What Customs Announced

Customs and Border Protection (Customs) announced last week, in a court filing in the Court of International Trade (CIT), that it would finally open up the much-anticipated Phase 3 of CAPE to finally liquidated entries on October 6, with significant exceptions. The announcement has renewed the question of whether businesses should file actions in the CIT to recover tariffs that were improperly imposed under the authority of the International Emergency Economic Powers Act (IEEPA), or whether there is still something to be gained by waiting.

Background: Why CAPE Exists

Customs created the CAPE tool (the Consolidated Administration and Processing of Entries) to comply with an order of the CIT requiring the agency to refund IEEPA tariffs following the United States Supreme Court’s ruling that the President had no authority to issue tariffs under IEEPA.

Since late April, Customs has been processing only:

• Unliquidated entries, and 
• Recently liquidated entries (liquidated within 80 days)

That left questions remaining about whether Customs would refund “finally liquidated entries” (entries that had been liquidated and for which the protest period had expired), especially in light of a pending appeal of the CIT order.

The V.O.S. Selections Appeal

That appeal of four consolidated cases, V.O.S. Selections, Inc. v. United States, No. 26-1895 pending in the Federal Circuit Court of Appeals, challenges orders issued by Judge Eaton in the CIT that broadly require Customs to reliquidate all entries previously subject to IEEPA tariffs and refund those tariffs—regardless of whether the importer had filed a suit in the CIT.

The government is challenging the order as an unlawful universal injunction and asserts that only named plaintiffs are entitled to relief. The appeal does not challenge the substance of those orders, however, and Customs has now confirmed that the agency intends to allow refunds of finally liquidated entries … but only for named plaintiffs with reliquidation orders.

Option 1: File in the CIT Now

Customs’ latest update provides a clear path to refunds for all importers that are tired of waiting and want to pursue their full IEEPA tariff refund. Importers can choose to file an action in the CIT, move to reliquidate their entries without IEEPA tariffs, and hopefully receive an order that will serve as the key to open the door to their remaining tariff refunds.

Option 2: Wait and Watch

But importers that would rather not incur the additional expenses of litigation still have an option to wait it out.  There is no pressing deadline to cash in on available refunds—the two-year statute of limitations will expire at earliest in February 2027, so there is time to wait and see how other litigation will play out.

Patient businesses may still benefit from refunds in one of two ways:

1. A favorable appellate ruling. The V.O.S. Selections case may resolve favorably on appeal (eventually), which would automatically require Customs to refund IEEPA tariffs for all affected parties (presumably when filing through CAPE).  The big question, however, is how quickly this will resolve, given that both parties might be willing to further appeal an order to the Supreme Court.
   
   OR
    
2. Class certification. The CIT may certify a class and open existing litigation results up to all affected importers. Class certification motions have been filed in a few of the CIT tariff cases, with oral arguments in Freestyle World, Inc. v. Customs (1:26-cv-01088-RKE) completed in mid-August. Judge Eaton’s ruling is still pending, but if he orders certification of a class, non-party importers may be able to benefit from the reliquidation orders in that case by filing simple paperwork.

What We Recommend Now

The decision of whether to file a lawsuit now or to wait is a choice that every business should weigh with their legal counsel now that a clear path forward has been paved through the courts.  We continue to recommend the following actions at this time:

1. File for all eligible refunds through CAPE: Ensure that you are registered properly in ACE (Automated Commercial Environment) to be able to file for refunds and receive electronic refunds from Customs when available, and file any entries that are currently available to all importers through CAPE.
2. File protests where deadlines loom: Be prepared to file protests if your protest period is expiring and your entry is not yet eligible for a refund in CAPE. The CIT’s orders do not require protests to be filed to recover refunds, but until this process is final and implemented, filing a protest before the end of the 180-day period after liquidation (and then filing in CIT if that protest is denied) is the safest way to preserve your rights if the CIT’s orders are appealed.
3. Review supply chain contracts: Review agreements and terms and conditions to determine your rights and obligations with respect to IEEPA tariffs refunds.
4. Consult with the Ice Miller International Trade team: The Ice Miller team is monitoring this situation closely and can help you determine your best course of action, whether through litigation or continuing a wait-and-see approach.

How Ice Miller Can Help

As businesses navigate these uncertain and rapidly changing times, the Ice Miller team stands ready to assist and provide guidance on these and other issues. Please contact Meghann Supino, Tim Belevetz, Dale Stackhouse, Grace Dahm, Dakota Coates, or Emily Bullen if you believe we can help.

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This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.