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Identity Theft and the Perils of Prior Disclosure

Looking to read a judicial opinion that is not a leaked draft?  U.S. v. Katana Racing is a fascinating look into how Customs and Border Protection tried to hold a company responsible for entries someone else made fraudulently and the risk of making a prior disclosure while also maintaining that no violation has occurred.  The facts are that Katana had been importing passenger and light truck tires from China. After the U.S. began assessing safeguard duties on these tires, Katana sought to find new suppliers. Rather than lose the business, one of its existing suppliers proposed that it would assume the responsibilities of importing the goods and the parties negotiated a new price for the tires. This is a Delivered Duty Paid arrangement and makes the seller responsible for customs clearance and the payment of duties, taxes, and fees. Shortly thereafter, the supplier asked Katana to execute a Power of Attorney with the stated reason that it was necessary to allow the supplier to move the

Fishy Classification

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There is a saying among lawyers that a prosecutor can get a NY grand jury to indict a ham sandwich . Apparently, it is harder to classify a tuna sandwich, or at least the tuna in the sandwich. This deep thought relates to the dispute between U.S. Customs and Border Protection and StarKist Co. over the tariff classification of tuna salad imported ready-to-eat in pouches. We first addressed this debate in the post  No Mincing Words on Tuna Classification (customslaw.blogspot.com) . After being caught, the tuna is processed in Ecuador where it is cooked, machine chopped, then hand-folded with a mayonnaise base comprising more than 12% soybean oil. Customs classified the prepared tuna in HTSUS item 1604.14.10 as Prepared or preserved fish; Tunas; In airtight containers: In oil, which carries a duty rate of 35%. The importer argued that the proper classification is in three alternative tariff items: 1604.20.05 (10%), which covers minced fish prepared or preserved including "products co

The Mysterious Domestic Party Petition

We sometimes hear from a domestic party that someone is allegedly importing merchandise using an incorrect tariff classification or understating value in a way that both violates the law and creates an unfair commercial advantage for the importer. Often, the domestic party has spent considerable time and effort securing an order imposing antidumping or countervailing duties and has reason to believe someone is improperly avoiding the payment of those duties. The question is what tools exist to allow that domestic producer to ensure the law is being properly enforced and also to offset the unfair advantage.  One thought that often comes up is the Domestic Interested Party Petition under 19 USC § 1516 , which is a little used but potentially useful tool. But, as we will see, it has limitations. This section of the customs law allows an "interested party" to submit a written request for Customs to furnish to it the classification and rate of duty imposed on "designated impo

Warehousing May Be "Use"

Would you buy a "used" swimsuit? The answer to that question probably depends on exactly what "used" means. In at least one narrow application of the term, the Court of International Trade has determined that a swimsuit is "used" when it is stored in a warehouse, entered into inventory, picked off the shelf for packing, and shipped to a customer. This comes from SGS Sports Inc. v. United States , a recent decision from the CIT. The issue came up in the context of swimwear that was imported into the United States and then sent to a warehouse in Canada to be held in inventory until sold. Upon its return to the U.S., the importer asserted that the goods were entitled to duty free entry under HTSUS item 9801.00.2000, which covers: Articles, previously imported, with respect to which the duty was paid upon such previous importation . . .  if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other mea

CIT Remands Section 301 List 3 and 4A to USTR for Explanation

The Court of International Trade issued its first decision on the merits of the claim that the United States collected Section 301 duties on List 3 and List 4A products collected illegally. The decision is available from the Court . In short, the Court affirmed that the President and USTR had legal authority to impose the duties. However, the Court also found that USTR failed to follow the required notice and comment procedures. Thus, the Court ordered that USTR provide a fuller response to the comments it received relating to List 3 and List 4A. The Court first had to determine whether it has the authority to review the USTR’s action at all. The government argued that the decision to impose the additional duties was immune from judicial review because it is a presidential (rather than agency) action or is a political decision, which is an area left to the President. The Court found that the issues before it do not relate to presidential discretion or policy questions but to whether US

Printed Foil is not Printed Matter

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What is the correct tariff classification for an aluminum foil laminated with plastic that is used as packaging material for pharmaceutical products and medical devices? More to the point of Amcord Flexibles Kreuzlingen v. United States , does it matter if there are words printed on the material? The merchandise at issue in this case looks like this: The Court of International Trade previously addressed the classification of this material without the printing  in a case called Amcor Flexibles Singen Gmbh v. United States . In that case, the Court determined that the flexible aluminum foil and plastic material was properly classified in Heading 7607 as a product of aluminum.  The new question presented to the Court is whether the same material, when printed, is transformed into "printed matter" of Heading 4911. If your first reaction to that theory is "come on, that's crazy," just remember that the difference between paper "of a kind used for printing"

Is This the End of Predetermined End Use?

The Court of International Trade today issued a decision in the closely-watched CyberPower country of origin case. I have had high hopes that this case will be the vehicle to clarify the substantial transformation test used by Customs and Border Protection and the Courts to determine country of origin for purposes of marking and of assessing non-preferential duties (including Section 301 duties on goods originating in China). As discussed below, the language in the decision is generally favorable for a simplified and more reasonable approach to origin. But, the Court found open questions of fact and ordered the parties to prepare for a trial.   The issue is the country of origin for Section 301 purposes of power supplies. The plaintiff had moved assembly from China to the Philippines, but retained many significant parts from China including a populated printed circuit board assembly. U.S. Customs found the item to originate in China and be subject to the 301 duties. Both parties mov