[00:00:06] Speaker 03: The next case for argument is 141581 Fordham Motor Company versus the United States. [00:00:13] Speaker 03: Everybody give a chance to get settled. [00:00:27] Speaker 03: Okay, Ms. [00:00:27] Speaker 03: Douglas, whenever you're ready. [00:00:30] Speaker 04: Good morning. [00:00:30] Speaker 04: May I please introduce myself? [00:00:32] Speaker 04: Stephanie Douglas on behalf of Ford Motor Company. [00:00:35] Speaker 04: Ford brings this NAFTA refund appeal from the CIT's third dismissal of Ford's claims. [00:00:42] Speaker 04: In the last appeal, this court held that 19 U.S.C. [00:00:45] Speaker 04: 1520D governs all post-importation claims for duty-free preference. [00:00:51] Speaker 04: That statute requires the presentation of a certificate of origin within one year, but this requirement may be waived. [00:00:57] Speaker 04: And the custom has waived the field presentation requirement for all 1520D claims filed through the reconciliation program since 1998. [00:01:06] Speaker 04: This court left one narrow question on remand. [00:01:10] Speaker 04: whether customs denial of Ford's 1520B claims filed outside the reconciliation program before it existed was arbitrary, where the sole ground given was that Ford's certificates of origin were presented more than one year after importation. [00:01:26] Speaker 04: More than 15 years into this case, the reason customs articulated on remand has never been written in any document. [00:01:34] Speaker 03: I'm having some difficulty in this case because it's had such a long history and we tried to go back and look at what exactly was argued by whom and when. [00:01:47] Speaker 03: And it's quite confused, but you're not arguing right. [00:01:51] Speaker 03: I guess the question is, are you arguing that there's some sort of waiver here, that customs was not free to make the arguments it's backed up here with because of something it said or did or failed to do earlier? [00:02:05] Speaker 04: I think I am arguing that in one sense. [00:02:08] Speaker 04: I think the question on remand was what was customs reason in 1999 for denying Ford's claim, not what reason customs could come up with in 2013 for denying Ford's claim. [00:02:21] Speaker 04: Under Olympic Adhesives v. United States, this court said, and an agency may not, of course, shift the grounds it relied upon for taking action. [00:02:30] Speaker 04: the ground upon which an agency order must be judged are those upon which the record discloses. [00:02:34] Speaker 03: No, no, that's fine, but I don't understand how that necessarily applies here because this was the first time, I think, and you know the record better than I probably, but this issue was presented. [00:02:46] Speaker 03: I mean we sent [00:02:48] Speaker 03: So we weren't saying customs can't come up with the post-hoc rationalization. [00:02:53] Speaker 03: We were allowing them the opportunity. [00:02:55] Speaker 03: I mean, they didn't give a rationale. [00:02:57] Speaker 03: They did what they did, and that was historic. [00:02:59] Speaker 03: And then the question is what basis, if you had a reasonable basis, to have done that. [00:03:05] Speaker 03: So they're free, are they not, to come up with the basis for having done that? [00:03:11] Speaker 04: I think they are free to explain what that basis was. [00:03:14] Speaker 04: not to make up a new reason. [00:03:16] Speaker 04: The reason that customs gave in denying the protest was that there is no authority to waive a CO presentation, that a CO is required and a 1520D claim... Yeah, but the issue wasn't before that. [00:03:27] Speaker 03: I mean, the issue wasn't before that in the first instance. [00:03:31] Speaker 03: This reconciliation issue, which is a strong argument, and one obviously that the previous panel thought was relevant and they ought to address, [00:03:40] Speaker 03: The issue before them was the CO on the non reconciliation. [00:03:46] Speaker 03: So I guess I'm not getting the extent to which there's any kind of way. [00:03:51] Speaker 03: I mean they were free were they not to go back once we've asked them to go back and explain to us what this reconciliation program is, which is something separate, different at least than what they were relying on in this case. [00:04:05] Speaker 04: I think they were free, again, to offer an explanation for why reconciliation is different. [00:04:11] Speaker 04: And I think if we boil that all down, the answer they gave was, in reconciliation, we have record-keeping penalties, and we don't have that outside of reconciliation. [00:04:23] Speaker 04: And that has never been articulated. [00:04:25] Speaker 02: Custom has never taken the position that it... It seems to me that what Custom is arguing is that [00:04:31] Speaker 02: the reconciliation program is based on a wholly different statutory scheme than 1520D, the NAFTA duty drawback clause. [00:04:42] Speaker 02: And