Rulings Review

Customs and Border Protection issued a few interesting rulings recently. Here is a quick summary of two.

H007168 (Aug. 2, 2007)

When a sale occurs before importation, when does the seller retain enough of an interest to act as importer of record? Good question. The statute requires that the importer of record be the owner or purchaser of the merchandise (we're not talking about brokers and agents here). 19 USC 1484. Customs, in a suprisingly business-friendly exercise of discretion, has defined "owner" as including someone who retains a "financial interest" in the merchandise. In this case, the seller retained a security interest in the merchandise inteneded to make sure it eventually gets paid. According to this ruling, that was sufficient to make it an "owner" with the right to make entry.

W563475 (Nov. 3, 2006)

Calling Tom Cruise! The Church of Scientology imported some electrical devices known as "E-meters" used to "audit" COS members. Unlike CBP auditors, Scientology auditors use the e-meter to locate spiritual travail and, one assumes, eliminate it. The question presented was how to classify the gizmos.

The Church had classified the e-meters as "other instruments for measuring or checking voltage, current, resistance or power, without a recording device: other" in 9030.39.00. The applicable rate is 1.7%. The Church argued for classification as religious articles in various provisions of heading 9810. Customs, however, found that the e-meters are not "an appurtenance or adjunct of an alter or pulpit."

Generally, I don't refer to the lawyers involved in an issue. However, I note that the COS was represented by my friends at Grunfled, Desiderio, Lebowitz, Silverman & Klestadt. That may provide context to their next argument, which was that the e-meter is analogous to "prayer shawls, bags for the keeping of prayer shawls and headwear of a kind used for public or private religious observances . . . . " The thinking was simply that tallit and yarmulkes have no non-religious function and neither does the e-meter. Consequently, they should be classified the same way. Customs found the language to be clear and skipped counsel's reliance on legislative history.

The last traditional customs argument was for classification as a religious scroll or tablet of wood or paper, commonly called a Gohonzon, which the e-meter clearly is not.

After CBP rejected that argument, the COS pulled out the big guns: the Religious Freedom Restoration Act, 42 USC 2000bb et. seq. This law makes it illegal for a federal agency to substantially burden the exercise of religion through a generally applicable rule without a compelling governmental interest. Customs, however, distinguished a case in which a banned hallucinogen was needed for religious sacrament from a simple duty on the imported equipment. Doing so, it found no substantial burden. Thus, the classification stays as an electrical meter.

This, of course, is teed right up for very interesting litigation. I'm not sure I'd go with RFRA as my main point though. I'd be looking at why a yarmulke or Gohonzon gets to be duty free but not an e-meter. Assuming the importer has standing to assert the claim, this sounds like another equal protection case to me.

I also wanted to review W563043 (Oct. 18, 2006), which seems to involve a pretty contentious NAFTA issue, at least according to the blurb I read. It is not up on CROSS. If anyone has a copy, please pass it on to me.


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