Posts

Showing posts from 2018

Reflecting on 2018

This will be the last post of 2018. It was not a good year for the Customs Law Blog. It was a good and difficult year for customs lawyers and equally so for importers. 2018 gave us 232 duties on steel and aluminum products and a poorly implemented exclusion process. We also saw 301 duties imposed on billions of dollars of goods imported from China, plus a slightly better exclusion process. To make the year just that much more unpredictable, importers and exporters faced numerous threats by the US to withdraw from NAFTA and the release of the text of a substantially new North American free trade deal. All of that, and other factors, kept me from being able to update the blog as often or as substantively as I would have hoped. I hope you are all reading my Twitter feed to keep up with me and my short updates. I am forever grateful to the readers of this blog. I appreciate your feedback and hope to continue to have opportunities to meet in real life at trade events throughout the year

What to Take from 2018: Suppliers Lie

This is part 2 of the Univar discussion. For the evidence issues, see part 1 . If you know me or have ever heard me speak about customs penalty cases, you may know that I am forever frustrated by the disconnect between exporter dishonestly and importer liability. In my personal view, there are many cases in which a na├»ve or careless importer is left holding the penalty bag when an unscrupulous exporter lies about the true nature of the product or the relevant law. How many times does an importer need to ask the exporter to confirm the country of origin, composition, or other relevant fact before the importer can legally rely on those representations? In an age of on-line e-commerce transactions in which seller and buyer may never meet IRL, what is the responsibility of the importer? Those are rhetorical questions because the law is clear on this. My frustration with the law is real, not rhetorical. Let’s look at the facts of United States v. Univar USA, Inc. (Slip Op. 18-157) to

A Sweet Lesson in Hearsay

Image
United States v. Univar USA Inc. , Part 1 This is another penalty case. It has two distinctly different discussions. The first has to do with several disputes concerning the admissibility of evidence. The second has to do with whether the importer exercised reasonable care. This is a 69-page opinion, so we will only hit the highlights, starting with the evidence questions. The government’s claim in this case is that Univar imported saccharine from China allegedly transshipped through Taiwan and misrepresented the correct country of origin. As a result, Univar would have illegally avoided paying antidumping duties. Defendant Univar made a motion for summary judgment arguing that the case should be dismissed as a matter of law. The Rules of the Court of International Trade require that the parties submit statements of facts about which there is no dispute to be tried. These statements must be supported by a citation to admissible evidence. See USCIT Rule 56(c) . Regarding eviden

Where is the Report of Investigation?

As we get to the end of 2018, I am trying to wrap up a lot of work and a few blog posts. Here is the first. Greenlight Organics is not a particularly interesting decision on its own, at least not at this point. It involves a motion for summary judgment in a customs fraud case. The government is seeking approximately $3.5 million in unpaid duties and penalties from Greenlight. Because this is a fraud case brought under 19 USC 1592, the applicable statute of limitations in five years. See 28 USC 1621. The trick with a fraud case is that, unlike the standard negligence case, the five-year clock does not start to run until Customs and Border Protection first learns of the fraud. Here, the government filed its complaint on February 8, 2017. Defendant contends that the government knew of the fraud in 2011, making the case time barred. The United States counters that it did not know of the fraud until sometime after February 8, 2012, making the case timely. The Court of International T

Reasonable Efforts to Confer are More than Short Emails

Things continue to happen in the world. Here is one: U.S. v. Great Neck Saw Manufacturers (18-144) This is one of the rare discovery disputes that produced a written opinion from the Court of International Trade. The underlying case involves an effort to collect a $1 million penalty on approximately $307 thousand in unpaid duties. As per the usual course of action, the government served on defendant requests for production, interrogatories, and requests to admit. Citing the large number of entries, GNSM requested an extension to respond. Five days after the extended period, GNSM provided a response that did not address the entire request. In the response, GNSM noted the difficulty of gathering the information on approximately 6500 entry lines, the need for client confirmation, and its inability to produce some information. Four weeks later, the government inquired as to the status of the remaining request. After some additional production and additional expressions of effort by th

GSP Refund Claims Denied

In other news, the Court of International Trade has dismissed a claim seeking refunds of duties paid while GSP was lapsed. The case, Industrial Chemicals Inc. v. United States involves 65 entries on which the importer paid duties for goods that would have been duty-free if the Generalized System of Preferences was in effect. When GSP was renewed, the importer had a statutory 180-day period (ending December 28, 2015) in which to make a claim. Due to some undefined misunderstanding between the importer and its customs broker, the claim was not made until February 2, 2016. Customs promptly denied the request as untimely. The importer filed a protest challenging . . . well, something. Customs and Border Protection denied the protest and the importer sued in the Court of International Trade. In the CIT, the United States moved to dismiss for lack of subject matter jurisdiction. There is some ambiguity about the plaintiff’s theory. The protest might be directed at the original refusal