because of that, that the processes by which are afforded to claim under the reconciliation program versus one under 1520D, that they're different. [00:04:54] Speaker 02: And they're different because they have different statutory schemes. [00:04:59] Speaker 02: It seems to me that that's their argument. [00:05:01] Speaker 02: But when you ask the question, how are they different, they say, well, the safeguards are different. [00:05:08] Speaker 02: Correct. [00:05:08] Speaker 02: Can you address that? [00:05:09] Speaker 02: Yes. [00:05:09] Speaker 02: Is there a difference between the safeguards that are afforded under the procedural safeguards, afforded under 1520D versus the reconciliation program? [00:05:18] Speaker 04: There is no difference in the procedural safeguards between the reconciliation program and 1520D claims filed outside the reconciliation program. [00:05:26] Speaker 04: The NAFTA Article 505 states that importers [00:05:30] Speaker 04: that importers must maintain records. [00:05:33] Speaker 04: NAFTA Article 508 requires penalties where customs laws are not complied with, including NAFTA. [00:05:39] Speaker 04: 1508 is written very broadly, requires any importer who does any import to maintain any document [00:05:46] Speaker 02: pertaining to that importation or a declaration in a 1520D claim, whether it's made in a reconciliation program or made through the electronic... Customs seems to be arguing that when we waive a presentation of a certificate of origin under the 1520D process, it's gone and lost forever. [00:06:04] Speaker 02: We can never go back and require the importer to come up with the certificate of origin [00:06:12] Speaker 02: Is that your view of how the customs procedures under NAFTA operate? [00:06:17] Speaker 04: Not at all. [00:06:19] Speaker 04: I think this is a fundamental problem that the CIT had in adopting customs position that the only waiver authority it has for 1520D is of possession. [00:06:29] Speaker 04: So Customs says once we waive possession, it's gone forever. [00:06:33] Speaker 04: The importer doesn't have to maintain it. [00:06:35] Speaker 04: But Ford had possession, and Ford didn't ask... Let's go back to that issue. [00:06:40] Speaker 02: Is it the case that if they waive the presentation of a NAFTA certificate of origin, that the importer is not required to maintain or to keep records? [00:06:52] Speaker 02: respect to that certificate. [00:06:54] Speaker 04: That is not true. [00:06:55] Speaker 04: If customs waives the presentation of any document related to an importation of goods [00:07:00] Speaker 04: especially a document that's listed on the A1A, like the CO list it is, then that importer shall maintain it, shall produce it upon request, and shall be subject to penalties for failing to do so. [00:07:13] Speaker 04: Ford cited that in two customs as early as 1996 and then again in 97. [00:07:19] Speaker 04: And 98, before this claim was ever filed, Ford said under 181, 22A and B, we'll maintain them and we'll give them to you if you need them. [00:07:27] Speaker 04: So even if customs, that's why I say customs, this isn't the reason customs is ever given. [00:07:32] Speaker 04: Ford said we'll give them to you on request, we'll give them to you in electronic format, we'll give them to you however you want them, whenever you want them. [00:07:40] Speaker 04: We just want you to waive it with the electronic filing and the claim. [00:07:43] Speaker 04: just like you're going to do in reconciliation and will follow exactly the same procedures. [00:07:48] Speaker 04: So that's what Customs does today. [00:07:51] Speaker 04: And if you look at their directives, their directives say an importer's obligations are to possess the CO at the time the declaration of preference is made, to maintain that CO, and to produce it to Customs upon request. [00:08:02] Speaker 04: There is no exception given for claims made [00:08:06] Speaker 04: in the reconciliation, outside the reconciliation, there's nothing discussed in the directive about how that post-importation claim is filed. [00:08:14] Speaker 02: So another argument that Customs is making that I don't quite understand, maybe you can help out with this, but I'm interested in seeing what Ford's response is. [00:08:25] Speaker 02: It seems that Customs is saying under reconciliation, once an importer flags [00:08:32] Speaker 02: a particular customs transaction, it becomes an entry. [00:08:36] Speaker 02: They say that with quotations, it's an entry. [00:08:40] Speaker 02: Is it not the case that under 1520D, once you finish that commercial transaction and you pay the duties, and then later you seek the refund, is that not also an entry? [00:08:57] Speaker 04: It is exactly still an entry. [00:08:59] Speaker 04: In 1520D, if you look at the language of it, 1520D says it authorizes customs to reliquidate an entry, that is, the original entry. [00:09:08] Speaker 