Customs Law

This is a two-parter covering three decisions including  Second Nature Designs Ltd. v. United States . This part covers an interesting procedural question with implications for importers deciding whether to file a challenge to a customs decision in the Court of International Trade. In this case, that decision was the proper classification of decorative objects made from branches, wood, dried flowers, and other material. Customs classified these items in HTSUS item 0604.90.60 other foliage, branches and other parts of plants . . . dried . . . or otherwise prepared (7%). Plaintiff believes the merchandise is properly classifiable in 0604.90.30 covering the same merchandise except in "dried or bleached" form (free).  From Second Nature Designs This first decision does not resolve the classification. It goes to whether the United States properly asserted a counterclaim against the plaintiff. A counterclaim is a claim the defendant asserts against the plaintiff. Here, after Second...

Despite being judicial review of agency action, principles of administrative law do not always apply to customs law. That is because most decisions by Customs and Border Protection affecting the importation of merchandise are subject to administrative review in the protest process and then judicial review on a de novo standard. That means the judge will make a decision based on the evidence presented to the court rather than the administrative record on which the agency based its decision.  For comparison, in a trade case, the court will uphold a Commerce Department dumping margin calculation as long as the decision is based on substantial evidence in the record  and is otherwise in accordance with law. That means the agency can prevail even if the court would have reached a contrary conclusion. That is the opposite of, for example, a tariff classification case in which the court is required to reach the correct result based on the evidence before it with little regard for Cus...

In the last post , about the Federal Circuit’s very important decision on due process and allegations of evasion of antidumping duties, I made a snarky, offhand comment that the government believes “liquidation is magic.” That was in the context of the government arguing that Customs’ liquidation of entries mooted an appeal, thereby taking away the importer’s right to further judicial review. I said that knowing full well that I still needed to write this post summarizing Target Corp. v. United States in which Target made what I want to be a valid and righteous argument that Customs’ improper liquidation of entries at a favorable rate of antidumping duty prevents the Court of International Trade from ordering Customs to collect the legally applicable duties. But it turns out that while liquidation is an important legal step, in at least one unusual circumstance it is not sufficiently powerful to overcome the full force of an Article III court. Understanding this case requires a lot ...

Hot on the heels of my complaining about how the EAPA law and process is stacked against importers, the Court of Appeals for the Federal Circuit has issued an important decision that will have a major impact on how those cases work. If you are unfamiliar with evasion cases under the Enforce and Protect Act and how Customs and Border Protection handles them, go back and look at these two posts: Part 1 , Part 2. Royal Brush Manufacturing, Inc. v. United States , is the decision in an evasion case against Royal Brush involving pencils allegedly transshipped from China through the Philippines. Customs determined that there was evasion of an antidumping duty order based in part on evidence that was not disclosed to Royal. Specifically, Customs sent a representative to the facility in the Philippines to photograph the interior and provide a report. Customs refused to disclose all the photographs to Royal. Moreover, CBP's report concluded that the facility did not have sufficient capacit...

A common error in tariff classification is to assume that some doodad used in or with a machine is necessarily classified as part of that machine. That is not always the case, which is why it is important to check the "relative" Chapter and Section Notes. For example, Section XVI, Note 2(a) states, that "Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings . . . ." That means, for example, that a valve of Heading 8481 will usually be classified as a valve without regard to the machine into which it is assembled. The heading for the valve prevails over, for example, 8431, which covers "Parts suitable for use solely or principally with the machinery of headings 8425 to 8430." The latter including goods of Heading 8429, meaning "Self-propelled bulldozers, angledozers, graders, levele...

In my last post , we covered the mechanical aspects of evasion investigations conducted by U.S. Customs and Border Protection. These are cases CBP may initiate on its own, but which seem to more usually be initiated following an allegation by a domestic producer that an importer has evaded the payment of antidumping duties, countervailing duties, or both. The most common means of evasion is transshipping a product subject to an AD or CV duty order through a country not subject to the order and misidentifying the country of origin.  In this post, I want to run through some of the concerns that have been expressed by importers (and their lawyers) dealing with EAPA cases. You'll see that these cases require a whole new approach to customs enforcement. Because judicial review in EAPA is limited to facts in the agency record with a very deferential standard of review, these look a lot more like antidumping and countervailing duty cases minus the safeguard of complete information disclos...

