Monday, October 23, 2006

By Request

I know a lot of people in the customs law business. Occasionally, I disagree with my colleagues. For the most part, that leads to a polite exchange of ideas and, maybe, an agreement to disagree. It's different, however, when I commit my opinions to the public through this blog. When someone disagrees with a blog post, I have the choice of ignoring it or letting the world know about.

Today, by the express request of a friend and the implied rebuke of the Federal Circuit, I address an apparent error in my thinking.

The relevant context here is International Custom Products v. United States. When the case was decided at the CIT, I wrote a post that was hard on the government and congratulated the Court for keeping CBP on the straight and narrow. The basic facts as presented were that the importer received a ruling and went about its business based on the ruling. Much later, Customs investigated the product and its use. As a result of this investigation, Customs issued a Notice of Action to reclassify the merchandise, substantially increasing the duty rate. The importer characterized this action as revoking or modifying the ruling and challenged Customs' failure to go through the required notice and comment process to revoke or modify the ruling.

It seemed clear to me that as long as the same product was involved, the ruling should stand until properly revoked. That is what I said, harshly, in the original post. Since the administrative procedure was at issue, I did not think a protest should be necessary to get into Court. After all, Customs had already told the importer how it would decide the protest and the issue did not really relate to liquidation. It related to requiring CBP to follow its procedural regulations.

Well, it appears that I was wrong. At least as far as the CAFC is concerned. The Court cut right to the heart of the matter and said that there was no good reason why the importer should not be required to file a protest, let Customs deny it, and go to the CIT under 28 USC 1581(a). The Court rejected the notion that filing a protest was futile or too slow.

For the most part, this laser-like focus on the protest process is entirely consistent with past law holding that if the CIT has jurisdiction under 1581(a), that is the only way to get into court. The HMT litigation notwithstanding.

Still, you have to feel for the importer who had a business built around the classification ruling it received from Customs only to have Customs change the classification. There seems to be something in the background regarding whether the merchandise either changed or was not properly described in the original ruling request. If that is true, and I don't know that it is, then it would make sense for Customs to want to leave the ruling in place while telling the importer to change its classification. If the goods are exactly the same as what was described in the ruling, it still seems to me that Customs needs to revoke or modify it.

I hope that satisfies everyone.


Anonymous said...

I think you are a bit hard on yourself. You can disagree with the CAFC without being wrong. Perhaps the CAFC got it wrong.

Anonymous said...

The original request did not accurately describe the product.

Anonymous said...

I think this case is just one more example of what I would characterize as the evolving doctrine in the CAFC as "coulda shoulda". In ICP as well as several other opinions over the past several years, the CAFC has ruled that where an importer had an option that wasn't pursued, that was the option that should have been pursued. In my view these opinions don't address or even flatly avoid whether the course of action actually pursued by the importer was proper. It seems good enough for the Court that there was an alternative that wasn't pursued. That's not right. Paul V.

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