Catching Up
I am behind on my blogging. As I have said in the past, that usually happens when I am busy at work, which is a good thing. So, to play a little catch up, I am going to combine several recent cases in this single post.
Tempura Tempest
First up, the Federal Circuit ruled on the classification of tempura in a case called R.T. Foods, Inc. v. United States. We discussed the Court of International Trade decision here. The government asserted that cut, flour dusted, fried, and flash frozen vegetables are classified in HTSUS 2004.90.85, which covers "Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, frozen, other than products of heading 2006: Other vegetables and mixtures of vegetables: Other: Other, including mixtures." According to R.T. Foods, the products are classifiable in HTSUS 2106.90.99, which provides for "Food preparations not elsewhere specified or included: Other: Other: Other: Frozen." The latter classification is entitled to duty-free entry from Thailand. So, this comes down to whether the prepared tempura is "elsewhere specified or included." If it falls into Heading 2004, it is elsewhere specified and cannot be in Heading 2106.
The Court of Appeals noted that Heading 2004 describes the products by name and is, therefore, an eo nomine provision encompassing all forms of the named item (i.e., all forms of vegetables prepared other than with vinegar, frozen, etc.). On the other hand, Heading 2106 is a basket provision, which is inherently not very specific.
R.T.'s main argument was that its product is substantially different from the simple prepared vegetables of Heading 2004. These were mixtures of different vegetable and, in the case of one product, were formed into attractive bird's nest forms. Based on the combination of components, R.T. also argued that the products are more properly treated as ready-to-eat meals and that they have a use distinct from simple prepared vegetables.
None of this was persuasive enough. In what I will call the decisive utterance of this case, the Court of Appeals for the Federal Circuit held that:
International Custom Products
When we last left International Custom Products, it was fighting for its day in court despite not being able to pay the duties Customs and Border Protection alleges it owes for allegedly misclassifying "white sauce base" to avoid the application of a dairy quota. The Court of International Trade previously dismissed the case for failing to state a cause of action on which relief can be granted, because paying all the duties owed is a statutory requirement to secure judicial review.
ICP has now asked the Court of International Trade to reconsider that prior decision or to amend its prior judgment on the theory that the requirement to deposit duties is, as applied here, an unconstitutional violation of due process. Unfortunately, this has all been fully briefed and rejected by the CIT in the previous case.
Even more unfortunately, the Court of Appeals for the Federal Circuit has also held that the Notices of Action rate advancing these entries, which are the sole basis on which ICP is deemed to owe this enormous amount of money, were invalid and void. In other words, ICP has won its case on the merits. It should not actually owe this money. But, because of the statutory requirement, ICP must pay the money to make that legal conclusion apply to the remaining entries. That is an absurdity that the Department of Justice and Customs should recognize and address outside of the context of a law suit. Why? Because it is actually the right thing to do.
On the other hand, and this is an important consideration, the long litigation history of this dispute leads one to read between the lines that ICP may not be exactly an innocent party. Clearly, only the parties and their counsel know for sure. But, from the outside, something stinks here. It is just not clear from which side the odor is emanating.
Pop Quiz
What is this thing?
If you said that it is a pair of pliers or a pair of locking pliers, you would be properly using the English language. Unfortunately, a prior decision of the Court of International Trade has moved Customs and Border Protection to hold that locking pliers are actually wrenches. Why? Because the locking mechanism facilitates "wrenching" a bolt or similar item and that fact is acknowledged in the relevant industrial standards. This is actually an issue on which I worked, so I will leave it at that.
Tempura Tempest
First up, the Federal Circuit ruled on the classification of tempura in a case called R.T. Foods, Inc. v. United States. We discussed the Court of International Trade decision here. The government asserted that cut, flour dusted, fried, and flash frozen vegetables are classified in HTSUS 2004.90.85, which covers "Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, frozen, other than products of heading 2006: Other vegetables and mixtures of vegetables: Other: Other, including mixtures." According to R.T. Foods, the products are classifiable in HTSUS 2106.90.99, which provides for "Food preparations not elsewhere specified or included: Other: Other: Other: Frozen." The latter classification is entitled to duty-free entry from Thailand. So, this comes down to whether the prepared tempura is "elsewhere specified or included." If it falls into Heading 2004, it is elsewhere specified and cannot be in Heading 2106.
The Court of Appeals noted that Heading 2004 describes the products by name and is, therefore, an eo nomine provision encompassing all forms of the named item (i.e., all forms of vegetables prepared other than with vinegar, frozen, etc.). On the other hand, Heading 2106 is a basket provision, which is inherently not very specific.
R.T.'s main argument was that its product is substantially different from the simple prepared vegetables of Heading 2004. These were mixtures of different vegetable and, in the case of one product, were formed into attractive bird's nest forms. Based on the combination of components, R.T. also argued that the products are more properly treated as ready-to-eat meals and that they have a use distinct from simple prepared vegetables.
None of this was persuasive enough. In what I will call the decisive utterance of this case, the Court of Appeals for the Federal Circuit held that:
R.T. has not identified a feature or component of the subject merchandise that so substantially transforms the vegetables so as to remove them from the eo nomine provision. Furthermore, R.T. has not shown how tempura battering and frying does not fall within the eo nomine provision’s specification that the frozen vegetables be “prepared or preserved otherwise than by vinegar or acetic acid.” Absent such a substantial transformation, it is clear the merchandise falls within the scope of heading 2004.Try as it might, R.T. was unable to overcome the conclusion reached by Customs and Border Protection and the Court of International Trade that the goods are fully described by Heading 2004. As a result, the decision of the CIT was affirmed.
International Custom Products
When we last left International Custom Products, it was fighting for its day in court despite not being able to pay the duties Customs and Border Protection alleges it owes for allegedly misclassifying "white sauce base" to avoid the application of a dairy quota. The Court of International Trade previously dismissed the case for failing to state a cause of action on which relief can be granted, because paying all the duties owed is a statutory requirement to secure judicial review.
ICP has now asked the Court of International Trade to reconsider that prior decision or to amend its prior judgment on the theory that the requirement to deposit duties is, as applied here, an unconstitutional violation of due process. Unfortunately, this has all been fully briefed and rejected by the CIT in the previous case.
Even more unfortunately, the Court of Appeals for the Federal Circuit has also held that the Notices of Action rate advancing these entries, which are the sole basis on which ICP is deemed to owe this enormous amount of money, were invalid and void. In other words, ICP has won its case on the merits. It should not actually owe this money. But, because of the statutory requirement, ICP must pay the money to make that legal conclusion apply to the remaining entries. That is an absurdity that the Department of Justice and Customs should recognize and address outside of the context of a law suit. Why? Because it is actually the right thing to do.
On the other hand, and this is an important consideration, the long litigation history of this dispute leads one to read between the lines that ICP may not be exactly an innocent party. Clearly, only the parties and their counsel know for sure. But, from the outside, something stinks here. It is just not clear from which side the odor is emanating.
Pop Quiz
What is this thing?
Comments