Customs Law

In real life, I represent importers and exporters who need to maintain compliance with U.S. laws and regulations concerning international trade. For the most part, that means customs law and export controls. As Bryan Garner once said at a seminar I attended, "hence the title" [of my blog]. One of the more complicated and potentially troublesome areas of compliance for importers involves antidumping and countervailing duty orders. The financial consequences of such an order can be dire for companies that entered into purchase contracts prior to the order or without knowing that an order applied to the goods. Often, the latter happens when suppliers assure the buyer that merchandise is either outside the scope of the order or from a source other than the subject country. Unfortunately, suppliers may be uninformed on the scope of the order, too happy to falsely state the origin of the product, or willing to misrepresent that it is otherwise outside the scope of ...

Note: I am writing this post while on vacation at an undisclosed location. The Internet here is lousy. I am paying a fair amount of money for "high speed access." Despite that, I feel like I am working on a vintage 3600 baud dial-up modem. Consequently, you will have to make do with two links. I might go back and fill in more when I have a decent connection. We just talked about a Customs and Border Protection ruling in which I complained about CBP straying from the traditional substantial transformation test of looking for a change in name, character, or use to determine country of origin. Now we run up against Energizer Battery, Inc. v.United States , in which the Court of International Trade addressed essentially the same question. The CIT started out strong and raised my expectations that we would see a very detailed analysis of the test. We did get a thorough and logical opinion. But, I still have some concerns. So, let’s walk through this. Under the Buy America ...

You may recall that the Court of International awarded attorneys fees to the plaintiff in International Custom Products v. United States. This case has a very complicated litigation history. I will not review that here. You should go back and read the original post about the CIT decision on fees. Now, the Court of Appeals for the Federal Circuit has affirmed the CIT's decision. That is a substantial victory for the plaintiff. What you need to know is that Customs and Border Protection issued a binding ruling to ICP on the classification of its "white sauce." Customs subsequent issued a Notice of Action reclassifying unliquidated entries under a different provision. CBP did not take steps to revoke or modify the prior ruling before taking this action. As a result of the reclassification, and the resulting application of dairy quota, the duty payable on this merchandise increased by 2400%. The subsequent litigation resulted in five judicial opinions including two prior ...

This is one of those posts in which I tell you that there are many cases and rulings sitting on my desk, all of which I plan to use as the basis for upcoming blog posts. It is also the end of the year and the time when I contemplate the state of this blog. [Note: Shaking my fist at the ABA Journal ] This has been a good blog year, despite having fallen behind on my coverage of rulings. My personal view is that the content remains of acceptably high quality combined with it usually being timely. So that's good. I did earn recognition from the Expert Institute ; fifth place out of a large field is not too bad. Thanks for your votes. I'll continue to plug along here and hope you stay with me in an 2017. As always, I sincerely appreciate my readers. At the recent Court of International Trade Judicial Conference and at a trade meeting in Chicago, folks introduced themselves as readers. That always makes me happy. I hope to see more of you at upcoming events. Feel free to comment o...

I watch competitive cooking the way a stereotypical American male might watch baseball. I don't care if it is Top Chef or Chopped at the high end or the dreck that is Cupcake Wars and The Great American Food Truck Race. I don't watch kids compete, that's where I draw the line. I also like to eat. As a result, I am familiar with a lot of strange food items. Pine nuts are not all that odd. I recently learned a lot more about pine nuts when I read Specialty Commodities Inc. v. United States , which involves the tariff classification of the seed of the Korean pine nut, Pinus koraiensis. Customs and Border Protection classified these seeds as "Other nuts, fresh or dried, whether or not shelled or peeled: Other: Other: Shelled: Other" in HTSUS item 0802.90.97. The plaintiff believes they are best classified in 0802.90.25 as "Pignolia: Shelled." Clearly, the question is whether the seed of the Koreas pine, from China, is a "Pignolia" for purpose...

We don't talk enough about customs value here. It is important, complicated, and interesting. It deserves more attention. There are, however, also fewer rulings and cases on valuation questions. Happily, this one (HQ H233376, Sep. 19, 2016) caught my eye. The issue is whether a royalty paid to a U.S. patent holder who is unrelated to the importer is dutiable when the royalty is paid not by the importer but by the importer's parent company. The patents at issue are all utility patents, meaning that they relate to new and useful inventions rather than to the design aesthetics of the item. A utility patent generally involves the critical technology that defines or empowers the invention. The license grants to the importer (via a predecessor company, just to complicate matters) "to make, have made, use, sell, offer for sale and import Licensed Devices" worldwide. The license also authorizes the licensee to disclose to the manufacturer, who is in Malaysia, the informati...

