Friday, July 18, 2008

More from the Courts

The Courts have been busy. On Wednesday, the Federal Circuit decided Volkswagen, in which another case was dismissed under Court of International Trade Rule 12(b)(5) for failure to state a claim.

Volkswagen follows from Saab and similar cases involving efforts by importers to secure a value adjustment under 19 CFR 158.12 for latent defects in automobiles. Because Customs and Border Protection calculates duties as a percentage of value, if the vehicle was actually worth less than reported at the time of entry, the importer paid too much in duties. The problem in this case is that the defects were not discovered until after liquidation was final, meaning that a protest was no longer available. VW attempted to claim the adjustment directly under 158.21, which has no time limit associated with it.

The result here is that the CAFC held that even though there is no deadline stated in 158.12, it relates to appraisal. Appraisal decision can only be challenged via a protest. Thus, there was no relief available.

The decision has an interesting concurrence by Senior Judge Friedman (no relation, BTW) who finds the result to be harsh but correct. He suggests that Congress is the appropriate body to fix the problem.


Speaking of Courts, the Supreme Court might take the opportunity to look at some customs-related issues. Two petitions for certiorari have been filed.

The first is in Sakar International. That case involves a jurisdictional question relating to whether the seizure of merchandise bearing allegedly counterfeit Microsoft Windows logos is an embargo for purposes of the exclusive jurisdiction of the Court of International Trade under 28 U.S.C. § 1581(i)(4). The CAFC said no on the basis of the Supreme Court decision in K-Mart.

The second cert petition was filed in NuFarm, which argues that the NAFTA drawback rules (in this case relating to in-bond rather than drawback per se) are unconstitutional as a tax on exports. The rules require that when merchandise is imported to the U.S. under bond for export, within 60 days after export to a NAFTA country the importer has to pay duties to the U.S. that would have been due but for the bond. To Nu Farm, this sounds like a duty triggered by the exportation, which would violate the export clause. To the CAFC, it is just the deferred payment of the import duty.

Although it is unlikely that either of these cases will get further review, stay tuned for future developments.

Lastly, I promised I would go back and expound further on Totes-Isotoner. I have re-read the opinion a couple times and don't really think I have much to add that is at the right level of detail for this blog. On the question of whether the issue is really that inanimate objects have no equal protection rights, I think that is somewhat different than the court's analysis of the complaint. I see the problem as being one of asserting that people were injured as a result of the discriminatory tariff. This is why the court discussed the fact that the tariff items in question are not actual use provisions. There will need to be a showing, I think, that men buy men's gloves and, therefore, are injured. If the issue were whether gloves have rights, I think the case would have been dismissed on standing or justiciability.

But, as with all my musings, I am just a member of the blogosphere's chattering class. Feel free to disagree.

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