04: So these are all entry documents. [00:09:10] Speaker 04: And this court has distinguished, Judge Newman in the dissent in the previous appeal stated that at entry, related to an entry, in connection with an entry, these are all just words that Custom uses interchangeably for importation-related documents. [00:09:25] Speaker 04: And that's how Custom describes it. [00:09:28] Speaker 04: In the A1A list, Custom states that [00:09:31] Speaker 04: An importer is required to maintain these documents and shall produce them upon request, and those documents include a CO. [00:09:39] Speaker 04: So it is an entry-related document, and that's what 1520D does. [00:09:43] Speaker 02: So is a bond required or top assertion required for an entry under 1520D? [00:09:49] Speaker 04: A bond is not required for a reliquidation of an entry under 1520D filed outside the reconciliation program, but that bond is never triggered for 1520D claims filed in the reconciliation program. [00:10:03] Speaker 04: It is not a principal distinction to say that a bond is required under reconciliation and not outside, because the bond is applicable for [00:10:12] Speaker 04: liquidated penalties if an importer does not file a 1484B reconciliation. [00:10:17] Speaker 04: This is not a 1484B reconciliation of duty, rate, or classification. [00:10:23] Speaker 04: So it is only applicable where the importer owes more money or fails to file a 1484B reconciliation. [00:10:30] Speaker 04: It does not apply to a 1520D claim reconciled through the reconciliation program. [00:10:36] Speaker 04: And Custom specifically says, even if you flag it for NASA, if you decide not to, no problem, no penalties. [00:10:43] Speaker 04: The only consequence is you may not file a 1520D claim. [00:10:47] Speaker 04: So Custom describes all of the post-importation refund claims. [00:10:51] Speaker 02: When you file the 1520D claims, you pay the duties. [00:10:55] Speaker 02: Correct. [00:10:55] Speaker 02: And you pay the non-preferential rate. [00:10:57] Speaker 04: Correct. [00:10:59] Speaker 04: So, exactly. [00:11:00] Speaker 04: So Ford has already paid the duties for these goods. [00:11:04] Speaker 04: 18 years ago, in 1997. [00:11:08] Speaker 04: And Ford has been seeking a refund of those duties. [00:11:10] Speaker 02: So when you get a bond, basically what you're saying is, I want a bond to protect customs for payment of the duties. [00:11:17] Speaker 02: If I don't pay the duties, then customs is covered. [00:11:19] Speaker 02: Correct. [00:11:20] Speaker 02: But under 1520D, they're covered anyway because duties have been paid. [00:11:23] Speaker 04: They already have the money. [00:11:25] Speaker 04: And the only penalty for not filing a reconciliation of a 1520D, if you blag it, is you don't get the refund. [00:11:32] Speaker 04: But they already didn't give Ford the refund here, even though when Customs said, you must produce the COs, Ford produced them. [00:11:40] Speaker 04: The other thing that Customs states is that it has this risk of a loss of revenue, but the first time Customs ever told Ford that the COs would be rejected more than one year after entry was after they already had the COs, so there was no risk of loss of revenue. [00:11:55] Speaker 04: And moreover, 1592 provides that the minimum penalty if Customs determines that an importer has claims preference [00:12:03] Speaker 04: fraudulently or with gross or regular negligence even, the minimum penalty under 1592 is to restore the duties that were lost. [00:12:11] Speaker 04: So there is no risk of a loss of duties, there is no risk of a loss of money, no matter how the 1520D claim is filed, whether it's traditionally filed or through the reconciliation program. [00:12:41] Speaker 03: Mr. Kenney. [00:12:42] Speaker 00: Good morning, Your Honors. [00:12:43] Speaker 00: Edward Kenney for the government. [00:12:44] Speaker 00: With me is Beth Brotman from U.S. [00:12:46] Speaker 00: Customs and Border Protection. [00:12:48] Speaker 00: The lower report here correctly sustained Customs Remand Report. [00:12:53] Speaker 00: Customs Remand Report reasonably explained the difference between waivers and traditional 1520D claims and waivers with 1520D claims made through reconciliation. [00:13:06] Speaker 00: Reconciliation [00:13:07] Speaker 00: brings in a whole different grouping of statutes, 1401, 1484, 1508, 1509, and allows benefits to the important public for a number of customs issues, including value, certain classification issues, and 1520 did. [00:13:27] Speaker 02: At the end of the day, there's really no difference between a reconciliation [00:13:32] Speaker 02: and a duty drawback under 1520D, is there? [00:13:36] Speaker 02: I mean, at the end of the day, you look at a customs transaction and you go, what do we have here? [00:13:43] Speaker 02: Are any duties out or not? [00:13:45] Speaker 02: And reconciliation, you reconcile the records