I like bikes. Lately, that is more in theory than in actual usage, but that is my fault. In reality, bikes are a transformative technology. They give kids their first sense of independence. They give everyone a means of transportation with zero carbon emissions. In some cases, the availability of that transportation may be lifesaving . Thus, when I see something at work that involves bicycles, I usually take note. Such is the case with the September 21, 2016 Customs Bulleting and Decisions in which Customs and Border Protection revoked a ruling, N269994 (Nov. 20, 2015), on the country of origin of bicycles. The bicycle in question is assembled in the United States from imported components, including frames. Customs had previously ruled that assembling components to a U.S.-origin frame produces a bike with the U.S. as the country of origin. In N269994, it apparently misapplied that same analysis to find the U.S. to be the country of origin of bicycles with imported frames. In...

The Court of Appeals for the Federal Circuit has affirmed the Court of International Trade decision in Tyco Fire Products v. United States . You can read the background on this case here . The Federal Circuit held that liquid-filled glass bulbs of the sort used in fire sprinklers are properly classified as articles of glass in Heading 7020 rather than as mechanical appliance of Heading 8424. There are two interesting points to take away from this decision. The first is that the Federal Circuit, at least this panel, is skeptical of the value of the Brussels Tariff Nomenclature Explanatory Notes when interpreting the current Harmonized Tariff Schedule of the United States. This is in part because Customs declared the HTSUS to be a wholly new system and that the BTN Notes are of no value when interpreting the new text. The CAFC did not definitively decide this issue, but it certainly creates doubt as to the continuing value of the old notes. The second point is that the CAFC indicates...

I am on the record complaining about the amount of discovery that is requested in many, not all but many, customs cases before the U.S. Court of International Trade. My belief is that in many cases, mostly tariff classification cases, there is not a reasonable basis to dispute the nature of the product. That is not necessarily the case when issues like principal use or essential character are concerned. But, in many cases, the actual physical characteristics of the item are known and not reasonably subject to debate. That physical reality will usually trump arguments based on personal understandings, marketing, and intention. As a general rule, I don't think it matters that Malcom down in Engineering always calls the electric toothbrushes he designs "machine tools." Nor do I think it matters that an Import Specialist at the Port of Smallville, Kansas once said that the electric toothbrush should be classified as toothbrushes rather than as electromechanical domestic appli...

Two days left to vote for my work blog in the Best Legal Blog contest . Because I learn from current events, I would like to modify my previously friendly and polite pitch. This blog contest is rigged. The IP lawyers and immigration lawyers are out to get me. Lawyers from big firms in NY and Washington are sneaking in, pretending to be niche boutiques, but they are really old, tired, losers with no stamina. My blog is the best, the best. It bigly covers import law, which really is the most important law. I know customs law like no one else. I just do. If you vote for me, you'll see, it will be great. I will win because that's what I do. I will make my blog great again and that will make you all great again. Who will pay for that? Mexico, that's who. Vote here .

For some reason, I have been asked what it would take for the U.S. to withdraw from NAFTA or another trade agreement. Funny how that comes up today, the day after the U.S. presidential election. The answer is not 100% clear. In Article 2205 , the NAFTA says the US can withdraw with 6-months written notice. If that happens, the agreement stays in place between Mexico and Canada. How that happens is a question. The US would certainly be out of the agreement going forward, but most of the implementation of NAFTA was through legislation. That legislation might still be in place until Congress removes it. Arguably, the legislation might automatically repeal itself. 19 USC 3451 says that if a country withdraws, the amendments made to implement NAFTA “cease to have effect with respect to that country.” It is not clear whether “that country” can be the US or whether that implies that Canada or Mexico has left NAFTA. There would be much litigation. Other trade agreements likely wor...

Election day is here. If you have not already voted, get out tomorrow and vote. After you have voted, come back and vote for this blog in the Expert Institute Legal Blog Contest. There are only about six days left to vote and my early surge is fading. Please show your support. You can vote at this link.

Next week we in the U.S. will have a new president-elect. Getting there has been an unusually disheartening referendum on the mood and direction of the country. Voting always matters, but it might matter more this year than in a very long time. With that, we take a quick look at Von Stade v. Arthur, 28 F. Cas. 1274 (S.D.N.Y. 1876)(I cannot find a fee link). Here is the decision in its entirety: SHIPMAN, District Judge.  The second section of the act of June 6, 1872 (17 Stat. 231), provided, that, on and after August 1st, 1872, the existing duties upon the articles which are enumerated in the section should be reduced ten per centum.  The section specifies, among the enumerated articles, "all wools, hair of the alpaca goat, and other animals, and all manufactures wholly or in part of wool, or hair of the alpaca and other like animals, except as hereinafter provided." The question in this case is, whether the duty of fifteen cents per pound upon hogs' bristles was redu...

