Showing posts from 2015

Charge the Weapon and Change the Toner!

I have been sitting on Xerox Corp. v. United States while I try to take care of meaningful client work. Thank you clients for another year of interesting and rewarding work. I am always honored to be given the opportunity to work with some great companies and individuals. [There may be spoilers in the links below. There are none in the text. Go down those rabbit holes at your peril.] I am irrationally happy to say that saw Star Wars: The Force Awakens this weekend. It made me very happy to re-live being 14 years old, at least for a while. I am also very pleased to say that the reboot did not screw anything up. It has almost exactly the look and feel of the original trilogy, is a bit funnier, and moves at a great pace. Now, if they don't turn Star Trek into the Fast and the Furious, I will continue to be nerdishly happy. I am, however, starting to lose enthusiasm for Batman vs. Superman , which they better not screw up. [Shaking fist at heaven.] That said, I am now about to

Ruling of the Week 30: Tapenade and the Chutney Problem

It is apparent that I did not succeed in my goal of getting 52 Rulings of the Week into the Blog. Despite, that, I think this has been a pretty productive blog year. This will be my 71st post of the year, with one to follow. That will probably cap 2015. Next year, I hope to pick up the pace somewhat. I'll continue trying to post the Ruling of the Week and court cases. I'll also make an effort at other administrative news. You know what I miss? Posts about animal smuggling . Keep an eye on my Twitter feed for news, mostly in the form or retweets from other bloggers. For now, consider the chutney problem. Headquarters Ruling H259324 (Sep. 3, 2015) involved the tariff classification and NAFTA status of green olive tapenade from Canada. This ruling is from a protest with an application for further review. That means that Customs and Border Protection denied the NAFTA claim made on this merchandise and the importer protested. In what appears to have been an effort to make the

Nitek and the Penalty Process

There is a lot on my plate at the moment, but I want to be sure to squeeze this in for you. There goes my lunch-time walk up Michigan Avenue. United States v. Nitek Electronics is an important decision of the United States Court of Appeals for the Federal Circuit. Go read it. The gist is all you will get from me today. The gist is that when the United States commences a penalty action in the United States Court of International Trade, the point of the action is to collect on the same penalty claim Customs and Border Protection asserted in the administrative process. In Nitek, Customs' claim was based on a finding that the importer had acted with gross negligence. When Justice filed the case in the CIT, it asserted that the violation occurred as a result of (un-gross) negligence. Nitek moved to dismiss on the grounds that Customs never made a claim based on negligence and, therefore, that claim was not properly before the Court. T he CIT agreed and dismissed the case . On bas

Deemed Liquidation and Notice

[UPDATE: Sometimes, Congress fixes things. That is the case here. The Trade Facilitation and Trade Enforcement Act of 2015 includes, at § 911 a fix for the issue discussed in this post. The relevant amendment changes the existing law "by striking 'on which notice of the original liquidation is given or transmitted to the importer, his consignee or agent' and inserting 'of the original liquidation'.” This should make the relevant date the date on which the deemed liquidation occurs, not the date of notice, which is how it should be (if you ask me).] The second recent case from the Court of International Trade involves the deemed liquidation of an entry. It is United States v. Great American Insurance Company of New York . This is a collection case in which the United States is seeking $50,000 from a surety for unpaid antidumping duties, plus pre-judgment and post-judgment interest. For purposes of my own time management, I am just going to give you the take-aw

Suspension, Assessment, and Liquidation

Interesting court decisions are piling up. The first is American Power Pull Corp. v. United States . This case involves two entries of hand trucks from China, which are subject to an antidumping duty order. At the time of entry, the importer deposited 26.49% of the value of the merchandise as a dumping duty deposit and Customs issued a notice of suspension of liquidation. A periodic review covering the entries followed and Customs continued the suspension of liquidation. After the review, and no doubt much to the disappointment of the plaintiff, the assessment rate was set at 383.60%. The producer filed suit to challenge that determination, no doubt making the plaintiff in this case happy. The Court granted an injunction against liquidation of the entry. Eventually, the rate was reduced to 145.90% and Commerce issued liquidation instructions to Customs and Border Protection. When CBP liquidated the entries with the additional assessment, American Power Pull protested, asserting that 

Goodbye Sitemeter

Since the earliest days of this blog, I have used Sitemeter to count the number of visits. The count is currently 233,472. Sitemeter has gone haywire and I rarely delve deeply into my visitor data anyway. So, I am pulling the link from the bottom of the page. If anyone has a suggestion for a good and free way to get analytics, let me know.