and under 1520D, isn't it the case that you determine whether you do have something that's originating or not or what the appropriate duties are? [00:13:57] Speaker 00: You're right. [00:13:58] Speaker 00: Essentially, they get the same benefit. [00:14:00] Speaker 00: However, reconciliation is a greater vehicle for getting, there's more opportunities for a type importer who can use that. [00:14:10] Speaker 02: It's electronic. [00:14:11] Speaker 00: It's fully electronic. [00:14:13] Speaker 00: Also, you can do up to 9,999 [00:14:16] Speaker 00: reconciliations in one reconciliation. [00:14:21] Speaker 00: So it's a great benefit for an importer who can use that. [00:14:23] Speaker 00: It also has the assurances that customs needs, and that is the imposing of a continuous bond with a rider that in the event that there is issues with the reconciliation. [00:14:33] Speaker 02: So what difference is between the bond under the reconciliation program and the duties paid under 1520D? [00:14:40] Speaker 00: Well, since the importer, there's a waiver of, in reconciliation, [00:14:46] Speaker 00: it does become a reconciliation in terms of statute 1401 that makes it a reconciliation. [00:14:52] Speaker 02: In terms of coverage of the risk, that's what I'm asking, what's the difference? [00:14:56] Speaker 00: The difference is there's no other, if you enter the reconciliation program and there is any sort of issue with regard to [00:15:08] Speaker 00: whether or not that was a valid reconciliation, going back, whether or not, when you said you possessed it, you can't get it. [00:15:15] Speaker 00: It's just easier. [00:15:16] Speaker 02: In terms of the bond, is there any difference between the bond that's provided in the reconciliation program, in terms of the risk, to customs? [00:15:26] Speaker 00: Well, the risk would be according to the terms of the bond. [00:15:29] Speaker 00: The bond requires a specific rider for the reconciliation program. [00:15:32] Speaker 00: That's not available in any other customs type bond. [00:15:37] Speaker 02: Under the reconciliation program, customers want to make sure they get paid the right amount of duties, correct? [00:15:43] Speaker 00: Right. [00:15:44] Speaker 02: And isn't that true also? [00:15:46] Speaker 02: When you do the duty drawback process under 1520D, you want to make sure, customers make sure that they're getting paid the right amount of duties. [00:15:55] Speaker 00: 15, 20 days, except from a duty drawback, it's another duty preference program. [00:16:05] Speaker 00: 1520D, there is no bond associated with the 1520D. [00:16:10] Speaker 02: Not a bond, but they paid the duties. [00:16:12] Speaker 02: In this case, they didn't afford, in fact, they paid the non-preferential rate. [00:16:17] Speaker 02: So they had paid already the regular duties with the expectation later on, we'll come back and we'll get our money back when we show we're entitled to the preferential rate. [00:16:26] Speaker 00: Yes, but the bond comes into effect when the duty deferral and the money is given back to the importer. [00:16:33] Speaker 00: If it's later looked at, that's the difference with 1520D traditional, according to 181.22, that's the only waiver available under traditional 1520D programs. [00:16:46] Speaker 00: The port director has to be convinced that that is a... And I'm not talking about waiver. [00:16:51] Speaker 02: And I'm asking you because what this customs report says, [00:16:56] Speaker 02: It says if there's differences, there's procedural safeguards that are available under one program and not the other. [00:17:02] Speaker 02: And I'm asking about the safeguard about whether the customer gets its money under the reconciliation program simply because you have a bond. [00:17:12] Speaker 00: So in a 1520 traditional one, let's say the port director was convinced out to that entry, out to an entry, the importers convinced him that it wasn't originating good. [00:17:24] Speaker 00: He waved in writing the requirement for a NAFTA CEO. [00:17:29] Speaker 00: There's money given back, it's re-liquidated money is given back. [00:17:33] Speaker 00: If lo and behold information turns out that that was untrue, it wasn't originating good, [00:17:40] Speaker 00: All that's really left is to do a penalty action or other things like that, which would entail a lot of work and effort. [00:17:47] Speaker 02: But in this case, they paid the maximum duty. [00:17:49] Speaker 00: Yeah, but I'm talking about after the re-liquidation of the 1520, the money is given back. [00:17:56] Speaker 00: But if that turns out to be wrong, then there is no coverage for customs. [00:18:01] Speaker 00: In reconciliation, there's a reconciliation bond with the writer attached to it. [00:18:07] Speaker 00: And if the money is given back, and it later turns out that that was incorrect, that can trigger that customs continuous bond. [00:18:14] Speaker 00: