Tuesday, August 07, 2018

Lamps, Laterns, and Justice

The Court of Appeals for the Federal Circuit has affirmed the Court of International Trade decision in The Gerson Company v.United States. This is the case you may remember from here, in which we discussed the difference between a lamp and a bulb.

As is the case in most classification cases, the issue on appeal was the same as it was below. Here, that means whether artificial tea light candles and similar devices are "lamps" of Heading 9405 or "electrical machines and apparatus . . . not specified or included elsewhere" of Heading 8543. It is relevant for purposes of discussion that Heading 8543 includes the subheading "electric luminescent lamps," at 8543.70.70 (now .71)

The Court of Appeals agreed that in a "hyper technical" sense, the artificial candles are electrical machines or apparatus. But, they are also lamps. What to do?

The Court noted that the apparent conflict (or ambiguity) can be resolved by reading the statute as a whole. Context matters. Looking at it in that light the Court found that 8543 must be more limited in scope than was proposed by plaintiff. If lamps are electrical machines and apparatus of 8543, and consequently excluded from 9405, what remains of 9405? Only non-electric lamps. That seems incongruous in that 9405 expressly covers searchlights and spotlights, which are presumably electrical. Furthermore, the Explanatory Notes describe lamps of 9405 as including lamps of any material that use any source of light, including electricity.

That would include lanterns. This one, for example, is perpetually powerful and able to recharge all your devices, including any extraterrestrial power rings you may have received from dying pink aliens. It would not be very useful in brightest day, but would be welcome in blackest night. [Yes, it has been a while since I did that kind of aside. It feels good.]

The description of electric lamps as complete items squares with the Explanatory Notes to Chapter 85, which describes that chapter as covering electrical goods not generally used independently. Rather, goods of Chapter 85 tend to play a particular role as a component in electrical equipment. To me, that sounds like a "bulb."

Gerson made several valiant arguments to overcome this analysis. It argued against using the Explanatory Notes to add limitations to the plain meaning of a Heading. It also argued that the Court of International Trade improperly treated these competing headings as controlled by use. Neither argument gained any traction.

There are a couple important analytical points to take from this case. First, the HTSUS is a statute that will be read as a whole to avoid conflicts. Any classification analysis that eliminates a potential heading must do so producing a consistent and logical reading of both headings. You can't leave one heading so limited in scope as to be effectively meaningless.

Second, always compare headings at the heading level. The fact that "electric luminescent lamps" appears in a subheading of 8543 does not dictate the scope of the heading.

One last point I think is worthy of note. The Court of International Trade almost always starts a classification analysis noting its obligation to reach the correct result. This comes from a 1984 Court of Appeals decision called Jarvis Clark Co. v. United States. The opinion was written by visiting Senior Circuit Judge John Minor Wisdom. Initially, it is important to linger at the beauty of being a judge named "Wisdom," (ignore the "Minor" part). That is like being a doctor named "Jane Curesall" or a super-villain named "Ed Nigma."

Regarding the Court's obligation to find the correct result, the Court of Appeals instructed:
The clear intent of Congress was to change the operation of the dual burden by requiring the Court of International Trade to reach a correct result. This requirement is not inconsistent with the presumption of correctness embodied in § 2639(a)(1). The importer still has the burden of establishing that the government's classification is wrong. Ordinarily it will be difficult to meet this burden of proof without proposing a better classification. But the trial court cannot determine the correct result simply by dismissing the importer's alternative as incorrect. It must consider whether the government's classification is correct, both independently and in comparison with the importer's alternative. In some cases, the government's classification may be so patently incorrect that the importer can overcome the presumption of correctness without producing a more satisfactory alternative. In other cases, the importer's alternative may have faults and yet still be a better classification than the government's. In either case, the court's duty is to find the correct result, by whatever procedure is best suited to the case at hand.
Apparently, this obligation does not attach to the Court of Appeals.  I gather that because in footnote 3 of this decision, the Court points to two alternative classifications, neither of which Gerson presented as alternative classifications. Because they were not argued, the Federal Circuit did not consider them. Had the CIT been aware of these alternatives, under Jarvis Clark, I think it would have been obligated to consider and, as appropriate, reject them. There may be no practical consequence to this difference in process. But, someday, there will be an odd case in which the best classification occurs to neither of the parties and not to the CIT. In that case, I guess the Federal Circuit would remand for further consideration.

