CIT Orders CBP to Refund IEEPA Tariffs Following Supreme Court Ruling

On March 4, the US Court of International Trade (CIT) issued a significant order in Atmus Filtration, Inc. v. United States, directing US Customs and Border Protection (CBP) to refund duties imposed under the IEEPA. The order follows the US Supreme Court’s February 20 decision in Learning Resources, Inc. v. Trump, which held that the IEEPA tariffs were unlawful. If it stands, importers may be able to obtain refunds on the IEEPA tariffs they paid without needing to take affirmative action, at least for a certain subset of their entries. We expect the US Department of Justice to appeal the order.

The CIT’s Order

The CIT ordered CBP to liquidate all unliquidated entries that were subject to IEEPA duties “without regard to the IEEPA duties.” Additionally, for liquidated entries for which liquidation is not yet final, the CIT ordered CBP to “reliquidate” those entries “without regard to IEEPA duties.” “Liquidation” refers to the finalization of import duties on entries or shipments, which usually occurs 314 days after the date of entry. Under 19 U.S.C. 1501, CBP can voluntarily reliquidate an entry within 90 days after liquidation.

The order is broad — it is not limited to the plaintiffs or importers that filed IEEPA related suits. The court reasoned that all importers whose entries were subject to IEEPA tariffs are entitled to the benefit of the Learning Resources decision. The CIT distinguished Trump v. Casa’s limits on universal injunctions by citing its exclusive nationwide subject matter jurisdiction over import-related claims, the constitutional requirement that duties be uniform throughout the United States, and the consolidation of all IEEPA refund cases before a single judge. 

What This Means

This is an encouraging development for importers because it will require CBP to issue refunds without legal action by the importer, if the order stands. However, the CIT did not provide a timeline for CBP to liquidate, reliquidate, or issue refunds. In a questionnaire response in Atmus Filtration, CBP stated it “still requires a review period to ensure no violation of other Customs laws and no other duties, taxes, or fees are owed (e.g., anti-dumping, Sec. 301 duties, Sec. 232, etc.).” 

In other words, the timeline and mechanism for refunds are still unknown. In addition, the refund process may result in scrutiny of importer entries and an uptick in enforcement action. We are already seeing an exponential increase in CBP Requests for Information (CF-28s) and Notices of Action (CF-29s). We also anticipate that the government will appeal the CIT’s order. Importers will want to monitor this matter closely.

Next Steps for Importers

Until we have more guidance regarding the refund process, importers can take the following steps to position themselves to receive refunds as efficiently as possible: 

• Importers who do not yet have an Automated Commercial Environment (ACE) account should apply as soon as possible. CBP is currently experiencing significant processing delays. An ACE account will allow companies to determine expected refund amounts.
• Importers should register for Electronic Automated Clearing House (ACH) refunds (which requires an ACE account). Under an interim final rule issued earlier this year, CBP indicated it would issue all refunds electronically with limited exceptions.
• Importers should continue monitoring entries for liquidation and filing protests as they come due. The court’s order did not address how refunds for “final” liquidated entries should be addressed and the refund issue may remain in litigation for some time. Companies should continue to preserve their rights to refund via protest. The 180-day deadline after liquidation makes timely action critical.
• Given potential increased CBP scrutiny during the refund process, importers should review past imports for accuracy. 

The International Trade team at AFS has extensive experience counseling clients on these matters, including avenues to preserve your rights to refunds. We are working with our clients to analyze their import data to determine the entries at issue and IEEPA tariffs paid. We are positioning companies to be prepared to quickly apply for tariff refunds if and when the refund mechanism is determined. We are closely monitoring these developments and will issue alerts as more information becomes available. Please reach out with any questions.