It's only available in reconciliation. [00:18:16] Speaker 01: So there is the assurance. [00:18:17] Speaker 01: Kennedy, is this a case having broad significance, or is it pretty much limited to Ford and these entries? [00:18:24] Speaker 00: Well, this case is a 1520D traditional case. [00:18:29] Speaker 00: And reconciliation, these entries did not come in under reconciliation. [00:18:33] Speaker 00: This court asked for an explanation as to the difference between [00:18:37] Speaker 00: waivers given in traditional versus waivers given in 1520D through reconciliation. [00:18:43] Speaker 00: 1520D in reconciliation, reconciliation program involves a lot of different NAFTA, CAFTA, and different programs that use 1520D. [00:18:55] Speaker 00: Well, it's hard for me to understand what Ford is asking here. [00:19:00] Speaker 00: Do they want 1528 taken out of reconciliation? [00:19:04] Speaker 00: Do they seek just to have the same type of 181.22 type of waivers that are available in traditional? [00:19:13] Speaker 00: That would have an impact. [00:19:14] Speaker 00: If there's something from the court, although I think the court would, it would be, it wouldn't necessarily. [00:19:21] Speaker 02: I don't think that Ford has made that argument, Councilman. [00:19:24] Speaker 00: No, but the outcome of what they're asking for here, that somehow a waiver in reconciliation is different or ultra virus or wrong, there could be an outcome in that matter and that's not beneficial to the importing community or customs. [00:19:47] Speaker 00: way and manner that reconciliation has been pronounced through the Federal Register and how it's carried out is beneficial to the importing public and beneficial to customs. [00:19:58] Speaker 00: there are assurances and the difference is because you're talking about certificates of origin now being entry documents because the unique thing about reconciliation is that it does bring in the Statute 1401, which creates an entry. [00:20:15] Speaker 02: Outside of the reconciliation program under 1520D is not the certificate of origin also an entry document? [00:20:24] Speaker 00: There is an entry document, but it's not, in 1520D, at importation, the importer doesn't even know whether his good is an originating good, so it's not a necessary, or he's not even thinking about it maybe at that time. [00:20:39] Speaker 02: But in the regulatory framework? [00:20:41] Speaker 00: There is a list, the A1A list, and the A1A list does have, it lists the NAFTA, and it fights to 181.22D as the origination of that. [00:20:52] Speaker 00: But that A1A list in the regulation says that it not only has to be a list, but it has to be necessary for the entry of that good. [00:20:59] Speaker 00: When it first comes in, if you're doing the traditional program... Let's back up a little bit. [00:21:04] Speaker 02: The NAFTA requires certain record-keeping requirements, correct? [00:21:07] Speaker 00: Yes. [00:21:08] Speaker 02: And in order to get preferential treatment under NAFTA, you have to have an originating good. [00:21:13] Speaker 02: Yes. [00:21:13] Speaker 02: And part of the records that the three countries agree that all parties are going to keep are all the records that go to establish whether you have an origination or not, whether you have an originating good or not. [00:21:28] Speaker 02: There's content requirements, production costs, [00:21:31] Speaker 02: change in tariff classification, all these other things that go on to figure out a rule of origin. [00:21:38] Speaker 02: But there's a separate paragraph that specifically requires certificate of origin. [00:21:44] Speaker 00: Your Honor, I'm not saying that there's not other protections. [00:21:47] Speaker 00: There are certain protections that overlap 520D and reconciliation. [00:21:51] Speaker 00: That's the problem. [00:21:53] Speaker 02: I don't see... You're saying that Customs says there's safeguards that are available under the reconciliation program and they're not available under 1520D. [00:22:05] Speaker 02: I agree with what you just said. [00:22:06] Speaker 02: There's overlapping safeguards. [00:22:09] Speaker 00: But there are greater safeguards and reconciliation. [00:22:12] Speaker 00: And that's a big difference for customs. [00:22:14] Speaker 00: There's greater safeguards because the customs is now they're representing a lot, potentially a lot. [00:22:19] Speaker 03: Tell us explicitly what those greatest safeguards are. [00:22:23] Speaker 00: Because now that we're considering the NAFTA CO to be an entry document, that entry document is now a required document. [00:22:31] Speaker 00: And that, according to 1509- Wait, we're talking about reconciliation. [00:22:36] Speaker 00: Yes. [00:22:36] Speaker 00: According to 1509-G, [00:22:38] Speaker 00: If that document is requested and not given, you can re-liquidate that entry to undo the preference to get the money