Sunday, July 29, 2018

Swimways Floaties Classification

I often say that tariff classification cases rarely depend on disputed facts and, in my view, generally do not turn on facts not clear from an examination of the imported product. In other words, I often think these cases present fewer issues and can be more easily resolved than is the common view. 
That said, there are obvious examples of where this is not the case. One example is Swimways Corp. v. United States, in which the Court of International had to undertake a fairly detailed factual analysis to determine the essential character of recreational floatation devices made of plastic inflatable floatation bladders, textiles mesh, and a metal spring that permits the deflated device to be compacted and then snap back to shape for use. The case involves two groups of floaties, the first are designed for adults. The second are designed for young children to help acclimate them to water as the first part of a learn to swim program.

U.S. Customs and Border Protection classified these floaties (which is my word, not the parties’) as other textile articles in Heading 6307. The importer protested and asserted that the correct classification for the adult floaties is in 3926 as other articles of plastics. For the child floaties, the plaintiff claimed that the proper classification is in Heading 9506 as an article for general physical exercise.

Let’s deal with that last part first. “General physical exercise” is not defined in the tariff schedule, nor in the Explanatory Notes. The Court looked to the Oxford English Dictionary for the meaning of “exercise” and found it to be training for the purpose of improving the body, mind, or spirit. Physical exercise is more specifically “excursion undertaken with a view with a view to the maintenance or improvement of health.

The packaging for the baby floatie, on the other hand, explained that it was useful for introducing infants to the water. It also helps them stay comfortable and happy in the water. Even though this may be an important first step in learning to swim, it is not physical exercise. Thus, the Court rejected this proposed classification.

As a result, the floaties are all going to be classified in the same heading.

Analytically, this is a useful decision to read. It very methodically goes through the legal and factual issues and illustrates how a classification should be determined. The first important decision the Court made is that neither Heading 3926 nor Heading 6307 fully describes these articles.

Heading 3926 covers “Other articles of plastics and articles of other materials of headings 3901 to 3914.” Heading 6307 covers “Other made up articles, including dress patterns.” Note 1 to Chapter 63 specifies that the goods of that Chapter must be “of textile.” Neither heading fully describes the floaties. For example, neither describes the metal spring. Further, 3926 does not include the textiles and 6307 does not include the plastics.

Because of that, the headings and the relevant legal notes do not resolve the classification. As a result, the Court moved on the determining classification on the basis of the material that imparts the essential character to the floaties. I am not going to through all of it. Here are the highlights: 

The Court differentiated between materials and components for purposes of identifying essential character. With respect to materials, the Court held that by weight, bulk and value no material predominates. Consequently, the Court moved on to components.

Looking at each, the Court found that the inflatable plastic bladders provide the floatation to the floaties. This is, obviously, pretty key. In addition, the bladders are the most complex parts to produce. They are also the most expensive components. Those factors convinced the Court to classify the floaties in Heading 3926.

There was a bonus issue in this case. I suspect, but do not know, that this bonus issue came as a surprise to the parties. That can happen, in part, because the Court of International Trade has a mandate to find the correct classification, whether or not the correct classification was argued by either party.

The additional issue relates to an accessory to the baby floatie, which is a combination toy with four inflatable arms. On three of the four arms is an infant toy: a stacker, a squeaker, and a soft star. On the fourth arm is a teether. What to do with this accessory, which comes with the floatie?

