Customs Law

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...

I've been at this a long time. Nevertheless, I am still sometimes surprised. That happened when I read N272495 (Mar. 1, 2016) . There are two "travel kits" at issue in this ruling. These are travel kits of the kind used by Victorian gentlemen tromping around the Amazon or Africa trailing a line of porters carrying their necessities. In this case, the necessities include six glass bottles with caps, two pipets, a funnel, coasters, a whisky taking journal, some other stuff, and a leather case for all of it. There is also a Share-A-Dram kit consisting of 12 glass bottles, a funnel, paper neck tags, and sample tasting ledger. Customs and Border Protection decided that these kits are to be classified as retail sets based on the single item that imparts their essential character. For the travel kits and the Share-A-Dram, that is the glassware, specifically the drinking glasses, which are the most expensive glass items. Here's the more interesting point. The drinking g...

The NAFTA Marking rules are a giant mystery to many people. Let's assume you are importing evaporator cores from Mexico. The cores are initially produced in South Korea and shipped to the U.S. From here, they are exported to a facility in Mexico that adds fittings and connections before shipping them back to the U.S. Once back here, they are used in the assembly of automotive air conditioners. When returned to the U.S., the cores are not NAFTA originating. You can assume that set of fact because it is what happened in CBP Ruling N014917 (Aug. 2, 2007). So, how do you analyze the origin of the cores? The U.S. has various rules used to determine country of origin. Most products that are not wholly the growth or product of a single country are deemed to originate in the last country in which it was subject to a substantial transformation, i.e. , a change in name, character, or use. See 19 CFR 134.1(b). That section goes on to say " however, for a good of a NAFTA country, ...

This one is pretty straight forward. The only reason I am covering it is that the notion of importing completely prepared pizza from Germany is oddly funny to me. Kind of like getting tacos from Australia. In N261593 (Mar. 11, 2015), U.S. Customs and Border Protection answered a ruling request from Freiberger U.S.A., Inc. asking for the tariff classification of a completely prepared and frozen pizza to be imported from Germany. Four varieties were involved including: flatbread with cream sauce and eleven-inch square. The correct tariff classification is in Heading 1905 which is the heading for: Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa; communion wafers, empty capsules of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products . . . . I come from Chicago where we like our pizza thick, the way God intended it. Consequently, it makes sense to me that pizza would be treated as a bread product. Sp...

Jean-Marc Clement, a Canadian customs and trade expert with BCF in Montreal has started blogging from a Canadian perspective. Read his first entry here.  It involves the tariff classification of swivel chairs and is an entertaining and interesting piece.

This really more of a case review than a ruling in that it comes from the Canadian International Trade Tribunal, which is not Canada Border Services Agency and is clearly not U.S. Customs and Border Protection. But, it is an interesting issue and Canadian customs law has a slightly exotic air about it. So, here we go, eh. There are a growing number of coffee artisans and coffee snobs. I find myself among the latter as I make excellent but highly inefficient cups of coffee in my AeroPress contraption. I also spend too much time and money at Intelligensia Millennium Park  where I occasionally purchase an individually prepared, single cup filtered, lovingly agitated, and perfectly heated cup of exotic coffee. It is delivered with a small carafe of the remainder for your refill. On the espresso side, the macchiato is a work of art and perfectly paired with a glass of sparkling water. If it is morning, the buckwheat scone is a delightful addition. But, I digress and leave m...

This is a follow up to my tweet from last week about the Canadian International Trade Tribunal determination in the long-running dispute between Frito-Lay Canada and Canada Border Services Agency . The issue had to do with Cheetos erroneously entered into Canada classified as cardboard boxes. [Insert your own cardboard Cheetos jokes here.] Frito-Lay paid the MFN duty applicable to cardboard, which was zero. Apparently because of the zero duty, Frito-Lay did not make a NAFTA claim at the time of entry, although the goods were originating. Subsequently, Frito-Lay discovered the error and corrected it under subsection 32.2(2) of the Customs Act. Because Cheetos are dutiable, Frito-Lay included a NAFTA claim and supporting NAFTA certificates of origin in the corrections. In Frito-Lay's eyes, this was a revenue-neutral correction, and should not have been very controversial. Unfortunately, CBSA disagreed. There are complications in the written decision because CBSA treated gr...

I hate the inevitable New Year's Day news story about the first local baby born in the new year. Not just because I am generally curmudgeonly, but also because I am skeptical of the data. I wonder how many birth certificates that should legitimately list the time of birth as 11:58 PM are fudged to 12:00:03 AM at the behest of competitive hospital marketing staffs. On the other hand, I can say with certainty that the first decision of the Court of International Trade for 2013 is: [drum roll please]  United States v. Millenium Lumber . [Insert sounds of popping corks and a band playing Auld Lang Syne.] There was a prior decision in the same case in 2012. That case was pretty procedural and held that the case should not be dismissed for failure to state a claim upon which relief can be granted. I'm not going to say more about that, and will move on to the merits. This is a case in which the United States is seeking to collect almost $2 million in liquidated damages fro...

