When Shall Means Might - U.S. Court Decision Changes The Customs Protest Process

U.S. importers filing protests with U.S. Customs and Border Protection ("Customs") should take note of a recent decision in the U.S. Court of International Trade that could represent a significant change in the way protests need to be dealt with by U.S. importers and Customs.1 The decision, which involves a protest filed by Hitachi Home Electronics (America), Inc. ("Hitachi"), proffers a new interpretation of the word "shall" and the statutory timeframe by which Customs must make a decision on protests.

Background

Under U.S. law, when a U.S. importer disagrees with a Customs decision on an entry, it can file a protest challenging the decision. There are two paths to take when filing a protest – a normal protest and one requesting accelerated disposition. Under the first path,2 Customs has two years from the date of filing to rule on the protest and "shall allow or deny such protest in whole or in part" within that timeframe. Under the second path,3 if Customs does not make a decision within 90 days of the filing of a protest, a request for accelerated disposition can be made. If still no decision is made within 30 days of the request, the protest is deemed denied and the U.S. importer can then try to seek its desired remedy in the U.S. Court of International Trade. Under either path, it is a final decision by Customs that allows the U.S. importer to get into court; without a final decision, the U.S. importer remains in legal limbo.

With regard to Hitachi, the company imported plasma flat panel televisions through the port of Otay Mesa and claimed that the televisions qualified for duty-free treatment under NAFTA. Customs disagreed and Hitachi filed a protest with the agency challenging its initial decision. Two years passed and Customs did not rule on Hitachi's protest.

Hitachi then commenced an action in court, claiming that because the two years had passed, Customs had failed to meets its statutory deadline and the protest should be deemed denied by operation of law. If true, that would give the court jurisdiction to rule on the substantive issues raised. The U.S. government disagreed and argued that the court did not have jurisdiction to decide on Hitachi's claim because a final decision was still pending from the agency.

The court agreed with the government. Specifically, the court stated that even though the statute uses the word "shall," it is more directory than mandatory because the statute fails to also provide for adverse...