One might expect that the toys would be included in the classification of the floatie as part of a retail set. The Court did not take that approach. Rather, pointing out that the “octopus” of toys and teether are not used in conjunction with the floatie for the purpose of floatation. They also do not rely on the floatation device for their use or value. Consequently, the Court classified the toy array separate from the floatation devices. That resulted in the floatation devices, which are not retail sets, being classified in 3926 along with a separate retail set of toys of Heading 9503.

Saturday, July 21, 2018

Jurisdiction Argument Goes Up In Smoke

U.S. Customs and Border Protection is the agency responsible for the collection of federal excise taxes. Recently, a question has come up regarding which court is the proper venue for an action to collect these taxes. Turns out, that is not as clear as you might have thought. United States v. Maverick Marketing, LLC Et Al., tries to sort that out.

Maverick Marketing and Good Time USA were involved in an agreement to import tobacco. Under 26 USC 5701, importers of tobacco are liable for federal excise taxes. The United States has alleged that Maverick and Good Times made material false statements and/or omissions when entering tobacco products into the United States and, as a result, deprived the government of excise taxes. A previous decision (Slip Op. 18-16) of the Court of International Trade denied defendants' motion to dismiss for failure to state a claim.

The jurisdiction problem arises from the language Congress used in the statute defining the jurisdiction of the Court of International Trade.  Keep in mind that the Court of International Trade, like all federal courts, can only act within the jurisdiction granted to it by Congress. For cases the United States brings to collect a penalty assessed by Customs, the relevant statute is 28 USC 1582, which says:

The Court of International Trade shall have exclusive jurisdiction of any civil action which arises out of an import transaction and which is commenced by the United States—
(1) to recover a civil penalty under section 592, 593A, 641(b)(6), 641(d)(2)(A), 704(i)(2), or 734(i)(2) of the Tariff Act of 1930; 
(2) to recover upon a bond relating to the importation of merchandise required by the laws of the United States or by the Secretary of the Treasury; or 
(3) to recover customs duties.
What's missing from that?

This case is about about recovering federal excise taxes, not customs duties. Federal excise taxes are not mentioned in the statute. Furthermore, this part of the case is not about recovering a penalty; it is only about the taxes. To the extent that the surety was also a defendant, the Court does have jurisdiction under subsection (2) to recover on the bond.

The Court of International Trade was able to see its way through this and find it has jurisdiction. The key is that Section 1582 gives the Court "exclusive jurisdiction of any civil action which arises out of an import transaction and which is commenced by the United State . . . to recover a civil penalty under" section 1592. Section 1592(d) permits the United States to seek the recovery of any duties, taxes, or fees it was deprived of as a result of the false statement or omission. Furthermore, 1592(d) states that Customs may recover lost duties, taxes, and fees even if no penalty is assessed. Consequently, when subsection (1) gives the CIT jurisdiction over a claim to recover a civil penalty under section 1592, that necessarily includes the recover of unpaid taxes and fees, despite subsection (3) being silent as to taxes and fees.

The Court also held that the federal excise taxes are legally equivalent to customs duties for purposes of jurisdiction. Boiling it down: The taxes on tobacco products are imposed on imported merchandise, become due at the time of entry, and are collected and administered by Customs. The taxes are also based on the value of the imported merchandise and reported on the entry documents. All in all, they are handled as if they are duties. This finding is consistent with a federal appeals court case from 1951 that was referenced in the relevant legislative history to 28 USC 1582. It also comports with the ancient legal principal "Si is vultus amo a anatis, natat ut anates, et quacks quasi anas est anatem tum verisimile."

On those two grounds, the Court found it had jurisdiction over is action brought by the government to recover federal excise taxes.

Sunday, July 08, 2018

Duty Drawback, TFTEA, and Administrative Delay

Tobacos de Wilson, Inc., et al. v. United States, et al. is an effort to force Customs to apply amended drawback law after the statutory deadline but before Treasury has completed the regulatory process. It is pretty in the weeds but is important to drawback claimants. In the bigger picture, it is a good example of using the Courts to ensure that administrative agencies are meeting congressional mandates for action.