back. [00:22:52] Speaker 03: And that is not the case with respect to non-reconciliation? [00:22:55] Speaker 00: That's not the case. [00:22:56] Speaker 00: You can go 592, you can do some other things, but not as easy. [00:23:00] Speaker 00: You also can trigger the continuous bond. [00:23:03] Speaker 02: You can deny NAFTA treatment for featured imports. [00:23:11] Speaker 00: We're talking about issues where the preference has already been granted and it's already out the door. [00:23:18] Speaker 00: The money has already been given back, but later on it's discovered that that was wrong or erroneous. [00:23:24] Speaker 00: There are greater opportunities to correct that in NAFTA reconciliation. [00:23:30] Speaker 00: where you get into the, and that's because reconciliation is treated as an entry and you can use those laws. [00:23:37] Speaker 00: to a greater extent, and you can reliquitate upon a demand for that document that doesn't get satisfied. [00:23:44] Speaker 02: Under 1520D, if Customs realizes later on that they made an error and they should not have refunded duties because, let's say, there was a mistake or there was a fraudulent certificate of origin, are you saying that Customs is without recourse to go back and get that money? [00:24:03] Speaker 00: I'm not saying it's not without recourse, but it's going to be a lot harder because now you have a court director waiving and writing the requirement for possession of that document and presentation. [00:24:14] Speaker 02: So one procedure safeguards harder than the other, but they're not different. [00:24:21] Speaker 00: Point us to a couple of differences in safeguards that exist in the reconciliation program but not under 15, 20... I believe that the crucial safeguards are the continuous bond, that assurance of having the continuous bond and the fact that [00:24:36] Speaker 00: reconciliation, it's actually a new entry and can be re-liquidated easily because in the 1509 segment it is now considered an entry document and if you demand it and they can't produce it, it could be re-liquidated against the preference. [00:24:58] Speaker 00: So that's a big assurance for customs. [00:25:02] Speaker 00: Those are two big assurances for customs. [00:25:04] Speaker 00: And it benefits everyone. [00:25:05] Speaker 00: It benefits not only customs, but the ability to do this, to give customs some extra assurances. [00:25:12] Speaker 00: gets the importer another opportunity to get NAFTA preference, up to 9,999 entries, and the ability to waive the presentation, but not the possession at that point, that's not available in 520D. [00:25:30] Speaker 02: Now, it's a reasonable... There's another area of confusion that I have with customs response, and it seems that they're saying that under reconciliation, [00:25:42] Speaker 02: we have an entry and the certificate is part of the entry documentation. [00:25:49] Speaker 02: And they're saying, so that means that we can go back any time and reliquidate and ask for the certificate back. [00:25:57] Speaker 02: But we can't do that under 1520D. [00:26:00] Speaker 02: And they're saying once we waive the requirement, the deadline, it's gone forever. [00:26:06] Speaker 02: We can never go back and request the certificate of origin. [00:26:10] Speaker 02: Is that true? [00:26:11] Speaker 00: As a practical matter, yes, because you've waived it in writing as I was explaining. [00:26:15] Speaker 02: Doesn't that undo the entire NAFTA? [00:26:18] Speaker 02: I mean, isn't the primary requirement or objective of the parties to ensure that the preferential benefits remain within the free trade area and that you don't have third countries coming in as free riders? [00:26:32] Speaker 02: So one way to make sure you do that is to tell people, we'll give you preferential benefits, but you've got to maintain records for five years. [00:26:41] Speaker 00: That's exactly the case, Your Honor, because under 1520D, we're talking about a narrowed waiverability. [00:26:48] Speaker 00: And you really have to convince the court director, and you have to get him in writing. [00:26:52] Speaker 00: He's got to put himself out on the limp. [00:26:54] Speaker 00: This is a originating good. [00:26:56] Speaker 00: He has to be satisfied. [00:26:57] Speaker 00: I mean, if you take a look at the entry here, [00:26:59] Speaker 00: There's not even a statement in the JA on this, that this was an after-originating good. [00:27:04] Speaker 00: One of the criteria that's necessary, but there was no C of O. So, I mean, would a court director issue a waiver when the [00:27:13] Speaker 00: Actual petition for 520D doesn't even have the statement on it. [00:27:18] Speaker 00: Probably not. [00:27:19] Speaker 00: It didn't happen here. [00:27:21] Speaker 00: But it's a limited waiver in 520D, and it is protecting the root cause of NAFTA of is this an originating good? [00:27:29] Speaker 00: Now, customs can, you