Lamenting Litigation

Sometimes, a seemingly simple proposition is not easy to prove in federal court. Such is the case with the tariff classification of Ziploc bags. First, a note to intellectual property lawyers. Ziploc is a registered trademark of SC Johnson & Sons. I am not using it as a generic description. Rather, it is the actual product at issue in the Court of International decision SC Johnson & Sons v. United States . I am not going to say "brand" or insert a registered trademark symbol ® throughout my text. Let's just all agree that when I say "Ziploc" I mean plastic bags that are products of SC Johnson & Sons. On its face, one would expect that the classification of these common items under the Harmonized Tariff Schedule of the United States would be a relatively straight-forward proposition. In fact, I am surprised there is a controversy at all. There are two potential HTSUS heading. Heading 3923 covers: "Articles for the conveyance or packi

Lawyerly Arguments on Drawback

There are a lot of practicing lawyers who secretly or not so secretly harbor desires throw in the legal towel and transition to a career that is their true passion. A third of them think they would be award-winning novelists if only they had time to write. Another third think they should be hedge fund managers, venture capitalists, or similar financial potentates. The remainder are an eclectic mix of future pastry chefs, bike shop owners (who are also excellent baristas), rock drummers, and other jobs where middle-aged hipsters with discretionary income will fit right in. The rest of us actually like lawyering and sometimes get the opportunity to be creative at the same time. Such is the case in Flint Hills Resources v. United States , a not-so-recent decision of the U.S. Court of International Trade. The question was whether Customs and Border Protection properly denied refunds of Harbor Maintenance Tax ("HMT"), Merchandise Processing Fee ("MPF"), and Environment

Watch this space

There is a chance I will soon see a gap in my schedule large enough to write a post or two. It could happen. I'm not promising, but it could. There are several Court of International Trade decisions to discuss. We also have a new trade agreement with Mexico and Canada that we will not call NAFTA; it is the United States Mexico Canada Agreement. The only pronounceable word I can get from that is "UnMexiCan." That does not seem good for political marketing in Mexico. I hope to give some highlights of that agreement here. You may also have noticed that today was the deadline for filing exclusion requests from the first round of Section 301 duties on goods from China. That, and 232 duties, is a significant part of why I have had my head down.

CIT: Trolls are Not Human

Image
We live in an age in which we recognize and respect the great diversity of humanity. No matter your shape, color, or gender; your physical abilities or challenges; or your religious affiliation or lack thereof, you are a human being entitled to all of the rights and privileges of all other human beings. Of course, that does not apply to Trolls. Trolls are gross little beings with wide noses between their big eyes and jug handle ears. Plus, their heads are disproportionately large and they have hair that stands tall like wheat in a Nebraska field. Sometimes, they have unnaturally green skin. Don't get me wrong, some of my best friends are trolls. I wish them all the best. I just know to a legal certainty that they are not human and I don't want my kid marrying one. I know this because the Court of International Trade told me so in Russ Berrie & Co., Inc. v. United States. This is one of those cases that is a grind to get through and must have been so for the judge.

2018 DiCarlo Court of International Trade Program at JMLS

Image
Click Here for Details https://email.jmls.edu/international/compliance-dicarlo/2018/email.html

Case Dismissed Over $26

Often, Customs and Border Protection gets a win for legally correct reasons that are not, in the bigger picture, "just." That is the nature of what we do. There are rules and we live in a country where the rule of law is supposed to matter. We cannot avoid the application of those rules to reach the result we think is better on policy or personal grounds. Neither Congress nor the Administration (including the executive agencies like Customs and Border Protection) can impose their wills to reach a desired conclusion that is inconsistent with the law or the constitution. If they do, it is the role of the judiciary to declare the action illegal and ensure it is remedied. At least that is how it is supposed to work. That is why a lifetime appointment to the federal bench in among the most consequential of powers granted the President and the Senate. At the same time, federal judges (particularly in lower courts like the Court of International Trade) have to follow the law as writ

Tapenade Redeption

In 2016, I had fun participating in a mock oral argument on the classification of a loose mixture of chopped olives. The facts of that case were modeled on a ruling concerning the classification of olive tapenade and artichoke tapenade. See my discussion of that here . In the High Court of ICPA, I lost to a jury of my peers, which remains to this day a shocking stain on my record. I suspect the entirely fake judge was terribly biased. Today, I have renewed confidence thanks to a decision of the U.S. Court of International Trade in Mondiv v. United States , in which the CIT found for the plaintiff that the merchandise is, in fact, sauce or a sauce preparation. Despite my joy, I feel terrible physically and will make this quick. Both products are prima facie classifiable in HTSUS Heading 2005, where CBP classified them as "Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006." But, it also t

