Following the U.S. Supreme Court’s ruling striking down most of the tariffs imposed by President Donald Trump under International Emergency Economic Powers Act of 1977 (IEEPA), and the Court of International Trade declaration that "every single cent of IEEPA duties that were imposed must be returned,” the question for U.S. Customs and Border Protection (CBP) — and importers — has been how to refund more than $166 billion in IEEPA tariffs collected over 53 million entries filed by over 330,000 importers.

The answer is CBP’s “Consolidated Administration and Processing of Entries” system, or “CAPE,” a new tool built within the Automated Commercial Environment (ACE) and designed to streamline and consolidate the refund process.

CAPE Phase 1

CBP launched Phase 1 of CAPE at 8 a.m. April 20. The new system is designed to consolidate refunds of IEEPA duties, including interest, rather than processing refunds on an entry-by-entry basis. Phase 1 is limited to certain unliquidated entries and certain entries within 80 days of liquidation, which CBP estimates will cover over half of the entries on which importers paid IEEPA duties. More complex categories — including entries flagged for reconciliation, entries on drawback claims, entries covered by open protests, certain AD/CVD entries and entries for which liquidation is final — will be addressed in subsequent phases.

Who May File

The Court of International Trade has confirmed that the use of CAPE is not limited to importers who have filed a lawsuit at the CIT. All eligible importers may participate in the refund process. Still, only the Importer of Record (IOR) or the authorized customs broker who filed the entries on the IOR's behalf may file for a refund through CAPE.

How the CAPE Process Works

There are four general steps of the CAPE system: (1) Claim Submitted; (2) Claim Processed; (3) Review and Liquidation/Reliquidation; and (4) Issuance of a Refund.

Submitting a Claim

The process begins when an IOR or authorized broker submits a “CAPE Declaration” using the new CAPE tab in the ACE Portal. The declaration is a “comma-separated values” or “.csv” file listing the entries for which IEEPA refunds are requested — no other entry-related information is required, only entry numbers. Entry numbers are not limited to alphanumeric characters: CBP will accept entry numbers both with and without a dash. Each CAPE Declaration has a limit of 9,999 entries but IORs and brokers may file multiple declarations.

Claim Processed

After submission, CBP validates the claim in two steps: First, the system performs file-level validation to confirm that the declaration contains properly formatted entry numbers; that the submitter is either the IOR or the authorized broker; and that the CSV file is not corrupted. Second, the system runs entry-specific validations to confirm that each entry number exists in ACE, has at least one IEEPA HTS Chapter 99 code declared and is not duplicated in the same or a prior declaration.

If a claim submission fails the first step, the CAPE Declaration will be rejected and specific errors identified so filers may correct and resubmit the declaration. However, if an entry-specific validation fails, that entry will be removed from the declaration and the system will continue processing the remaining entries. The rejected entries may corrected and resubmitted in a separate CAPE Declaration.

Review and Liquidation/Reliquidation

Once validated, the entries will be updated by removing the IEEPA-related HTS Chapter 99 provision(s) and corresponding duty(s), recalculating the duties owed as if IEEPA duties were never imposed and creating an updated version of the entry. For unliquidated entries, CBP will set them to liquidate 45 days from the CAPE Declaration acceptance date. Liquidated entries will reliquidate the next business day. Interest is calculated on refunds in accordance with applicable CBP regulations.

Refunds Issued

Refunds will only be paid electronically via Automated Clearing House (ACH). Importers must have completed the ACH registration and have bank account information on file with CBP to receive a refund. CBP expects valid IEEPA refunds to be issued within 60-to-90 days following acceptance of a CAPE Declaration, absent compliance concerns requiring further review. Importantly, once a CAPE Declaration has been filed and accepted, it cannot be amended; any omitted entries will require a new CAPE Declaration.

Compliance Considerations

Each declaration requires the filer to certify that: “I certify that I am legally authorized to make this filing, and that in doing so I have complied with all applicable laws, regulations, and instructions.” The certification presents potential exposure to penalties or enforcement if entries are later found to contain errors such as misclassification, undervaluation or incorrect origin.

Importers can conduct a targeted compliance review and identify any risks posed by historically noncompliant entries before including them in a CAPE Declaration. Companies with longstanding IEEPA-dutiable supply chains may find that CAPE creates both an opportunity to recover significant duties and an obligation to reconcile past compliance gaps.

Steps to Prepare for Filing a Refund

To prepare for filing a CAPE Declaration, importers should:

Establish or verify your ACE Portal account. Importers and brokers must have an active ACE Secure Data Portal account to file CAPE Declarations. Note that it is taking upwards of a month to apply for a new account.

Enroll in ACH refunds. All refunds are issued electronically via ACH, and refunds will not be processed without bank account information on file. Despite more than 330,000 importers having paid IEEPA duties, less than ten percent (10%) have completed electronic refund setup as of early March.

Identify eligible entries. Compile a list of entries that are eligible for IEEPA refunds under Phase 1 — specifically, unliquidated entries and entries within 80 days of liquidation. The ACE Portal is the best source for this data.

Monitor liquidation and protest deadlines. Entries approaching the 180-day protest window require particular attention. Importers can continue to protest entries nearing the 180-day deadline, as the timeline for subsequent phases of the refund process is uncertain. Failure to file a protest could result in forfeiting a claim.

Review entries for accuracy before filing. Because accepted CAPE Declarations cannot be amended and CBP may review the accuracy of underlying entries, importers could ensure there are no duplicative entries and no other compliance concerns such as origin, tariff classification or value issues that could trigger additional review.

Consider how refunds may impact obligations to stakeholders. Some customers that shared in the cost of IEEPA tariffs may seek to recover a share of the duties paid. Companies can review contractual provisions addressing tariffs, surcharges or price adjustments, as well as analyze how tariff impacts were reflected in invoices, pricing decisions and public statements.

Consider filing an action at the CIT. For entries for which liquidation is final, importers could evaluate whether filing an action at the Court of International Trade is necessary to preserve their rights to recovery.

Looking Ahead

While the CAPE system is a significant step toward refunding IEEPA duties, legal and procedural uncertainties remain. CBP will continue to develop additional CAPE functionality through subsequent phases to address more complex entry categories. The Court of International Trade continues to oversee the refund process, with CBP required to submit periodic progress reports.

Initiating the refund process may also be a significant step toward claims both against third-party suppliers and by third-party customers looking for refunds of duties paid. IORs may want to consider reviewing existing contractual arrangements and the amount, if any, of refunded tariffs paid to suppliers or flowed down to customers. Depending on the circumstances, IORs may want to prepare for or potentially mitigate the impact of such third-party claims. Early action can help minimize risk and maximize recovery.

Miles & Stockbridge’s international trade lawyers have developed an IEEPA tariff recovery and risk management framework and will be monitoring the CAPE process to advise importers on navigating the system.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.