Over the years, I have opined on the tariff classification of a number of gizmos that I think are probably computers. Often, Customs and Border Protection disagreed with me. Usually, this has to do with whether the particular item is "freely programmable" as opposed to having a specific and limited function. For example, here is a discussion on big industrial digital printers. Here is another on a music editing system and another  on a smart watch. I also previously admitted to being a middle-aged Microsoft fanboy. So, this next post is right in my wheelhouse. If you are not familiar with Microsoft's HoloLens, watch this video. The imported merchandise is the Microsoft HoloLens and its associated "clicker" controller. HoloLens is a computer [ spoiler ]. It has a 32-bit processor, 2 GB RAM, 64 GB storage, a graphics processor, and Wi-Fi connectivity. Most important for our purposes, it runs Windows 10 and supports applications written for that environm...

When I saw that the Court of International Trade issued an opinion in a case called Pleasure-Way Industries, Inc. v. United States , I was hoping for something more salacious than the tariff treatment of mobile homes from Canada. Despite my prurient disappointment, this is an interesting case and raises a couple interesting questions. As with many classification cases, the material facts are not in dispute. The plaintiff purchased Sprinter vans in the United States and exported them to Canada. In Canada, the plaintiff converted the vehicles into motor homes (or possibly the " tiny house " to which I aspire). That conversion included new flooring, cabinets, plumbing (including a toilet and shower), kitchenette, and a propane system. When returned to the US, the plaintiff believes the vehicles should be afforded a duty preference under HTSUS item 9802.00.50 as “[a]rticles returned to the United States after having been exported to be advanced in value or improved in con...

Ruling of the Week? Who am I kidding? This is number 20 in my 2016 rulings of the week series, not number 43 as it should be. I'll either try to step it up next year or come up with a more truthful name for the series. Today's ruling is HQ H264771 (Jul. 28, 2016) in which Customs trods over ground I thought was well settled and reaches the conclusion opposite from what I might have done. Let's see how that happened. It's a close call, so reasonable minds might differ on this one. The merchandise in question is plastic "SippaTop" bottle toppers. These are plastic, spill-proof, reusable, tops for juice bottles. They are in the form of popular licensed characters and are, therefore, marketed as collectible. According to the company, they give young children more independence and parents more peace of mind, which I take to mean that they don't spill and that keeps everyone happy. The importer entered these in 3923.50.00 as plastic lids, stoppers, caps...

I'm Larry Friedman. You may remember me from such blog posts as  Customs Trolls and the False Claims Act . In that post, we talked about the case brought by a company called Customs Fraud Investigations LLC alleging that Victaulic Company had avoided the payment of marking duties by making false statements to Customs and Border Protection. At the time of the first post, the United States District Court for the Eastern District of Pennsylvania dismissed the case as failing to state a cause of action. The Court subsequently refused CFI's motion to amend its complaint in an effort to correct the deficiency. The Court of Appeals for the Third Circuit has now reversed the District Court and sent the case back down for further proceedings. The case was brought under the False Claims Act.  This law was passed after the Civil War as a means of ensuring that the government was not paying out on fraudulent claims. In a typical FCA case, the "relator" alleges that someone su...

I've been waiting for a potentially block-buster decision in Ford Motor Co. v. United States , which is pending before the U.S. Court of International Trade. We now have a preliminary decision which is interesting, but is not yet in a position to bust any blocks. This case is about the tariff classification of imported Ford Transit Connect vehicles made in Turkey. At the time of entry, all Transits have swing-out front doors with windows, second-row sliding doors with windows, and swing-out rear doors, some of which have windows. The imported vehicles also have two rows of seats, rear passenger windows, rear passenger seat belts, child-locks on the rear sliding doors, a rear cup holders in the front console, a full length cloth headliner, coat hooks, and a map pocket in the second row. Starting in 2010, Ford created a "cost reduced" second row seat for use in Transit vans. The second row seats lack headrests, "comfort wires," a tumble lock mechanism and labels...

I received an email telling me that this blog is in the running for some kind of recognition among legal blogs in niche or specialty practices. To win, I need readers to vote. So, please do me a solid by visiting this site  and voting for my blog. You'll need to navigate down the page to find The Customs Law Blog. Then click the image of the blog. That will take you to the voting page. Thanks. And, watch this space for a review of a case from the Supreme Court of Canada and some developments involving the False Claims Act.