Hello Moto

I am treading lightly. It turns out, people read this stuff. The last time I talked about sec. 1625 and the revocation or modification of rulings or treatments, I got chewed out (with some justification). But, here we go again. This time, I freely admit I am writing this not out of a disagreement with the judgment but because I had a hard time piecing together what happened. Maybe you did too.

In Motorola, Inc. v. United States, (slip op. 06-165), the issue was whether 900 bypass entries or pre-classification rulings constitute "treatment" for purposes of 1625. If so, Customs should have engaged in the 1625 notice and comment process before issuing a ruling changing the classification in a way unfavorable to Motorola. The Court does a very thorough, well-reasoned analysis finding that bypass entries are not a treatment triggering section 1625.

The regulations (19 CFR 177.12(c)(2)(ii)) state the following:

The determination of whether the requisite treatment occurred will be made by Customs on a case-by-case basis and will involve an assessment of all relevant factors. In particular, Customs will focus on the past transactions to determine whether there was an examination of the merchandise (where applicable) by Customs or the extent to which those transactions were otherwise reviewed by Customs to determine the proper application of the Customs laws and regulations. For purposes of establishing whether the requisite treatment occurred, Customs will give diminished weight to transactions involving small quantities or values, and Customs will give no weight whatsoever to informal entries and to other entries or transactions which Customs, in the interest of commercial facilitation and accommodation, processes expeditiously and without examination or Customs officer review . . . .

The Court found that bypass entries are processed expeditiously for purposes of facilitating commerce. Consequently, the burden was on Motorola to show that real review occurred and that the exception does not apply. Unfortunately, the Court did not find Motorola's evidence of review compelling and found that bypass does not constitute treatment.

But, there was another possibility for Motorola, and this is where things got more complicated for me. The second question was whether two pre-class rulings constitute treatment. Here, the Court started with the premise that the PRLs, which it called interpretive rulings, do not constitute prior interpretive rulings or decisions for purposes of 1625(c)(1). Thus, they can only trigger notice and comment if they are treatments for purposes of 1625(c)(2).

The reason for this oddness is that the CIT previously held, and no one contested on appeal, that PRLs do not trigger 1625 notice and comment because they only apply to the same merchandise and not to other merchandise even if substantially identical. So, 1625(c)(1) was off the table and Motorola's only chance was to find a 1625(c)(2) treatment.

No such luck. The problem for the Court was that it could not (in its judgment) consider interpretive rulings as treatments under (c)(2) when there is a specific provision for them in (c)(1). That would make (c)(1) redundant, and that is against the lawyer rules for reading statutes. For proof, poke around on the sadly apparently defunct Statutory Construction blog.

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