I have not yet addressed cases brought under the Enforce and Protect Act ("EAPA"). These are important and controversial cases, so we need to change that. Also, there have been a few at this point, so we need to get going. As a starting point, EAPA is part of the Trade Facilitation and Trade Enforcement Act of 2015. It sits in the customs laws at 19 USC 1517 . The act seeks to address the "evasion" of antidumping and countervailing duties by means of written, oral, or electronic statements (or data) that contain material and false statements or omissions that result in "any cash deposit or other security or any amount of applicable antidumping or countervailing duties being reduced or not being applied with respect to the merchandise." The act is directed at imports of "covered merchandise," which is products that, when imported, are subject to antidumping or countervailing duties. "Interested parties," who are most likely domestic prod...

On June 14, 2023, the U.S. Court of International Trade approved the voluntary dismissal of a case brought by a group of environmental organizations to force the U.S. government to take action to force Mexico to better implement steps to protect the grievously endangered vaquita. Prior posts on related legal efforts in this matter are here and here . The vaquita is a small porpoise that is endemic to Mexican waters in the Gulf of California. Unfortunately, its range overlaps with totoaba, which is subject to illegal fishing because the totoaba's swim bladder is prized in China for its apocryphal effectiveness in traditional medicine. As a result of illegal totoaba gill net fishing, there are 10 to 13 vaquitas remaining in the world. Unless there are dramatic changes in the bycatch of vaquita, the vaquita is will likely become extinct. The decision is not legally very important because the parties reached a settlement and there was no need for the Court to make important findings o...

Tariff classification can sometimes produce surprising results. Such is the case with Nature’s Touch Frozen Foods v. United States , a recent decision of the U.S. Court of International Trade. The seemingly simple issue was the correct classification in the Harmonized Tariff Schedule of the United States of mixtures of frozen fruit and of frozen fruit with vegetables. The competing headings are, in relevant part, 0811 “Fruit and nuts . . . frozen” and 2106 “Food preparations not elsewhere specified or included.” Nature’s Touch argued for classification in 2106 on the grounds that the Heading 0811 does not encompass mixtures of fruits or of fruits and vegetables.  Heading 0813, for example, covers "Fruit, dried, other than that of headings 0801 to 0806;  mixtures  of nuts or dried fruits of this chapter." There is no similar indication in 0811. Moreover, plaintiff noted that the subheadings in 0811 also do not mention mixtures; they identify only individual fruits includ...

Judicial challenges to the grading of the customs brokers license exam are not very common, but they happen. Usually, I have not been super supportive of the plaintiffs. See my maybe too mean-spirited post from 2006. On the other hand, I have gained a lot of respect for Mr. Byungmin Chae, who has been fighting with Customs over his score since taking the April 2018 exam. As background, broker license applicants who fail to pass the 80-question CBLE with a score of 75% or more may ask Customs to reconsider the grading on questions for which applicants believe they should have received credit. 19 CFR § 111.13(f) . If Customs does not change the grade, applicant may seek further review by the Executive Director of the Office of Trade. Any applicant that is not satisfied with the results of that review may sue the United States and ask the Court of International Trade to review the exam scoring.  Photo by Museums Victoria on Unsplash Mr. Chae missed passing the exam by eight questions...

In United States v. Zhe "John" Liu , the defendant was accused of a running a scheme to avoid antidumping duties on wire hangers from China by transshipping them through other countries and incorrectly stating the country of origin. The government is seeking to impose a penalty of just under $1 million, which is the domestic value of the merchandise. The defendant moved to dismiss the complaint arguing that it is barred by the statute of limitation and that Mr. Liu is not a proper defendant because he did not import the goods. Let's pause for a moment. First, the fact that this penalty is the domestic value of the merchandise may seem odd. It is not. The complaint asserts that the violation occurred as a result of negligence. Under 19 USC 1592 , the penalty for negligence is usually up to twice the loss of revenue, which will usually be much less than the entered value of the merchandise. However, the statute says that when the violation results from negligence, the penal...