I was recently in Toronto to speak to the Canadian Transport Lawyers Association about the so-called Beyond the Border Action Plan . One of the initiatives under that project is a pilot at the Prince Rupert port of entry in Canada to harmonize cargo screening. The ultimate goal is to move to an environment in which cargo can be screened once and admitted twice. Here is the text of the U.S. announcement of the pilot: U.S. and Canada Announce New Pilot to Strengthen Cargo Security (Tuesday, October 23, 2012) Washington — The United States and Canada announced the launch of the Prince Rupert Pilot to strengthen cargo security at the Canada-U.S. border as part of the Integrated Cargo Security Strategy in the Beyond the Border Action Plan. The pilot focuses on harmonizing the screening process for maritime cargo between the two countries. “The Prince Rupert pilot implemented under the Integrated Cargo Security Strategy is key to the ongoing efforts to facilitate legitimate trade...

Hat tip to my friend Paul who alerted me to this story . Read the article.  The upshot is that police officers are being charged with smuggling American-origin cheese into Canada for sale to pizzerias. Apparently, American-origin cheese (as opposed to "American cheese") costs roughly a third of the equivalent in Canada. Thus, the officers were making $1 thousand or more per run to the U.S. cheese monger. Mayor McCheese could not be contacted for a statement.

I am just back from a week in Boston with a side trip to Portland, Maine. A few lobsters gave their lives for me and my family. Ditto a few dozen clams and sundry other sea creatures. While we were in Maine, the local news was covering a dispute between Maine lobster-men and their New Brunswick, Canada counterparts. Because of the glut of lobsters, prices have fallen. The New Brunswick industry wants to keep low priced Maine lobsters out of the market and protested by literally blockading the Maine lobster boats from dropping their haul at New Brunswick processing plants. This raised several questions in my head. First, what "processing" is done to lobsters? Most are pegged or banded in the boat and then live out the remainder of their lives in tanks waiting to be steamed or otherwise prepared. I suppose there are also industrial producers making frozen tails, lobster meat salad, and other goodies. The second question I had was whether anyone was taking any legal ...

Here is one I missed. Sorry, I'll be catching up. In Rogelio Salazar Cavazos v. United States , the issue was whether the Court of International Trade had jurisdiction to review a denied claim for NAFTA preferential treatment for candied peanuts imported from Mexico. Customs classified them in a tariff provision carrying a 131.8% rate of duty, which did not make the importer happy. The importer protested the classification . After liquidation but before the protests were denied, the importer filed NAFTA post-entry claims. These claims were timely, within one year from the date of importation. Customs and Border Protection subsequently denied the NAFTA claims as well.   Plaintiff did not protest the denial of the NAFTA claim . The importer then filed a summons in the Court of International Trade seeking review of the denial of the NAFTA claim. The United States moved to dismiss on the grounds that there was no denied protest relating to the NAFTA claims. The impor...

The Court of International Trade does not actually preside over very many trials in classification cases. Most of those cases do not involve disputed facts and are resolved on motions and legal arguments without the need for witness testimony. There was, however, a trial in Target Stores v. United States , and I wish I had seen it. The issue in the case was the proper tariff classification of imported gazebos with textile coverings. Customs and Border Protection wanted them classified in HTSUS Heading 6306 as tents. The importer asserted that the proper classification was in Heading 7308 as structures of iron or steel. It appears that this case involved a couple side shows, which bear discussion. First, the United States attempted to give up on the case by proposing a stipulated judgment classifying much of the merchandise as proposed by plaintiff and some of it in Heading 4421 for wooden structures. But, in transmitting the proposed stipulation, the United States stated that it ha...

According to this article , U.S.-based energy guy T. Boone Pickens feels that he has been unfairly cut out of a deal for the sale of electricity to Canada via wind production. I have no idea about the underlying facts, but I am always happy to see investors invoking the NAFTA Chapter 11 provisions, the corresponding investment provisions in other Free Trade Agreements, or free-standing bilateral investment treaties. In the case of NAFTA, Mr. Pickens will need to prove that a Canadian governmental entity undertook a "measure" that violated a protection provided to U.S. or Mexican investors in Canada. Those protections include: National Treatment:  This means that the investor must receive treatment that is no less favorable than would be afforded to a similarly situated domestic investor. Most Favored Nation Treatment:  This means that the investor must receive treatment that is no less favorable than would be afforded to a similarly situated investor from any other coun...