One Protest Per Customer

I'm going to do this one quickly because I am busy and the case is straightforward, but still an important lesson. In Design International Group v. United States , the Court of International Trade reaffirmed the rule that an importer may only file one protest contesting the liquidation of an entry. In the case, the importer made two entries of pencils. When Customs liquidated the entries, it allegedly miscalculated the quantity and, as a result, incorrectly assessed duty. The broker for the importer filed protests for each entry. That right there is one protest per entry. Customs denied both entries. Subsequently, counsel for the importer filed a third protest challenging the denial of both prior protests. That is a second protest challenging the liquidation of each of the entries. When Customs and Border Protection denied that third protest, the importer filed suit in the Court of International Trade, using the third denied protest as the basis for jurisdiction. What do you

Ruling of the Week 2015.29: Hasbro II, Royalties and Proceeds

Continuing my exploration of classic Customs and Border Protection rulings, we come to the confounding "General Notice" called Hasbro II. It was published at 27 Cust. B. & Dec. No. 6 (1993). Customs does not have Customs Bulletins online from that far back, so I put a copy here for you to read. The issue arises from a ruling request concerning an apparent royalty payment. Hasbro, as the importer/buyer of merchandise agreed to pay the seller 7% of the resale invoice price of the imported goods. Presumably, in addition to the original purchase price, the contract requires Hasbro to pay an addition amount to the seller equal to 7% of whatever price Hasbro gets for the goods on resale in the U.S. It seems fairly obvious that the 7% second payment, which is included in the purchase contract, is part of the total price paid or payable for the imported goods. That would tend to make it dutiable. But, the law requires specificity. If the payment is not " for the merch

When Does A Treatment Start?

Do you know what I hate? Change. Once I get comfortable with something, I am not a big fan of changing it up until something demonstrably better comes along. I drive my cars until I can't and I have gone to the same place to get my hair cut for 15 years. I have an 8 year old computer at home that is only now getting annoying enough to merit a trip to the recycling center. I also do not like it when Customs and Border Protection makes a change without an obvious and good reason. I get that if the Harmonized System Committee changes the law, Customs will implement the change. Also, I am completely in favor of the movement to ACE, which will provide demonstrable benefits to the trade. But other times, it seems to just be a matter of Customs rethinking the issue or never having been happy with the result the first time around. See, first sale valuation This comes up in the context of American Fiber & Finishing, Inc. v. United States , a recent decision of the Court of Internati

Ruling of the Week 2015.28: Billiards Procurement

Governments buy all kinds of unexpected stuff. Billiards tables, for example. In HQ H268491 (Oct. 15, 2015) , U.S. Customs and Border Protection issued a final determination on the country of origin of certain billiards tables for purposes of government procurement under the Trade Agreements Act of 1979 . These rulings are not your run of the mill origin determination for purposes of labeling or duty determinations. Rather, an interested party may ask CBP for either an advisory or final decision on whether an article is a product of a designated country or instrumentality for purposes of securing a waiver of the "Buy American" rules for goods offered for sale to the U.S. Government. This ruling involves four billiards tables assembled in the United States from components from various countries. The components are shipped to the customer and the tables are assembled on-site. It is sufficient to understand that there are a lot of steps and a lot of parts. Also, the assembly

Ruling of the Week 2015.27: Prototypes and Double Taxation

This is a review of what I will call a "classic" Customs and Border Protection ruling about which everyone in the trade should be familiar. In this case, we are talking about HQ 545907 (Oct. 11, 1996), which is the reconsideration of HQ 545278 (Apr. 7, 1994). This ruling involves a contract between Ford Motor Company and Yamaha Motor Company. Under the terms of the deal, Yamaha was to design and develop a modified Ford engine. Ford agreed that it would purchase any prototypes Yamaha made. If the program was successful, Ford agreed to enter into a contract for the purchase of the modified engines. To develop the modified engine, Yamaha produced 178 prototypes, which were purchased by Ford. Ford imported 156 of the prototypes and paid duty on them based on the price paid to Yamaha. Note that this is 1996, before tariff item 9817.85.01 was added to the tariff. The program was a success and Ford started importing the engines. The relevant question is whether the sums Ford

