Tariff Duty Refunds: Most Recent Updates - Buchanan Ingersoll & Rooney PC

U.S. Customs and Border Protection (CBP) has recently commenced processing refunds for Section 301 duties previously paid on certain goods originating from China. This significant development stems from the U.S. Court of International Trade (CIT) decision in the case of J.C. Penney Company, Inc. v. United States. The ruling determined that CBP's denial of duty refunds was unlawful for goods that underwent a "substantial transformation" in a third country prior to their importation into the United States, but were initially declared as Chinese origin, leading to the assessment of Section 301 duties.

This refund process specifically impacts importers who paid Section 301 duties on goods that were subsequently determined to have undergone a substantial transformation in a third country before their entry into the U.S. Crucially, these importers must have also filed a post-importation country of origin change request, typically through a Post Summary Correction (PSC) or a formal protest, to reclassify the goods as originating from a non-China country. The refunds are not a blanket reimbursement but are targeted at these specific circumstances where the country of origin was correctly changed post-importation to reflect the pre-importation substantial transformation.

CBP began processing these refunds in late May 2024. It is important for the trade community to understand that these refunds pertain exclusively to the scenario outlined by the J.C. Penney decision regarding post-importation country of origin changes. This process is distinct and separate from the ongoing Section 301 exclusion process, which grants relief for specific products, and it is also unrelated to the broader litigation challenging the legality of Section 301 duties themselves, such as the *Slip-Op. 23-162* case.

Given these updates, importers should take proactive steps to assess their eligibility for these refunds:

• Review Past Entries: Importers should meticulously review their past import entries for goods that were initially declared as Chinese origin, paid Section 301 duties, but underwent a substantial transformation in a third country prior to U.S. importation.
• Identify Correction Filings: Verify if a Post Summary Correction (PSC) or protest was filed to change the country of origin to a non-China country for these specific entries. If a PSC or protest was filed and subsequently denied, importers should monitor for the processing of their refunds.
• Understand Time Limitations: Be aware that the window for filing most protests is 180 days from the date of liquidation. If no PSC or protest was filed for eligible entries, it may now be too late to initiate such a claim.
• Consult Trade Counsel: Importers are strongly encouraged to consult with experienced trade counsel to thoroughly evaluate their specific import history and determine potential eligibility for these Section 301 duty refunds.