CAPE Phase 3 Tariff Refunds Require Litigation
CIT Mandates Lawsuit Filing to Unlock Legacy CAPE Phase 3 Refunds
The U.S. Court of International Trade (CIT) has issued a major regulatory update regarding U.S. Customs and Border Protection’s (CBP) Consolidated Administration and Processing of Entries (CAPE) framework. In a series of pivotal orders issued on July 15, 2026, the Court established a critical operational boundary for the upcoming rollout of CAPE Phase 3.
The decision shifts how companies must pursue refunds for older, “finally liquidated” entries where emergency International Emergency Economic Powers Act (IEEPA) duties were paid.
Key Takeaways
Importers seeking refunds on legacy tariff overpayments under the U.S. Customs and Border Protection’s CAPE framework must now actively take legal action rather than waiting for automated portal processing. Recent orders from the U.S. Court of International Trade clarify that entries liquidated over 80 days ago require an individual lawsuit to unlock Phase 3 reliquidation and successfully claim funds.
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Court Order Mandates Litigation: Passive waiting is no longer an option for older entries; importers must file a protective action under 28 U.S.C. § 1581(i) in the Court of International Trade to gain access to automated CAPE Phase 3 refunds.
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Three-Tiered CAPE Processing: Active or recent entries (under 80 days) qualify for standard Phase 1 or 2 administrative automated declarations, whereas finally liquidated entries (over 80 days) strictly require court approval to pass system validation.
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Special Handling for Open Protests: Entries currently tied up in administrative protests can be systematically withdrawn once an importer secures a specific court reliquidation order, opening the pathway to automated processing.
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Immediate Importer Protocol: Businesses should audit their ACE data reports, separate entries exceeding the 80-day liquidation threshold to assess return on investment, and engage trade counsel to secure inclusion on the master approval list.
1. The Core Update: Litigation Now Required for Phase 3 Access
For months, many commercial importers operating outside active litigation assumed they could simply wait for CBP to open the automated CAPE portal to recover historical 2025 tariff overpayments. The CIT’s July 15 orders have effectively eliminated that passive approach.
The Court made it clear that for entries liquidated beyond the current 80-day CAPE administrative window, importers must first file an individual lawsuit in the CIT to unlock automated refund capabilities.
[Standard Importer File Upload] ──> Blocked by CAPE Phase 3 System Validation
[Active CIT Plaintiff IOR Number] ──> Approved for CAPE Phase 3 Reliquidation
Under this newly clarified framework, the CIT is currently issuing case-specific orders across approximately 3,700 individual pending IEEPA lawsuits. These orders explicitly direct CBP to reliquidate specific historical entries without the illegal Chapter 99 provisions.
Once an importer-specific court order is finalized, CBP will issue specialized filing instructions to the plaintiff’s legal counsel, allowing them to successfully transmit the Phase 3 CAPE declaration through the ACE portal.
2. Strategic Timeline: Mapping the Three CAPE Layers
To ensure your corporate compliance team is deploying resources correctly, review how your current entry backlog maps against the three operational layers of CAPE:
| CAPE Processing Layer | Entry Age & Status | Mandatory Action Required |
|---|---|---|
| Phase 1 (Active Now) | Unliquidated or liquidated less than 80 days ago. | File a standard automated CSV declaration directly in the ACE portal. |
| Phase 2 (Active Now) | Complex Reconciliation (Type 09) or active AD/CVD entries. | Execute file matching and submit via Phase 2 administrative portal workflows. |
| Phase 3 (Late July 2026 Rollout) | Finally liquidated entries (>80 days past liquidation date). | File a protective Section 1581(i) lawsuit at the CIT to get on the master approval list. |
“The CIT’s recent mandate turns CAPE Phase 3 from an automated portal into a high-stakes litigation track—importers must file protective lawsuits or risk forfeiting millions in legacy 2025 tariff refunds.”
3. Potential Expansion to Open Protests
The CIT also disclosed that CBP is developing secondary CAPE functionality designed to process refunds for entries that remain tied up in open, unresolved administrative protests.
Tactical Advisory for Protested Entries: If your company currently has entries sitting in the standard 180-day protest window, you do not need to choose between an administrative protest and a Phase 3 lawsuit. The Court confirmed that once an importer obtains a specific CIT reliquidation order, existing protests can be systematically withdrawn so the refund can cleanly execute via the CAPE automated channel.
4. What Importers Must Do Now
Because the federal government has already successfully processed over $95 billion of the estimated $166 billion in total IEEPA overpayments, the remaining balance consists entirely of these high-friction, finally liquidated historical entries.
To protect your company’s working capital and prevent permanent asset forfeiture, the Brady Ware trade advisory team recommends executing the following protocol immediately:
1. Execute an ACE Entry-Aging Audit:
Pull your comprehensive ES-003 or ES-022 data reports from the ACE portal and isolate all 2025–2026 IEEPA entries. Classify them strictly by the number of days elapsed since their formal liquidation date.
2. Separate the Phase 3 Population:
Isolate all entries that sit past the 80-day liquidation threshold. Because these are completely ineligible for standard Phase 1 or Phase 2 processing, calculate the total dollar value of this legacy pool to evaluate your litigation ROI.
3. Engage Counsel for Protective CIT Filings:
For high-value legacy entry pools, consult with specialized trade counsel to initiate a protective action under 28 U.S.C. § 1581(i). This places your company’s IOR number on the master plaintiff list required to pass Phase 3 system validation.
5. The Bottom Line
The CIT’s July 15 update confirms that CAPE Phase 3 will be a powerful tool for legacy capital recovery, but it will not be handed out automatically to passive bystanders. If your business has substantial capital trapped in entries liquidated more than 80 days ago, sitting back and waiting for the portal to open will result in system rejections. Taking immediate court action is now the required operational step to force open your pathway to an automated IEEPA refund.
Disclaimer: This article provides general information and should not be considered professional financial or tax advice. Please consult with a qualified CPA or financial advisor for guidance specific to your individual business needs.
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Jin leads Brady Ware’s International Tax – Tariff team. With extensive cross-border advisory experience, he provides entity setup, compliance, and M&A services, as well as outsourced accounting and business consulting for international companies and high-net-worth individuals navigating the U.S. market.