Customs Law

Unless something big happens, this will be my last post for the year. Happy holiday of choice to all of you. Here's to a happy, healthy, and productive 2015. The U.S. Court of Appeals for the Federal Circuit has affirmed the Court of International Trade's decision in Belimo Automation v. United States . The issue in the case is the tariff classification of specialized actuators used to move dampers in HVAC systems. The actuators include an electronic circuit that senses the damper angle and adjusts it to maintain proper alignment. The importer argued that these items should be classified in HTSUS item 9032.89.60 as an "automatic regulating and controlling instruments and apparatus; parts thereof." The Federal Circuit disagreed and affirmed the Court of International Trade, which is a win for Customs and Border Protection. Chapter 90, Note 7(a) provides that Heading 9032 only applies to Instruments and apparatus for automatically controlling the flow, level, ...

Customs valuation is subject to its own rules and requirements. Importers apply those rules and requirements when reporting the value of merchandise to Customs and Border Protection. As you likely know, when the buyer and the seller are related, the sales price between the parties is suspect and Customs can seek to determine whether the relationship affected the sales price. If so, the related party price might be rejected as a basis for transaction value, causing Customs to apply a different basis for valuation. That is a compliance hassle that no one wants. Over on the income tax side of things, they have their own statutory rules and tests to determine whether transfer prices are an acceptable means of valuing products. The problem for customs compliance professionals is that the IRS tax compliance often drives transfer pricing and customs compliance must find a way to make due with the result. IRS compliance is sometimes the big dog that wags customs valuation as a small tail. Wh...

It has been said, possibly only by me, that every object will become the object of obsession for at least one person. In the Internet age, people who share an interest or passion for something mundane can find one another and form tribes of fellow aficionados willing to obsess over their chosen totem. Here are a few examples: spoons , fishing lures , antique bottles , pepper mills , and my personal favorite old computers  (that's the first computer I ever purchased). It turns out, that there are also pencil aficionados ( here , here , and here ), one of whom was the unnamed plaintiff in United States ex rel. John Doe v. Staples, Inc. et al. Let's backtrack a bit. The False Claims Act is an 1863 law enacted to fight fraudulent claims for reimbursement by the government following the Civil War. Under the FCA, the government can bring a case against anyone making a false claim seeking payment from the government and against anyone who makes a false statement to avoid making a p...

GRK Canada, Ltd. is a big deal. I have already posted about it twice ( here and here ) and this is a third time. It goes to the very heart of how Customs and Border Protection and the U.S. Court of International Trade should interpret the Harmonized Tariff Schedule of the United States. If you are a diligent compliance professional, this is likely far more important to your day-to-day work life than is the decision in Trek Leather , which has caused much teeth gnashing. Recall that the issue in GRK is the proper tariff classification of "wood screws." The Court of International Trade looked very closely at the physical characteristics of the screws and did not focus on the apparent common use of the screws, which is to fasten wood. Unable to differentiate between wood screws and self-tapping screws on the basis of physical characteristics, the CIT employed General Rule of Interpretation 3(c) and classified them as self tapping screws, the last tariff provision in numerica...

This is the last of the cases I have in my cue. General Mills, Inc. v. United States  is one of those cases only a lawyer would love or would hate, depending on which side of the dispute you happen to be. The problem for General Mills is that it wants the Court of International Trade to review a ruling in which Customs and Border Protection determined that Brussels sprouts from Belgium that were packaged with frozen butter sauce chips in Mexico are not entitled to duty-free entry to the United States under the North American Free Trade Agreement. Part I: The Ruling Let's start with with ruling, so that I can also call this my Ruling of Last Week 17. The relevant ruling is HQ H212296, which is in the January 29, 2014 Customs Bulletin  starting at page 89. The NAFTA portion of the ruling is in dispute and is interesting. Keep in mind that the imported product is just frozen Brussels sprouts from Belgium packed in pouches in Mexico with frozen butter chips. The finished p...

Hydrogen fuel cells are likely to play a significant role in powering the future. We are on the cusp of seeing passenger cars powered by fuel cells . Fuel cells are used in spacecraft and in more mundane setting like the devices that spray air fresheners in public washrooms. The nature of a fuel cell was also front and center in the recent U.S. Court of International Trade decision in Rubbermaid Commercial Products, LLC v. United States , which involved air fresheners and a similar device that squirts cleaners into public toilets. Here is a little science that will help explain the legal issue. Keep in mind that water is two hydrogen atoms bound to a single oxygen atom. A fuel cell consists of zinc and water with a cathode and an anode. The cathode is a negatively charged electrode, which attracts positively charged particles. The anode is positively charged and attracts negatively charged electrons. In the fuel cell, the zinc and water are chemically reacting with the oxygen in th...

Hartford was a surety in the marketplace Sunline imported crawfish from abroad Sunline says to Hartford, "Man, I need your cash" And Hartford says this while it shakes Sunline's by the hand Obligor, obligee, goods come in Lala, how the goods come in If you are visiting this blog, you probably know that most importers use a bond secured by a surety company. The surety agrees that if the importer defaults, the surety will pay Customs and Border Protection any duties owed. In return, Customs agrees to release the merchandise to the importer before the entry is liquidated and duties paid. The surety bond is the oil that lubricates the whole system. Without the security of the bond, Customs would hold on to merchandise until it had cash in its metaphorical agency hands. Surety bonds are a common means of insurance for all kinds of deal including your local bail bondsman to complicated financial transactions. As a result, there is a lot of law surrounding the relation...

The U.S. Court of Appeals for the Federal Circuit has affirmed the decision of the Court of International Trade that "BetaTab," a mixture of beta-carotene, antioxidants, gelatin, sucrose, and corn starch, is not "particularly suitable" for a specific use. Rather, it is properly classified as "provitamins, unmixed" under HTSUS item 2936.10.00. The reason Roche Vitamins, Inc. v. United States is a tricky classification case has to do with HTSUS Note 1 to Chapter 29, which states that "Except where the context otherwise requires, the headings of this Chapter apply only to: [certain products] with an added stabilizer (including anticaking agent) necessary for their preservation or transport." Furthermore, the Explanatory Notes to Heading 2936 states: The products of this heading may be stabilized for purposes of preservation or transport:  by adding anti-oxidants, by adding anti-caking agents(e.g., carbohydrates), by coating with appr...

I just got around to reading Chasing Aphrodite: The Hunt for Looted Antiquities at the World's Richest Museum by Jason Felch and Ralph Frammolino. Anyone interested in the compliance aspects of the trade in cultural properties and antiquities should read this book. The details of the illicit trade and the evolution of thinking within the museum community are fascinating. The book is well researched and travels between illegal excavations in Italy to the NY apartments of wealthy collectors, and finally to the halls of the Getty Museum in California. There is not a lot of legal background here other than references to the 1970 UNESCO convention and the National Stolen Property Act. But, this is not a legal text. It is more about the culture of the antiquities trade. From a legal perspective, this is a great case study on how our clients can sometimes self-blind and delude themselves into believing they have compliance. Or, more cynically, how companies can create the appearance of ...