Customs and Border Protection (CBP) submitted a status report to the United States Court of International Trade (CIT) regarding refunds of tariffs imposed under the International Emergency Economic Powers Act (IEEPA).
Previously, the CIT ordered CBP to refund IEEPA tariffs on unliquidated entries and entries where liquidation is not yet final. However, the court temporarily suspended immediate compliance after CBP advised that implementing such refunds would require significant system development.
CBP had earlier proposed building new functionality within the Automated Commercial Environment (ACE) to manage the refund process. Under that framework, importers or the customs brokers who filed the entry originally would submit a declaration identifying entries where IEEPA duties were paid. ACE would validate the entries, recalculate duties without the IEEPA tariffs, calculate applicable interest and process refunds.
New ACE Functionality: CAPE
In its latest report, CBP indicated that the new ACE functionality will be called CAPE (Consolidated Administration and Processing of Entries). The system will consist of four components:
- Claim portal in ACE
- Mass processing
- Review and liquidation/reliquidation
- Refund processing
By outlining this process, CBP proposes that importers or their customs brokers will be responsible for submitting refund claims prior to final liquidation of the entry, rather than CBP automatically issuing refunds. CBP did not specify exactly which data elements will be required for these submissions, instead just providing an overview of the process.
Development Status
CBP reported the following progress on the CAPE system:
- Claim portal: Approximately 70% complete
- Mass processing: Approximately 40% complete
- Liquidation/reliquidation: Approximately 80% complete
- Refund processing: Approximately 60% complete
CBP did not provide a timeline for full completion of any component or a timeline for when CAPE would go live in ACE.
Scope Limitations
At least initially, CAPE will not apply to:
- Antidumping (AD) or countervailing duty (CVD) entries
- Entries with suspended, extended or under-review liquidation status
- Certain entry types, including warehouse withdrawals and entries tied to drawback claims
- Finally liquidated entries
Next Court Deadline
Judge Eaton has ordered CBP to submit another implementation status report to the CIT by March 19 at 2:00 p.m. ET, signaling continued judicial oversight of the refund process.
Practical Implications for Importers
At this stage, the refund process remains uncertain. Until the CAPE system is operational and further guidance is issued, importers should continue to protect their rights by considering available options, including filing protests on liquidated entries or seeking trade counsel to potentially file a lawsuit, if appropriate.
Importers should also ensure they have an ACE account with automated clearing house (ACH) refund functionality enabled, as this will be required to receive refunds once the CAPE process becomes available. CBP previously reported that only approximately 6% of importers have opted in to the mandatory electronic refunds via ACE.
