Deemed Liquidation by Customs

Koyo Corporation of USA (Koyo) imported roller and ball bearings for resale in the United States. At the time of entry, antidumping duty orders issued by the De­partment of Commerce were in effect. The orders required duty deposits to cover estimated antidumping duties between 48 and 74 percent ad valorem. Liquida­tion of the entries was suspended due to the ensuing litigation brought by Koyo to roll back the order. The importers (Koyo) were successful, and the rates were substantially lowered.

In view of the successful outcome for Koyo in the litigation, Commerce is­sued instructions to U.S. Customs and Border Protection to liquidate the entries at lower rates. CBP did not comply with Commerce’s instructions. When Koyo contacted customs one year later about the liquidation of its entries, CBP found these entries to have been “deemed liquidated” at the original higher antidump­ing duty rate.

Koyo took the case to the U.S. Court of International Trade (CIT), protesting the liquidations (after its initial protest was denied by CBP). The issue is whether the deemed liquidations claimed by Customs were justified under existing rules. The requirements for deemed liquidation following antidumping proceedings are that: (1) the suspension of liquidation that was in place must have been removed;

• Customs must have received notice of the removal of the suspension; and
• Customs must not liquidate the entry at issue within six months of receiving such notice.

The “deemed liquidation” provision was added to the customs law in 1978 to place a limit on the period within which importers would be subject to the pros­pect of liability for a customs entry and to terminate the government’s cause of action for the entry in question.

The court stated that Congress intended to encourage prompt liquidation and did not intend Customs not to obey its instructions and thereby retain funds to which it no longer had valid claim. It ordered Customs to reliquidate the entries at the appropriate duty rates, as instructed by Commerce, and refund the duties owed with interest to Koyo (2004 U.S. App; Fed. Circ, 2004).

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.