The Trade Facilitation and Trade Enforcement Act of 2015 (known awkwardly as "TFTEA," which is pronounced "tiff-TEE-ah" in my office) made three important changes to the duty drawback law. Those changes, intended to make drawback less cumbersome, include: a change to the standard for substitution manufacturing drawback; a change to the test for commercial interchangeability for substitution unused merchandise drawback; and an expansion of the period for filing drawback claims.

Under the law, Treasury (remember, drawback is all about the money) had two years to pass regulations implementing TFTEA. That two-year period expired on February 24, 2018 without implementing regulations. Apparently, a draft Notice of Proposed Rule Making is been sent to Office of Management of Budget for review. Under the statute, starting February 24, 2018, drawback claimants can elect to proceed under the pre-amendment version or under the TFTEA.

On February 5, 2018, Customs and Border Protection published a Guidance Document (the link goes to Version 3)stating that it would not apply the TFTEA until the pending regulations are fully promulgated. That guidance also included restrictions on drawback not included in the TFTEA. Among those restrictions is the denial of accelerated disposition for TFTEA claims pending the new regulations.

The first question, as is always the case, is whether the Court of International Trade had jurisdiction to hear this challenge to CBP's Guidance Document. The Administrative Procedure Act, 5 USC 702, gives individuals a means to challenge a final agency action. But, it is not a jurisdictional statute. Some other statute must grant the court hearing the case the authority to do so. In this case, jurisdiction is based on 28 USC 1581(i)(4), which gives the Court of International Trade exclusive jurisdiction over "civil actions commenced against the United States, its agencies, or its officers, that arise out of any law of the United States providing for administration and enforcement with respect to, among other things import revenue collection. According to the Court, the Guidance Document, which is an operative statement of CBP policy and details how drawback claims are to be processed, is a final agency action subject to review. Consequently, this case is properly before the CIT.

Thus, under the APA, the question to be resolved is whether the policy stated in the Guidance Document is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law or is without observance of procedure required by law.

Plaintiffs' first and second counts relate the allegation that the Guidance Document illegally limits a claimant's rights to accelerated payment. Accelerated payment of drawback claims is a regulatory provision that does not depend on the drawback statute, either pre- or post-TFTEA. See 19 CFR 191.92. Under the Guidance Document, CBP would continue to grant accelerated payment for claims filed under the old law but would decline accelerated payment for claims filed under TFTEA. According to plaintiffs, this is inconsistent with the regulations, especially 19 CFR 191.0, which states generally that the regulations apply to all drawback claims. Plaintiffs' reading of that makes it applicable to TFTEA claims as well.

The Court of International Trade rejected that argument. According to the Court, TFTEA requires Treasury to determine the calculation methods to be applied to refunds. Those methods will be determined in the regulations. Thus, for claims filed under TFTEA, the law requires a determination as to methodology that has not yet occurred. The regulation, therefore, is inconsistent with the statute and is invalid when applied to a TFTEA claim.

Plaintiffs also challenged two limitations on TFTEA drawback claims: the "first-filed" and "mixed use" rules. The first-filed rule means that the first claim made relating to a line on an entry will dictate the type of drawback available to be applied to the remaining merchandise on the line. This can limit the drawback available to claimants if, for example, some of the merchandise was first claimed on the basis of direct identification. All subsequent claims for that entry line must also be based on the direct identification method. Under the mixed use rule, claimants must identify entry lines that are subject to both pre-TFTEA and TFTEA claims. Under the most recent Guidance Document, CBP will accept these claims, but not process them until the regulations are passed.

Because CBP will not be enforcing these rules until the regulations are in place, the Court found these claims to be moot.

