merchandise can pass into the commerce of the United States. See 19 U.S.C. § 1490. Subsequently, during liquidation, Customs will collect any increased duties due or refund any excess of the estimated duties deposited on entry. See 19 U.S.C. § 1505(b).

By statute, Customs must complete liquidation of an entry within certain time limits. See 19 U.S.C. § 1504. If Customs fails to do so, the entry is "deemed liquidated" (i.e., liquidated by operation of law). Id. Pursuant to 19 U.S.C. § 1504(a), merchandise which is not liquidated within one year of its entry is "deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer." The statute includes several exceptions which permit Customs to extend liquidation beyond the one year anniversary of entry. See 19 U.S.C. § 1504(b). The statute permits an extension when (1) "information needed for the proper appraisement or classification of the merchandise" is unavailable; (2) "liquidation is suspended as required by statute or court order;" or (3) the importer "requests such extension and shows good cause therefor." Id. However, an entry of merchandise which is not liquidated within four years after the date of entry is liquidated by operation of law at the "rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer, . . . unless liquidation continues to be suspended by statute or court order." 19 U.S.C. § 1504(d). Additionally, the statute imposes a duty on Customs to notify the importer if liquidation is suspended. See 19 U.S.C. § 1504(c); see also 19 C.F.R. § 159.12(c).

The deemed-liquidated statute, 19 U.S.C. § 1504, was enacted in 1978. "The prior law had been that Customs might delay liquidation as long as it pleased, and with or without a formal suspension notice." Ambassador, 748 F.2d at 1562, 3 Fed. Cir. (T) at 30. In Ambassador, we noted that Congress enacted the statute because of "the uncertainty importers were being kept in, often for years, as to whether they might face further exactions, or when the refunds to which they might be entitled would be paid." Id. at 1562-63, 3 Fed. Cir. (T) at 30-31 (citing S. Rep. No. 95-778, at 31, reprinted in 1978 U.S.C.C.A.N. 2211, 2242). An additional purpose of the statute was to "bring the United States into conformity with international expectations interpreted to require that duty liabilities . . . be ascertained and fixed generally within [one] year after entry." Id. at 1565, 3 Fed. Cir. (T) at 33. Armed with this background, we turn now to the case before us.


The pertinent facts are not in dispute. In 1974, Commerce published a countervailing duty order covering imports of non-rubber footwear from Spain. See Wolff Shoe, 936 F. Supp. at 1086. From 1980 to 1982, Wolff made 203 separate entries of footwear which were subject to the order. Id. Wolff deposited estimated regular and countervailing duties for each of the entries. Id. at 1087-88. Pursuant to 19 U.S.C. § 1675(a), Commerce conducted annual reviews of the countervailing duty order in 1980, 1981, and 1982. See Wolff Shoe, 936 F. Supp. at 1086. Wolff's entries were included within these administrative reviews. Consequently, liquidation of Wolff's entries was suspended pending a final determination in each review. For each of the years under review, Commerce determined a countervailing duty rate that was greater than the rate upon which Wolff had based the deposit of duties at the time of entry.

The final results of the administrative reviews were challenged in the United States Court of International Trade. See Volume Footwear Retailers of Am. v. United States, 10 CIT 12 (1986). Wolff, however, was not among the plaintiffs challenging the results. See Wolff Shoe, 936 F. Supp. at 1089. On October 19, 1983, the Volume Footwear court entered a temporary restraining order directing Customs to suspend liquidation of all entries of non-rubber footwear from Spain

currently classifiable under items 700.0500 through 700.4575, 700.5605 through 700.5673, 700.7220 through 700.8360, and 700.9515 through 700.9545 of the Tariff Schedules of the United States Annotated, which were exported on or before December 31, 1980, and entered, or withdrawn from warehouse, for consumption on or after January 1, 1980, and no later than May 2, 1982, and remain ...

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