Composite Wood is not Necessarily Veneered

In Composite Technology International, Inc v. United States , the Court of International Trade considered the tariff classification of wooden door stiles and rails consisting of a 9.5 mm thick pine cap laminated to a based of laminated poplar wood layers. Each poplar layer is lass than 6 mm thick. The exposed surface is a layer of pine. Customs classified the merchandise in 4421.90.97 as other articles of wood. The imported protested that classification and claimed that the correct classification is 4412.99.51 as other plywood, veneered panels, and similar laminated wood. The issue, therefore, was whether the imported merchandise is properly classified as plywood, veneered panels, or similar laminated wood. If so, it would not be classifiable as an "other article of wood." According to the plaintiff, the merchandise described above fits squarely within the definition of a veneered panel or, in the alternative, as a "similar laminated wood." For those of you wh

Withdrawal Not As Easy As Expected

The second recent Court of International Trade decision of interest primarily to lawyers is United States v. International Trading Services, LLC and Julio Lorza.  In this case, the lawyer representing International Trading Services and Mr. Lorza tried to withdraw from his representation of the corporate defendant while apparently continuing to represent the individual. It is not very easy to fire a client in the middle of litigation. The CIT's Rule 75(d) requires that an appearance by an attorney may only withdrawn by order of the Court. It requires that the lawyer make a motion and that the motion be served on the client. Here, the corporate defendant dissolved pursuant to Florida law before counsel was hired by Mr. Lorza to represent both the defunct company and the individual. Counsel seeks to withdraw from representing the corporation on the entirely reasonable grounds that it no longer exists. Consequently, according to counsel, he has no corporate client to represent. Th

Duped "Importer" Liable for Customs Fraud

UPDATED: April 2, 2019. Note: As originally drafted, this post was based on the first version of the CIT slip opinion. As published, the initial opinion included the name of the broker involved. As amended, that person is identified only as "Individual A." The amended slip opinion is here . On the request of the broker and consistent with the Court's decision to not identify the broker, I have removed the name below. ________________________________ There have been several recent cases at the Court of International Trade that merit discussion. Two, in particular, are primarily of interest to lawyers. They show the truth of the old adage that bad facts make bad law. The first is United States v. Jeanette Pacheco . In this case, the United States of America is pursuing Ms. Pacheco to the tune of $2.6 million for her "role" in a customs fraud scheme. The "scheme" went like this: A licensed customs broker approached Pacheco in a nightclub. He offe

Ruling of the Week 2015.26: "Where Have I Been" Edition

[Updated because I either cannot spell, type, or proofread. The post is substantively the same.] Life and work sometimes intervene to prevent me from being a full-time blogger. So, I missed a couple rulings. Sorry about that, I do my best. I'm scanning rulings now for something of interest and stumbled on NY N266542  which is moderately NSFW and amusing to the 12 year old boy still stuck in my head. It involves a harness used when mommy and daddy love each other very much. The tariff classification is 6307.90.98 as an other made up textile article. The ruling is only of interest in a prurient way. Another one that caught my eye is N266838 (Aug. 4, 2015) concerning the tariff classification of used vegetable cooking oil. The product comes from the Ivory Coast and is classified in 1518.00.40 as animal or vegetable oil chemically modified and inedible, not elsewhere specified or included. I'm not sure whether use in cooking results in chemically modified oil or that the oil

Ruling of the Week 2015.25: No Refund for CPSC Restricted Goods

[UPDATE: I changed the title of this post to more accurately reflect the content, and to not look like an idiot.] Like a lot of other lawyers who do administrative law, I have lately been thinking about Customs and Border Protection's efforts to wrangle its partner government agencies into using the Automated Commercial Environment to submit data to Customs. If you have been dealing with Customs for the last year or so, you have probably seen this image. What is happening is the mandatory use of Customs' ACE system for electronic filing of data for other agencies. Previously, this data might have gone to Customs on paper or in a different electronic system. If this works, it will be great. If you are an importer, make sure your broker is up to speed and has invested in the software and training necessary to keep up with these changes. One of the agencies that is moving toward ACE implementation is the Consumer Products Safety Commission . CPSC regulates and enforces p