Plaintiffs next argued that the deadline for implementing regulations was mandatory and that the government's failure to comply entitles Plaintiffs to relief. The Court agreed that the deadline in the statute s clear and mandatory. Plaintiffs and other claimants are being deprived of benefits Congress intended to be in place by now. This, according to the Court, is a violation of the law.

The question is what to do about that violation? The Court had already ruled that the plaintiffs do not have a right to accelerated payment under TFTEA. Consequently, it refused to order it. The Court also found that it was not yet necessary to order Treasury to complete the regulatory process by a date certain. Instead, the Court ordered that if the government did not complete the process by July 5, 2018, the Court would consider imposing a deadline. [Note, this opinion was issued on June 29, 2018.] On top of that, the Court noted its willingness, if necessary, to craft further relief to ensure that the benefits of TFTEA are not lost due to administrative delay.

Thursday, July 05, 2018

Archaeological Pieces Under 9705 HTSUS

As of July 1, 2018, importers of archaeological pieces have to report their merchandise to U.S. Customs and Border Protection with new detail. That is because the U.S. has added a new statistical breakout for these items and two related statistical notes.

Prior to January of 2018, Heading 9705 provided, in its entirety:

Click Image for Better View

For people who trade in these items, those who study the legal and illegal trade in antiquities, and (presumably) enforcement agencies, lumping archaeological, historical, and ethnographic pieces together did not provide adequate detail about what is entering the country. As previously drafted, 9705.00.0070 covered items as diverse as a 1936 Bugatti race car and an Egyptian Stone Ushabti  from the 18th Dynasty.

Working on behalf of the U.S. Committee of the Blue Shield and with the support of several interested not-for-profit entities, we asked the 484(f) Committee to further divide this provision to separately identify, in particular, archaeological items.  The result is a new level of detail on the treatment of the items in Heading 9705 and new statistical notes to add clarity to the language. As a side benefit, there is now also a recognition that coins can, depending on age and how they were collected, constitute archeological pieces.

The new 9705 reads as follows:

Click Image for Better View

Note that the subheading for coins now includes the limitation "other than archaeological pieces." Beyond that, there are new breakouts at .75 for archaeological pieces and .80 for ethnographical pieces. Both breakouts reference statistical note 1, which reads:

For the purposes of statistical reporting number 9705.00.0075, "Archaeological pieces" are objects of cultural significance that are at least 250 years old and are of a kind normally discovered as a result of scientific excavation, clandestine or accidental digging or exploration on land or under water. For the purposes of statistical reporting number 9705.00.0080, "Ethnographic pieces", which may also be called "ethnological pieces" are objects that are the product of a tribal or nonindustrial society and are important to the cultural heritage of a people because of their distinctive characteristics, comparative rarity or their contribution to the knowledge of the origins, development or history of that people. See Customs and Border Protection (CBP) Informed Compliance Publication on "Works of Art, Collector's Pieces, Antiques, and Other Cultural Property".

To ensure that the reporting of archaeological pieces is not obscured in sets or collections imported as a whole, the tariff includes new statistical note 2, which reads:

For statistical reporting of merchandise provided for in subheading 9705.00.00, collections made up of articles of more than one type of cultural property, i.e., zoological, biological, paleontological, archaeological, anatomical, etc., shall be reported by their separate components in the appropriate statistical reference numbers, as if separately entered.
These new data present some important opportunities. To the extent importers are properly reporting the full tariff item and statistical suffix at the time of entry, Customs and Border Protection will have better data to focus on imports that might be subject to restrictions under the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export, and Transfer of Ownership of Cultural Property. That Convention is implemented in the U.S. as the Convention on Cultural Property Implementation Act ("CCPIA"), 19 USC 2601-2613 and in customs regulations at 19 CFR 12.104-12.109. Under these laws and regulations, the U.S. can extend protection to archaeological and ethnological materials from States that have ratified the Convention and for which the United States has entered into a bilateral agreement.  There is also a mechanism to unilaterally extend emergency protection. Covered items cannot be imported to the United States without documentation showing that their exportation was not in violation of the laws of the originating State or that their importation was otherwise permitted under the CCPIA.

