CAPE Phase III and CIT Refund Litigation
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Importers should consult qualified legal counsel regarding litigation strategy or rights associated with the pending Court of International Trade and Federal Circuit proceedings.
What Importers Need to Know
July 2026 Update
U.S. Customs and Border Protection (CBP) continues to expand the Consolidated Administration and Processing of Entries (CAPE) refund program following recent court decisions involving duties collected under the International Emergency Economic Powers Act (IEEPA).
The latest developments surrounding CAPE Phase III and the July 15, 2026, Court of International Trade (CIT) order are especially important for importers with finally liquidated entries that were previously considered ineligible for administrative refunds.
Background
Earlier this year, the U.S. Supreme Court ruled that the challenged IEEPA tariffs were unlawful. The Court of International Trade then directed the government to refund improperly collected duties.
To support this process, CBP introduced the CAPE refund program in three phases:
Phase I – Unliquidated entries and entries still within the statutory reliquidation period.
Phase II – Expanded eligibility to include many reconciliation-flagged entries and certain additional entry types.
Phase III – Designed to address finally liquidated entries, which have historically been the most difficult for CBP to refund administratively.
Why Phase III Matters
Until now, many importers believed that once an entry became finally liquidated, recovering IEEPA duties would require lengthy litigation—or might not be possible at all.
Phase III is intended to provide CBP with the technical capability to process refunds for these entries. However, technical capability does not automatically provide legal authority, and that distinction remains central to the ongoing litigation.
The Current Legal Issue
The Department of Justice continues to argue that CBP cannot reliquidate finally liquidated entries without a court order that specifically applies to the importer.
Meanwhile, the Court of International Trade has indicated that it plans to issue additional orders directing CBP to reliquidate certain finally liquidated entries using CAPE Phase III procedures.
Whether refunds will ultimately extend beyond importers that filed lawsuits remains under review by the U.S. Court of Appeals for the Federal Circuit.
Court Update - July 2026
On July 15, 2026, the Court of International Trade issued one of its clearest statements to date regarding the next phase of the refund process.
Key developments include:
CAPE Phase III remains under development.
CBP is expected to implement procedures for processing certain finally liquidated entries.
Approximately 3,700 pending IEEPA cases are expected to receive case-specific orders directing CBP to reliquidate qualifying entries once Phase III procedures are available.
Litigation continues before the Federal Circuit regarding the government's challenge to broader refund eligibility.
What This Means for Importers
Not every entry will follow the same refund process.
Current guidance generally indicates:
Unliquidated entries continue through the CAPE refund process.
Many reconciliation entries are now eligible under Phase II.
Finally liquidated entries remain dependent on Phase III implementation and the outcome of ongoing litigation.
Juno's Recommendations
Juno Customs Solutions recommends that importers:
Identify all entries that paid IEEPA duties.
Separate those entries into:
Unliquidated entries
Reconciliation entries
Finally liquidated entries
Monitor future CBP CAPE announcements and Court orders.
Consult qualified international trade counsel if significant refunds may depend on the outcome of the CIT litigation.
Maintain complete entry documentation so potential refund opportunities can be acted on quickly.
Our Outlook
The Court's recent order suggests that refund opportunities may continue to expand, but important legal questions remain unresolved.
The ultimate scope of refunds for finally liquidated entries will likely depend on:
Future Court of International Trade orders
The Federal Circuit appeal
Additional CBP guidance for CAPE Phase III
Importers should avoid assuming that all refund eligibility questions have been settled. Companies with significant IEEPA duty exposure should continue monitoring developments as Phase III implementation progresses.
Need Assistance Evaluating Your Refund Opportunities?
Juno Customs Solutions can help importers with:
CAPE eligibility reviews
Entry-by-entry refund analysis
Historical ACE data reviews
Identification of potentially recoverable duties
Coordination with legal counsel regarding litigation-related refund strategies
Our team continues to monitor every CBP announcement, Court of International Trade order, and CAPE update to help clients stay informed as this refund process evolves. For questions regarding these changes, please contact us at brokerage@junocustoms.com