Usually, when a federal agency takes some action, it provides a statement of legal authority. While this may look like boilerplate, it can be important. For example, the statute providing legal authority might include procedural steps that must be followed before the action can be taken. Or, the legal authority might dictate whether a court has jurisdiction to review the action. Almond Bros. Lumber v. United States , is an example of the latter. This case from the Court of Appeals for the Federal Circuit involves the long-running dispute between the United States and Canada over softwood lumber imports to the U.S. Softwood lumber is possibly the Jarndyce v. Jarndyce of the trade world. [Note: I never actually read Bleak House, I just like the metaphor.] All you need to understand this case is the gist, and that is all I will give you. Canada sells lots of softwood lumber to the U.S. Back in 1986, a coalition of U.S. lumber producers filed a petition seeking the imposition of counter...

Did you know that Customs had previously ruled that imported business cards required country of origin marking on every card, not just the box? If not, scroll down to page 16 in this Bulletin . Happily, the notice is a revocation of the rulings. In the revocation, Customs agrees that marking on the box in which the cards reach the purchaser is enough. Customs has reminded (?) the trade that if you are making a post-entry NAFTA claim that includes a change in tariff classification, the HTSUS change needs to be handled via either a protest or a PEA. The NAFTA change is to be handled via a 520(d) claim. So says CBP here . I have three decisions on my desk to review and possibly blog. At least two are interesting to me. One involves a jurisdictional dispute over an intellectual property seizure. Another involved a denied drawback claim. The third is a penalty case. You tell me which you want first. Lastly, and very important, is a note that the Border Patrol (a unit o...

I don't usually cover trade remedies cases on this blog. Nevertheless, I feel like I am seeing more questions than ever from importers about dealing with trade remedies. And, this is just an interesting opinion, which hits both customs and trade issues. In  Canadian Wheat Board v. United States , the question was whether the United States could legally keep antidumping duty deposits on unliquidated entries Customs collected in the enforcement of an antidumping duty order that a NAFTA binational panel invalidated. In reality, the panel has no authority to invalidate an order. Rather, it ordered a remand to the ITC to reconsider injury. On remand, the ITC found no material injury. The NAFTA panel affirmed that finding and Commerce revoked the order. But, Commerce instructed Customs and Border Protection to stop collecting cash deposits as of the revocation date and stated that the revocation would not affect the liquidation of entries prior to that date. In effect, that was an...

I do a lot of NAFTA work. For years, there have been unanswered questions concerning the ability of producers or exporters to allocate non-originating good to domestic customers and originating goods to customers in other NAFTA countries. That would maximize the benefit to the customers but might result in otherwise dutiable merchandise never being the subject to duty. The Canadian International Trade Tribunal recently got a crack at part of that question in Tara Materials, Inc. v. President of the Canada Border Services Agency , Appeal No. AP-2009-016 (Aug. 3, 2010). Tara exports artists’ canvases from the United States to Canada. Apparently, it dual sources fungible fabric used to make the canvases and some of it comes from outside of North America. In an on-site verification by CBSA, it was determined that Tara’s production resulted in goods that are originating 72% of the time and non-originating 28% of the time. In these circumstances, the NAFTA permits the producer to employ an...

PETA complains to CBP after the death of a CBP dog in a hot CBP car. Aphids stopped at border . US stops computers bound for Cuba from Canada. Customs and Border Protection employee stole Neil Armstrong's declaration and tried to sell it. For those of you under 30, Neil Armstrong is kind of big deal. He used to be more famous than Justin Bieber. More here . A couple cases from the Court of International Trade: Delphi Petroleum, Inc. v. United States , denying Delphi's effort to force the United States to pay attorney's fees following the decision on the merits . The Court denied the motion. Ford Motor Company v. United States , is a somewhat confusing case involving protests from the lack of explicit liquidation of reconciliation entries. The question has to do with whether the liquidations were extended or whether they should be treated as having liquidated by operation of law. In the end, the Court found that the case as presented was either not properly b...

Note: I cleaned this up a bit for clarity and to eliminate evidence of my poor typing skills. An anonymous commenter asked for an explanation of the difference between NAFTA marking, NAFTA originating, and origination for purposes of government procurement. That's a tall order, but here is a start. As I said here , determining whether some good is NAFTA originating does not tell you its country of origin. The NAFTA rules of origin embodied in HTSUS General Note 12 only tell you whether the article can be considered to have North American origin and, therefore, can be granted NAFTA duty benefits on entry. But, if the thing contains materials or labor from more than one NAFTA country, the Note 12 rules do you no good in figuring out what country to declare as the origin and how to mark the product itself. For that, you have to turn to the so-called NAFTA marking rules. Those are not in HTSUS 12(t). [Repeat that to yourself if you must.] Rather, they are in the Customs Regulati...