For products not properly declared as archaeological or ethnographic pieces using the correct statistical suffix, the failure to do so might expose the importer to penalties under the customs laws. This is not new, but by separating archaeological and ethnographic pieces from historical pieces, an importer will not be able to assert that it item is a historical piece to disguise its true nature while reporting the correct statistical suffix covering historical pieces as well as archaeological and ethnographic pieces. The importer will now have to pick one and get it right.

While it is true that errors in statistical reporting do not usually result in a customs penalty, this circumstance is different in that the correct reporting goes to admissibility of the merchandise. For items subject to protection under the CCPIA--including those from Iraq and Syria that are protected under special legislation--admissibility depends on the documentation showing legal exportation. The new reporting requirements should help to flag those items and give Customs an additional point of enforcement action.

Why does this matter? Mainly because regardless of the source or nature of the item, the United States, as a party to the Convention has made a policy decision that it wants to help countries preserve their cultural heritage by working to reduce illicit trade in these items. On top of that, there is strong evidence indicating that the illegal sale of looted artifacts has been a source of operating income for terrorist organizations and that this has resulted in significant destruction to priceless sites. See, for example here and here. We are hopeful that these and possibly future changes to the HTSUS will provide Customs, researchers, and traders with better data from which to monitor legal and prevent illegal trade in cultural property.

Sunday, July 01, 2018

Game of Thrones, the HTSUS Edition

Heading 9817 of the Harmonized Tariff Schedule of the United States includes a subheading covering the following:

Articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons; parts and accessories (except parts and accessories of braces and artificial limb prosthetics) that are specially designed or adapted for use in the foregoing articles: 

The question presented to the U.S. Court of International Trade in Danze, Inc. v. United States is whether certain toilets and toilet tanks fall within this subheading and are, therefore, entitled to duty-free entry to the United States.

The basis for the plaintiff's argument is that the merchandise complies with the Americans With Disabilities Act. The toilets include the Orrington High-Efficiency One-Piece model shown here and the Cirtangular Two-Piece. The tank involved is the Orrington tank. Note that none of these products have any obvious adaptations for the disabled such as grab bars. Nevertheless, the toilets meet the ADA requirements for accessibility. According to Danze literature, the ergonomics of the toilets make sitting and standing more comfortable for users.

Tariff item 9817.00.96 implements the Nairobi Protocol to the Florence Agreement on the Importation of Educational, Scientific and Cultural Materials. Part of the intent of the protocol is to provide “duty free treatment to articles for the use or benefit of the physically or mentally handicapped persons, in addition to articles for the blind."

There are two question that relate to the application of this provision to imported goods. First, is the item specially designed in some way to accommodate the user? Second, is that accommodation related to a physical or mental handicap? According to the legal notes to Chapter 98, "'physically or mentally handicapped persons’ includes any person suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities, such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working.”  U.S. Note 4(a), Subchapter XVII, Chapter 98, HTSUS. 

"Specially designed" is not defined in the HTSUS. However, Courts have previously construed this term and the legislative history provides guidance. In the end, the Court held that  “articles specially designed for handicapped persons must be made with the specific purpose and intent to be used by or benefit handicapped persons rather than the general public.” Moreover, "[a]ny adaptation or modification to an article to render it for use or benefit by handicapped persons must be significant."

There is no debate that these products comply with the ADA and associated federal guidelines. The question is whether that is enough to meet the classification requirement. According to the Government in this case, mere compliance with the ADA is not sufficient to show a significant adaption.

According to the Court, the ergonomic design of these toilets (and the associated tank) is primarily the seat height, which makes them comfortable. This toilet height has become a popular option for general consumers, not just (or predominantly) the disabled. This is also true of the flush controls and the elongated bowl design.