Ruling of the Week 2015.25: Stipulation Schmipulation

This one is for the lawyers. I'll try my best to make it not too far "inside baseball." Cases in the Court of International Trade don't always result in a published opinion. There are lots of ways customs cases get resolved. It is possible that one side or the other will just give up and file a voluntary dismissal. In other cases, the parties come to an agreement as to the proper treatment of the entry in favor of the plaintiff. When that happens, the parties file a Stipulated Judgment on Agreed Statement of Facts under Rule 58.1 . The Court will usually then enter the judgment and Customs will reliquidate the entry with a refund to the plaintiff or cut a lump-sum refund check. Sometimes there is a combination of events. Because of the large number of related cases at the CIT, the Court has a unique process by which it allows parties to designate a case a "test case" ( Rule 84 ) while suspending other cases that involve the same issues. Once the test ca

Finality of Liquidation and the Loss of Defenses

Most people assume that when sued by the United States for unpaid customs duties, taxes, fees, and interest, the defendant will have an opportunity to assert all available defenses to the claim against it. That is technically true. The question is which defenses are available. United States v. American Home Assurance Co. , has made the answer to that question a bit clearer, but maybe not in a good way. American Home ("AHAC") is the surety on a number of bonds covering the importation of mushroom and crawfish tail meat from China. Both of those products are subject to antidumping duty orders. Customs and Border Protection liquidated the entries and assessed antidumping duties. When the importer defaulted, the government tried to collect from AHAC and informed AHAC of its intent to seek post-judgment interest. AHAC protested the demands for payment of duties and interest. Customs denied the protests.  Therein lies the problem. Section 1514 of the Tariff Act of 1930 ( 19 USC

Ruling of the Week 2015.24: How Wide is Your Bike Lock?

Although I have actually been on my bike a shamefully few times this year, I remain interested in all things related to cycling, particularly commuting by bike. A key tool for a bike commuter is a good, solid lock. Thus, I noticed H168717 (July 17, 2015) in the August 12, 2015 Customs Bulletin . You will need to scroll to page 90 to find the ruling. The issue is the proper classification of Master Lock cable locks. Customs originally classified the locks in HTSUS item 8301.10.50 as "Padlocks: not of cylinder or pin tumbler construction: Over 6.4 cm in width." That tariff item has a duty rate of 3.6%. Master Lock argued for classification in item 8301.10.20, which covers locks with a width not over 3.8 cm and has a duty rate of 2.3%. I am going to save myself two thousand words by saying, this is what we are talking about: 8020D: Picture from Amazon 8119DPF: Picture from Amazon You can see where this is going, right? The sole question is, "What is the correc

Ruling of the Week 2015.23: How Smart is Your Watch?

Smart watches are cool new technology. Generally, I want cool new technology. I'm not so interested in a smart watch, at least not at the moment. One reason for this is that I am firmly commitment to my Windows Phone. I have little interest in a watch that requires me to have an iOS or Android phone. Microsoft does not sell a smartwatch, although its former partner Nokia was shopping one . I have some interest in a Microsoft band, which is supposed to have impressive utility for cycling . But, I hear there is a new version on the horizon, so I am waiting. That said, I am struggling to get my current bike computer (a Polar CS300) working. So, I am also kind of jonesing for a Polar M450 . These are clearly my first world issues. A more relevant consideration for this blog is the proper tariff treatment of a smartwatch. Customs recently settled the issue, at least with respect to a Samsung "Gear" Live Android smartwatch. See HQ H257947 (July 14, 2015) . The watch uses Bl

About that Lion and the Lacey Act

A lot has been said about the Minnesota dentist who killed Cecil the lion in Zimbabwe. From the perspective of this blog, the question being asked is whether the American dentist violated any U.S. laws. The short answer is that I don't know for certain whether any criminal laws have been violated. What has come up in the trade context is whether the hunter violated the Lacey Act. Since Lacey impacts trade, it pops up in my practice and is worth a short exploration. The Lacey Act was first passed in 1900 and is an early conservation law. As originally enacted, it protected animals from illegal hunting through criminal and civil penalties. The law also prohibits trade in protected animal and plant species that are hunted or harvested illegally. It is a crime to import into the United States any injurious animals including brown tree snakes, big head carp, zebra mussels, and flying fox bats. 18 USC 42 . Exceptions can be made for properly permitted (and dead) zoological specime