can get a penalty and start a penalty action. [00:27:32] Speaker 00: It's a harder thing to do, but it can be done. [00:27:35] Speaker 00: It's easier in reconciliation because it's a given case with customs. [00:27:40] Speaker 02: We also have a verification process, correct? [00:27:44] Speaker 02: the so-called jump teams, verification jump teams, where one country can go into another and verify the records of another. [00:27:53] Speaker 00: That's true. [00:27:54] Speaker 00: I'm not disputing that that's available. [00:27:56] Speaker 02: Does that safeguard exist under the Reconciliation Code? [00:27:59] Speaker 00: I think it overrides all programs. [00:28:01] Speaker 00: No, I'm asking, does it? [00:28:02] Speaker 00: Yeah. [00:28:04] Speaker 00: But the availability of day-to-day assurances to customs is [00:28:13] Speaker 00: Right there in the continuous bond that can be levied upon when reconciliation, it turns out, has been inappropriate or information should not have been... If they say under reconciliation that I have possession, it turns out that's not true. [00:28:37] Speaker 00: Customs now has the assurance of having a customs bond that they could get that money back. [00:28:41] Speaker 00: That was a give back. [00:28:45] Speaker 00: But the programs, these different programs, NASA preference at entry originally, if you have actual possession of the bonds of the NASA CO at entry, [00:28:56] Speaker 00: That's one way to get NAFTA preference and that's if you make the statement and have possession at entry. [00:29:02] Speaker 00: If it's one of the undetermined factors at entry and you don't want to post a continuous fine, you have 520-D available to you and within a year, within 12 months, you can get that NAFTA. [00:29:14] Speaker 02: In the facts of this case, Ford did not enter the goods [00:29:20] Speaker 02: claiming NAFTA treatment. [00:29:22] Speaker 02: They entered it under the general tariff. [00:29:25] Speaker 02: Yes. [00:29:26] Speaker 02: Right? [00:29:26] Speaker 02: So they paid the maximum duty that they would pay, and with expectation, we'll come back later on and show that these are originating. [00:29:36] Speaker 00: That's true, right. [00:29:38] Speaker 00: When they came in, right, they're just coming in under the general tariff for that good. [00:29:43] Speaker 02: So the customs director doesn't sit there and say, okay, I'm going to let you do that. [00:29:46] Speaker 00: No, because they don't even know at that time. [00:29:48] Speaker 00: Perhaps they can't get the information that they need to make the statements or anything, because there has to be a statement. [00:29:53] Speaker 00: You have to verify a statement that this is in a regime of good. [00:29:56] Speaker 00: But if you don't have that information available, you can't do that. [00:30:00] Speaker 00: Before reconciliation, you have 520-D. [00:30:02] Speaker 00: And 520-D, you have to present within the 12-month time period along with the... You have to make the claim. [00:30:12] Speaker 00: Then you have to present the NAFTA CO, and there's very limited waiverability. [00:30:17] Speaker 00: One of them being you have to convince the court director. [00:30:20] Speaker 00: If you don't get that, you have to produce it. [00:30:21] Speaker 00: There's no two ways about it. [00:30:23] Speaker 00: Reconciliation was another option that was created. [00:30:26] Speaker 00: But these entries here that we're dealing with are 520B claims, and there's been no waiver. [00:30:31] Speaker 00: And I know that they were saying that it's arbitrary or capricious not to have granted. [00:30:36] Speaker 00: I believe I heard that from Ford during this argument. [00:30:38] Speaker 00: There's nothing underlying in this case about that. [00:30:41] Speaker 00: You can look at the, what's in the JA is the actual petition. [00:30:45] Speaker 00: It doesn't have the statements made. [00:30:47] Speaker 00: There's been, as custom said, there was no presentation of the NAFTA CO here. [00:30:53] Speaker 00: And this is a regular traditional 1620D claims. [00:30:59] Speaker 03: Final thought. [00:31:00] Speaker 00: My final thought is what does this board want out of this case? [00:31:04] Speaker 00: And does Ford want a waiver when this Ford has already looked at the fact that there was no waiver granted to Ford and therefore there's a request to change the program. [00:31:20] Speaker 00: But there's not a request for a waiver for the entry. [00:31:24] Speaker 00: There's a request to not have to abide by seriatim entries before reconciliation came up. [00:31:31] Speaker 00: And there was no such waiving of that system was granted. [00:31:37] Speaker 00: And they just didn't bring on the NAFTA CO, give the NAFTA CO to customs. [00:31:44] Speaker 00: That claim is, as this court originally, the lower court stated, that's a failure to state the claim of a 520D claim. [00:31:52] Speaker 00: