Tuesday, August 24, 2010

Court Update

There have been several recent customs-related decisions from the Court of International Trade recently. I have read them and generally don't find much in any that require comment. At the same time, I don't want you to think that I am slacking off. So, here are short summaries.

Aromont USA, Inc. v. United States, involves the classification of a viscous "stock"  made from animal bones or vegetables. The issue was whether Customs and Border Protection properly classified the merchandise as soups and broths rather than as other food preparations. Initially, the Court had to hold that because the merchandise at issue in this case was not identical to merchandise that had been the subject of a previous Customs ruling, the ruling did not bind Customs and Border Protection. The primary difference seems to be the commercial designation of the merchandise. Here, the goods were called "stock," which is said to be equivalent to a "demiglace." I will check with my foodie friends on that.  On the substance, the Court found that "soup" and "broth" are use provisions and that the principal use of the imported merchandise was as a flavoring agent in gravies and in industrial food preparation. Thus, Customs' classification was reversed  and a win for the plaintiff.

BP Oil Supply Co. v. United States, is a  rare evidentiary dispute at the Court of International Trade. The underlying issue has to do with denied claims for duty drawback and an otherwise routine motion for an amendment to the Court's scheduling order controlling the progress of the case.  The U.S. responded with a motion to strike arguing that BP improperly included confidential settlement negotiations in its memorandum in support of the requested scheduling change. The theory is that the judge should not know what private discussions the parties have had about settlement as that might skew the judge's thinking if he or she has to actually decide the case. After finding that some of the text included with the motion should be considered confidential settlement discussions, the Court stated that: "Prudence therefore dictates that it would be exceedingly unwise for the court to give any consideration to these materials or to allow them to become part of the record. The emails, proposed stipulation of facts, and documents related to that proposal are therefore inadmissible on this motion pursuant to FRE 408 and its underlying policies. In the interests of judicial economy, however, these items will be disregarded by the court rather than stricken from the record."

Citizen Watch Co. of Am. v. United States, deals with the always vexing question of what constitutes a container classifiable in Heading 4202 of the Tariff Schedule of the United States. For reasons relating to pending litigation, I am dancing around this one. The merchandise involved was cardboard and fabric watch boxes that were said to be sturdy enough for only 10 to 50 open and close cycles. Customs and Border Protection classified these as similar to jewelry cases of 4202. The Court found that the boxes were not suitable for long-term use (even though they need not be able to survive as long as the watches). Consequently, they were not sufficiently similar to jewelry cases to be classified in 4202. Rather, they end up in the more general provision for containers in 4819.

Lastly, Tip Top Pants, is back on a motion for rehearing. First, I think rehearings present a semantic problem. In many decisions on rehearing, it seems the Court reviews the merits of the case, finds no error and, therefore, denies the motion for rehearing. It seems to me that the motion ought to be granted whenever the movant identifies a reason to take a second look but that the rehearing might then result in no change in the decision. But that is just me. On the merits, the Court stuck to the decision that Customs has to respond to petition to mitigate a penalty before moving on to collect the penalty in Court.

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