Sigvaris Affirmed

This is far less interesting than the life and death fight over the vaquita , but nevertheless an interesting illustration of how tariff language is to be interpreted. You may recall Sigvaris , the classification case involving graduated compression hosiery. These items exert 15 to 20 mmHg of compression on the wearer to force pooled blood to circulate out of the leg and throughout the body. Customs and Border Protection classified these products as graduated compression hosiery in Heading 6115, subject to a 14.6%rate of duty. Plaintiff protested, claiming that they should qualify for duty-free treatment as articles specially designed or adapted for the use or benefit of the physically handicapped in Heading 9817. These articles are duty-free. Customs denied the protests and the U.S. Court of International Trade agreed with Customs. The basic rationale for that decision was that these products are designed to help patients with early stage conditions that do not yet interfere with ge

Extinction, Biodiversity, and the Court of International Trade

Image
[Note: I am so disappointed in the Federal Government (exclusive of the judiciary) that I am leaving this pinned here for a while. Advancing that into the future is the only way I could make it stick. The actual publication date is Aug. 18, 2018. Visit the NRDC , Center for Biological Diversity , and Animal Welfare Institute to donate.] Over the years, the Court of International Trade has occasionally had to dip its judicial toes into environmental law. In Natural Resources Defense Council v. Ross , it was asked to do so to help prevent the potentially imminent extinction of the vaquita. Jumping in with both feet, Judge Gary Katzmann issued a fairly dramatic decision that appears to force the government to act consistent with an existing law intended to protect these animals. "Vaquita" is Spanish for "little cow," but the animal in question is only the most distant of evolutionary cousin to the land-dwelling cow. The vaquita is the smallest known cetacean, w

Lamps, Lanterns, and Justice

Image
The Court of Appeals for the Federal Circuit has affirmed the Court of International Trade decision in The Gerson Company v.United States . This is the case you may remember from here , in which we discussed the difference between a lamp and a bulb. As is the case in most classification cases, the issue on appeal was the same as it was below. Here, that means whether artificial tea light candles and similar devices are "lamps" of Heading 9405 or "electrical machines and apparatus . . . not specified or included elsewhere" of Heading 8543. It is relevant for purposes of discussion that Heading 8543 includes the subheading "electric luminescent lamps," at 8543.70.70 (now .71) The Court of Appeals agreed that in a "hyper technical" sense, the artificial candles are electrical machines or apparatus. But, they are also lamps. What to do? The Court noted that the apparent conflict (or ambiguity) can be resolved by reading the statute as a whole.

Swimways Floaties Classification

I often say that tariff classification cases rarely depend on disputed facts and, in my view, generally do not turn on facts not clear from an examination of the imported product. In other words, I often think these cases present fewer issues and can be more easily resolved than is the common view.  That said, there are obvious examples of where this is not the case. One example is Swimways Corp. v. United States , in which the Court of International had to undertake a fairly detailed factual analysis to determine the essential character of recreational floatation devices made of plastic inflatable floatation bladders, textiles mesh, and a metal spring that permits the deflated device to be compacted and then snap back to shape for use. The case involves two groups of floaties, the first are designed for adults . The second are designed for young children to help acclimate them to water as the first part of a learn to swim program. U.S. Customs and Border Protection classifie

Jurisdiction Argument Goes Up In Smoke

Image
U.S. Customs and Border Protection is the agency responsible for the collection of federal excise taxes. Recently, a question has come up regarding which court is the proper venue for an action to collect these taxes. Turns out, that is not as clear as you might have thought. United States v. Maverick Marketing, LLC Et Al. , tries to sort that out. Maverick Marketing and Good Time USA were involved in an agreement to import tobacco. Under 26 USC 5701 , importers of tobacco are liable for federal excise taxes. The United States has alleged that Maverick and Good Times made material false statements and/or omissions when entering tobacco products into the United States and, as a result, deprived the government of excise taxes. A previous decision ( Slip Op. 18-16 ) of the Court of International Trade denied defendants' motion to dismiss for failure to state a claim. The jurisdiction problem arises from the language Congress used in the statute defining the jurisdiction of the Cou

Duty Drawback, TFTEA, and Administrative Delay

Tobacos de Wilson, Inc., et al. v. United States , et al. is an effort to force Customs to apply amended drawback law after the statutory deadline but before Treasury has completed the regulatory process. It is pretty in the weeds but is important to drawback claimants. In the bigger picture, it is a good example of using the Courts to ensure that administrative agencies are meeting congressional mandates for action. The Trade Facilitation and Trade Enforcement Act of 2015 (known awkwardly as "TFTEA," which is pronounced "tiff-TEE-ah" in my office) made three important changes to the duty drawback law. Those changes, intended to make drawback less cumbersome, include: a change to the standard for substitution manufacturing drawback; a change to the test for commercial interchangeability for substitution unused merchandise drawback; and an expansion of the period for filing drawback claims. Under the law, Treasury (remember, drawback is all about the money) had