Issue 302, May 30, 2001
On April 18, 2001, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a decision approving a simplified process for challenging the legality of the assessment of the Harbor Maintenance Taxes (HMT) on imports. Specifically, in the case of Thomson Consumer Electronics, Inc. v. United States, Appeal No. 00-1091, the CAFC held that importers are not required to file written protests with Customs against each entry and liquidation as a prerequisite to initiating a refund claim in the U.S. Court of International Trade (CIT). In waiving the normally mandatory protest procedure, the CAFC held that the legality of the import tax could be challenged by filing a summons and complaint directly with the CIT. One summons and complaint should suffice to protect an importer's rights going back for two years from the date of filing and to future payments.

The CAFC's decision does not address the legality of the HMT on imports, but only the procedural issue on how to make a claim. It remanded the case to the CIT for consideration of the merits of Thomson's arguments against the constitutionality of the tax. It is expected that the CIT will render a decision on the merits fairly quickly and, whatever the outcome, another appeal to the CAFC will follow in due course, with the possibility of a further appeal to the U.S. Supreme Court. Therefore, the legality of the HMT on imports is not likely to be resolved until sometime in the future. If successful, however, importers who have participated in the litigation would stand to recover any HMT payment they made going back two years from the date of their summons and complaint, as well as any future payments.

One cannot draw any conclusion from the Thomson Consumer decision as to whether the courts will ultimately strike down the tax or not. The CIT and the CAFC have already rejected one importer's argument that the tax as applied to imports is improper; however, the CAFC only addressed one legal theory in that case. Other theories attacking the tax's constitutionality, while rejected by the CIT, have not yet been addressed by the CAFC. One can anticipate that those arguments will be briefed again for the CIT in the Thomson case, and that the subsequent CIT decision on those issues then would be reviewed by the CAFC.

Our contributing writer, F.D. "Rick" Van Arnam, is a Partner at the international trade and Customs law firm of Barnes, Richardson & Colburn in New York, and can be reached at (212) 725-0200.

Please note that due to the complex nature of the subject matter, Danzas AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with Danzas AEI.