Thursday, June 23, 2005

Take That, CBP! And, That!

Sometimes, the good guys win. Recently, the importer came away with significant wins over Customs in decisions from the Court of International Trade and the Court of Appeals for the Federal Circuit.

In the CIT case, called International Custom Products, Inc. v. U.S., an importer did exactly what Customs tells importers to do: it got a ruling before it started bringing in merchandise. In this case, it got the ruling years ago and set up its business according to the allegedly binding advice from Customs. Trouble is, at some point, Customs decided it did not like the results of the ruling. Coincidentally, I'm sure, Customs' new position increased the duties by some 2400%. The opinion indicates that there may have been some legitimate reason to think that the ruling is, in fact, wrong, but that is not the point. Once Customs decides that it no longer thinks a ruling is right, there is a process it needs to undertake to revoke or modify the ruling. That involves public notice and the the collection of comments on the proposed changed. Only after jumping through these hoops can Customs officially change its mind.

In this case, Customs tried an end run around that rule. Rather than go through the so-called § 1625 process, Customs matter of factly issued a Notice of Action (the familiar CF29) and just told the importer that the classification would change. In addition, Customs told the importer to change the classification on all future entries of the merchandise. The importer did the smart thing again; it called its lawyer.

Sometimes legal analysis is complicated. Sometimes it is not. In this case, it was both. There was a mess of stuff relating to jurisdiction, exhaustion of administrative remedies, ripeness, and the standard of review. But, the core issue was simple. What Customs did looked like a revocation, had the effect of a revocation, and should, therefore, have been handled like a revocation. Thus, the CIT held Customs to the law and declared the change to be null and void.

Of course, this is only half the battle. Customs will likely turn around and go through the revocation process and get to the same place. The importer will have to fight that fight in due course.

At the Federal Circuit, the case was International Trading Co. v. United States. In that case, the question was whether imports of goods subject to an antidumping duty order should be deemed liquidated by operation of law because Customs was too slow in liquidating them. If so, the importer would only be liable for the relatively small amount of estimated dumping duties deposited at the time of entry. If not, it would be hit with a whopper of a bill.

Basically, what it comes down to is whether the Commerce Department's notice of the final results of an antidumping duty review is "notice" to Customs of how to liquidate the merchandise. The meat of Customs' argument was that a Federal Register notice is considered to be official binding notice on astronauts in orbit, submarine commanders, and Amazon explorers but not on agencies of the Federal Government. Instead, Customs said that the six-month liquidation clock did not start to run until it received an e-mail from Commerce saying, "Excuse me, Customs, you may not have noticed the Federal Register notice, so this is a friendly nudge to go ahead and liquidate that merchandise." In other words, Customs wanted the proverbial engraved invitation. The CAFC said no and affirmed the CIT.

Good results and good decisions.

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