Without more evidence of specific and significant adaptation to disabled users, Danze was unable to show that these toilets were specially designed or adapted for the use or benefit of the disabled. Rather, it appears that they are consumer-oriented products that also satisfy the requirements of the ADA. Accordingly, the Court of International granted summary judgment in favor of the United States.

Tuesday, June 26, 2018

Let's Talk About Bugs

The United States Department of Agriculture has the important obligation to protect American farms, orchards, forests, parks and backyards against the damage that can be caused by plant diseases and pests that enter the United States through our ports of entry. This is derived from the Plant Protection Act, 7 USC 7701. For commercial importers, the most common pest vector is the humble wooden pallet, which can house and transport a number of pests including horntails (AKA wood wasps).

From http://mobugs.blogspot.com/
The problem with these critters and many like them is that they bore into trees to lay eggs. That can result in bugs emerging from processed lumber or even from completed structures.

When pests are discovered by Agriculture Inspectors at port of entry, the USDA will issue an Emergency Action Notice. Generally, the EAN requires that the offending shipment be turned around and exported from the U.S. 7 CFR 319.40-3. To prevent that from happening, the USDA has adopted a system under which wood packing material may be imported if there is adequate evidence of it having been treated to prevent infestation. The required treatment must be consistent with the international ISPM-15 standard and the material must be marked accordingly.

There has been a lot of recent enforcement action on this of late. In September, CBP issued a notice stating that "to motivate" compliance, it was alerting the trade that CBP may issue penalties for single violations. This was a change from the prior practice of not issuing a penalty until there had been five violations. CBP further noted that there would be no yearly reset for calculating repeat violations. See CSMS #17-000612 (Sep. 26, 2017).

One company that ran afoul of the wood packing material ("WPM") rules is Andritz Sundwig GmbH. Andritz imported $39.5 million in machinery for the production of steel and aluminum in two shipments. For each shipment, it received an Emergency Action Notice demanding the exportation of the cargo. Rather than comply with the EAN, Andritz filed a protest challenging the exclusion and requested accelerated disposition to get the case before the U.S. Court of International Trade. The resulting case is Andritz Sundwig GmbH v. United States.

Andrtiz asked the Court to review the denial of the protest and the demand for immediate exportation. Andritz also asked for declaratory judgment that the EANs are invalid. Andrtiz wanted the Court to order CBP to permit the merchandise to be separated from the WPM and the WPM fumigated.

In response, the United States moved to dismiss the case on the grounds that the Court of International Trade lacked subject matter jurisdiction over the dispute.

In most cases, a denied protest is subject to review at the CIT. That is usually non-controversial. However, a protest of the exclusion of merchandise is slightly different than the typical protest over classification, value or rate of duty. Exclusion can only be protested when it is "under any provision of the customs laws." 19 USC 1514(a)(4).

The authority for the EAN, according to the CIT, is not the "customs laws." Rather, it is the Plant Protection Act. The EAN states that the Department of Agriculture is the supervisory agency involved. As a result, the CIT held the denied protest was not properly before it. Moreover, the case was not within the Court's residual jurisdiction, which also relates generally to tariffs, duties, quantitative restrictions (other than for public health and safety) and the administration thereof.  The case belongs in the U.S. District Court for the Southern District of Texas, to which the case was transferred.

One thing to note is that the CBP administrative message notes that a penalty for an EAN would be issued pursuant to section 1592 or section 1595a of Title 19 of the U.S. Code. Title 19, as you likely know, is "Customs Duties," and penalty cases (at least under 1592) are routinely before the CIT. This makes me think that the CIT has not seen the last case involving an APHIS penalty.

Also, as a matter of grammar, I am not following the government's lead and stating that goods subject to an EAN must be re-exported. To me, that implies that they merchandise was previously exported from the U.S. I think the better usage is that the goods need to be exported, for the first time. Anyone have a reason why I am wrong about that?