Customs has enunciated its position on reconciliation and the benefits of that. [00:31:59] Speaker 00: But if you can't give a waiver to customs here, [00:32:07] Speaker 00: I don't see what Ford is asking for. [00:32:09] Speaker 00: Do they want 520D taken out of reconciliation? [00:32:11] Speaker 00: That can't be the way either. [00:32:12] Speaker 03: Okay, well why don't we ask Ford. [00:32:13] Speaker 00: Thank you. [00:32:21] Speaker 04: The court is not asking to have reconciliation, to have 1520D taken out of reconciliation. [00:32:26] Speaker 03: Okay, so in order to find in your favor, what would be, would we have to say that because here we sent it back for the purposes of deciding whether or not custom had some basis for having a different program under reconciliation, you're suggesting we should say no, there's no basis for a difference, it was unreasonable, and therefore. [00:32:47] Speaker 04: And therefore, because customs have [00:32:50] Speaker 03: have been out an exception to the requirement that the other pretty with it with the fifteen twenty-five in one year for all reconciliation claim they have to have a reason to not grant that exception here and they don't have well no okay i get that but isn't wouldn't we be compelled when we really be high holding something broader which is the same requirements of lack thereof with respect to waivers under reconciliation automatically apply [00:33:20] Speaker 03: to all entries under 1520D? [00:33:23] Speaker 04: I don't think the court has to go that far, because in this case, the facts are so unique, right? [00:33:28] Speaker 04: So in this case, it was after reconciliation was announced, but before it was implemented. [00:33:33] Speaker 04: The board requested a waiver and offered to comply with reconciliation. [00:33:37] Speaker 03: So you're suggesting that we write an opinion that creates one exception to 1520D that surrounds precisely the activities in your case and no other? [00:33:46] Speaker 04: I am saying that's all the court has to do is to find that [00:33:49] Speaker 04: customs denial of Ford's claims was arbitrary and capricious. [00:33:53] Speaker 04: The court doesn't have to say, and customs may never deny an exception again, it just has to say under these circumstances where Ford was diligently trying to comply with this burdensome paper process, we agree, reconciliation makes sense. [00:34:08] Speaker 04: And it makes sense to waive the presentation because customs always has [00:34:14] Speaker 04: the authority to request and punish if the importer doesn't maintain. [00:34:18] Speaker 03: To read from customs directives... But no, that's why I don't understand. [00:34:21] Speaker 03: I mean, I thought you were necessarily advocating for a broader world. [00:34:27] Speaker 04: I think that the broader rule does make sense. [00:34:29] Speaker 03: And what is the broader rule? [00:34:31] Speaker 04: I think the broader rule is that customs may waive the presentation of a CO with a 1520D claim within one year, subject to an importer's obligation to maintain and produce them upon request. [00:34:43] Speaker 04: And that's what Ford did here, was it told customs we will maintain and produce them upon request. [00:34:48] Speaker 04: And when customs says produce them, [00:34:50] Speaker 04: Ford produced them. [00:34:51] Speaker 04: It was only after Ford produced them, in June of 99, when Customs was holding the documents, that it said, we're not going to take them. [00:35:00] Speaker 04: It's too late. [00:35:01] Speaker 04: So in this case, it's arbitrary. [00:35:04] Speaker 04: Could there be another case? [00:35:05] Speaker 04: Could they announce a new [00:35:07] Speaker 04: as they did in Westar and Green Tree, could they announce a new rule going forward? [00:35:11] Speaker 04: We are never going to waive it traditionally, and we don't think you have to keep the document, because we're never going to waive it. [00:35:18] Speaker 04: Customs have to decide, if there's an exception to presentation in 1520D, as there is, then what's the reason for not granting it support here? [00:35:28] Speaker 04: The risk of loss of money isn't a real risk of loss. [00:35:32] Speaker 04: By the time they denied the claim, they had the COs, and they had [00:35:36] Speaker 04: You know, as Ford argued in the protest, you had enough information without the COs to grant Ford's claim, and Customs says, that may be so, but we don't have the authority. [00:35:46] Speaker 04: And we know that's not true. [00:35:47] Speaker 04: They do have the authority to process Ford's claim, and the refusal to do so here is what was arbitrary. [00:35:53] Speaker 02: If we order that Customs refund the overpaid duties to Ford, are you entitled to interest? [00:36:00] Speaker 03: Yes. [00:36:04] Speaker 03: All right. [00:36:05] Speaker 03: The time has expired. [00:36:06] Speaker 03: We thank both council members.