Broker Exam Challenge

Judicial challenges to the grading of the customs brokers license exam are not very common, but they happen. Usually, I have not been super supportive of the plaintiffs. See my maybe too mean-spirited post from 2006. On the other hand, I have gained a lot of respect for Mr. Byungmin Chae, who has been fighting with Customs over his score since taking the April 2018 exam. As background, broker license applicants who fail to pass the 80-question CBLE with a score of 75% or more may ask Customs to reconsider the grading on questions for which applicants believe they should have received credit. 19 CFR § 111.13(f) . If Customs does not change the grade, applicant may seek further review by the Executive Director of the Office of Trade. Any applicant that is not satisfied with the results of that review may sue the United States and ask the Court of International Trade to review the exam scoring.  Photo by Museums Victoria on Unsplash Mr. Chae missed passing the exam by eight questions, wh

Limitations Periods for Penalties

In United States v. Zhe "John" Liu , the defendant was accused of a running a scheme to avoid antidumping duties on wire hangers from China by transshipping them through other countries and incorrectly stating the country of origin. The government is seeking to impose a penalty of just under $1 million, which is the domestic value of the merchandise. The defendant moved to dismiss the complaint arguing that it is barred by the statute of limitation and that Mr. Liu is not a proper defendant because he did not import the goods. Let's pause for a moment. First, the fact that this penalty is the domestic value of the merchandise may seem odd. It is not. The complaint asserts that the violation occurred as a result of negligence. Under 19 USC 1592 , the penalty for negligence is usually up to twice the loss of revenue, which will usually be much less than the entered value of the merchandise. However, the statute says that when the violation results from negligence, the penal

Interest and Disclosures

The Court of International Trade decision in Otter Products, LLC addresses a novel question about how loss of revenue is calculated in the context of a prior disclosure. Grab a snack, this is complicated.  First, for anyone who needs a reminder: An importer that makes a material false statement or omission in connection with the entry of merchandise as a result of negligence, gross negligence, or fraud has violated 19 U.S.C. 1592 and is, therefore, susceptible to penalties. Penalties can be severe, up to two times any unpaid duties when the violation results from negligence and four times the unpaid duties when the violation results from gross negligence. Plus, the importer must pay the duties. In the case of fraud, the penalty is up to the domestic value of the merchandise, which is the entered value plus duties and other adjustments to try to get an approximate retail value in the United States. Given that the statute of limitations is five years, this can add up very quickly. Oddl

Value Allowances for Defects

 If you are bothering to read this blog, you likely know that most goods entering the United States are appraised on the basis of transaction value, which is the total price paid or payable for the merchandise when sold for export to the United States. For most transactions, that means the invoice price. But, the invoice price is usually based on some underlying assumptions about the nature of the goods. For example, if I order 1000 buckets for $250, I am doing so with the expectation that the buckets will actually hold water without leaking. When I enter the buckets, I will declare $250 as transaction value because, at that point, I still think the buckets will not leak. Customs will assess duty on the buckets using $250 as the value. In the ordinary course, that is how things should work. Creative Commons License Every now and then, things go haywire; and the buckets leak.  Now what? The customs regulations provide an opportunity to secure a refund of the excess duties paid on the fu

Kent International Rides to Victory

 Kent International has been in a dispute with Customs over the classification of "Kangaroo Carrier" child safety seats for bicycles for so long that it has generated six judicial opinions. We last covered it here . In what imight be the last word, the Court of International Trade has handed a limited win to Kent . Photo by James Wainscoat on Unsplash This decision is not really about the classification. On the merits, the Court previously found that the seats are classifiable in Heading 8714 as accessories to bicycles. What was at issue in this decision is whether Kent was entitled to have some of the entries liquidated as "seats" in Heding 9401 because Customs and Border Protection's prior liquidations constitute a legal "treatment" of the merchandise as such. A "treatment" is analogous to a ruling, except it just happens as a matter Customs' actions on entries. It is relevant here because once a "treatment" is established,

Decision on Section 301 List 3 and 4A

The Court of International Trade has issued a decision in the lead case challenging the Section 301 duties on products of China covered by List 3 and 4A.  This case is almost unique in the number of plaintiffs and law firms involved. The most similar prior circumstance involving as much of the customs and trade bar was the litigation involving Harbor Maintenance Tax, which went all the way to the U.S. Supreme Court in 1998 resulting in a decision called United States v. U.S. Shoe Corp .  For purposes of this blog, this raises an issue. My firm, like dozens of other firms, has plaintiffs asserting the same claims. The matter is ongoing and, therefore, I don't want to say much about anything. So here is the short version. The Court previously remanded the matter to the USTR to provide a better explanation of how the record demonstrates that the agency properly engaged with public comments in opposition to the List 3 and 4A tariffs including the size of the remedy and whether there w

Revenge of the Hobgoblin

UPDATE: A kind reader let me know I misattributed the quote. It is not from Thoreau as originally reported. Thanks for the feedback.  There is a saying, attributed to Ralph Waldo Emerson that “Foolish consistency is the hobgoblin of little minds.” The point of that seems to be that doing something the same way solely for the reason of maintaining consistency is a poor strategy. For trade compliance that is often true. The fact that a manager who retired from accounting in 1995 once said that none of your company’s tooling expenses are dutiable is not a solid reason for failing to report dutiable assists in 2023. Maybe in 1995 all the tooling was in the U.S., and it is now all over the globe. Consistency for the sake of consistency is not a good enough reason to maintain a compliance process. There should be some underlying reason to believe the process is legally correct. On the other hand, inexplicable inconsistency can be evidence of fraud. An ongoing penalty case in the Court of