U.S. Customs and Border Protection thereafter sought payment from both the importer and AHAC, who had issued the importer a “continuous bond” to cover up to $600,000. AHAC filed protests challenging CBP’s formal demands, both the 2004 “liquidation” and 2005 “reliquidation.” CBP denied both protests and AHAC declined to challenge either at the CIT.
The government in 2010 filed a CIT enforcement action against AHAC. AHAC sought to avoid liability by claiming that reliquidation resulted in the entries being “deemed liquidated” – i.e., having liability finalized as entered due to the passage of time without CBP action. CBP had unnecessarily reliquidated based on the mistaken belief that the entries were affected by separate CIT litigation in which another exporter challenged Commerce’s 2001-02 review.
Both the CIT and CAFC readily found AHAC liable. The entries had not been deemed liquidated because CBP timely acted to avoid that result with the initial liquidation. CBP’s subsequent reliquidation, although erroneous, did not void the initial agency action so as to effect a deemed liquidation.The reliquidation became final and conclusive when AHAC opted not to challenge CBP’s protest denial at the CIT. Both courts faulted AHAC for not preserving its dispute and refused to let the surety escape liability through the technicality of reliquidation.
The CAFC remanded for the CIT to assess the pre-judgment interest amount – which may include equitable interest beyond that authorized by statute. By increasing the potential bases for interest, the CAFC has positively incentivized both government pursuit of surety liability and settlement of those claims. Sureties are now on notice that they may have significant liability beyond the bond amounts and may pursue settlement to avoid such interest – particularly if, like AHAC, they declined opportunities to challenge liability determined by CBP.
