Customs Law

Customs and Border Protection has issued ruling HQ H308234 (Jun. 3, 2020) which covers the classification, valuation, NAFTA status, and 301 status of a USB drive with software on it. Given that a large portion of the trade community is still keenly following origin and 301 issues, it is a good ruling to review. The products involved are the Start Me Stick and the Fix Me Stick . Both of these devices are USB stick drives containing software. The point of the Start Me Stick appears to be to access the internet while bypassing the computer to which the stick is attached. I guess the use case for that is if you use a public terminal (at a library, for example), if your current computer too slow, or if for some reason you need a wholly private browser experience that is not run through the browser on your computer. That latter might help if, say, you are looking for a new job or Tinder date via your office computer. I am not clear how this thing gets and IP address and whether activity ru...

The difference between crude or roughly trimmed stone and polished stone may seem pretty obvious in the colloquial sense. But, in the world of tariff classification, it is always possible for facts to complicate matters.  Such is the case in HQ H306644 (Feb. 3, 2020) , our Ruling of the Week. The imported merchandise was identified as Blue Pearl, India (or Jet) Black and India Red in roughly five to seven foot lengths and three to four foot widths. The importer originally classified the merchandise in Heading 2516 as crude or roughly trimmed granite. CBP's lab looked at the merchandise and determined that it was polished on two opposite faces or on one face. The importer disputed that the surfaces were polished and CBP looked again. The lab came back with a determination that the top surface is highly reflective of light and smooth to the touch. According to the lab, that is sufficient grounds to find it is polished. As an aside, it also turns out that the stones are not granite, b...

I keep an eye on rulings from CBP with a focus on those that are slightly off kilter or entertaining to the 12-year old boy that still lives in my head. Cruising the most recent Customs Record, I saw that Customs and Border Protection had issued a ruling concerning the classification of a Giant Inflatable Weasel. Alas, when I sat down to read the ruling, I found it actually concerned a giant inflatable easel. That is far less silly, but equally as illustrative. So, here is what we can learn from HQ H301988 (May 14, 2020) . The merchandise is a PVC inflatable easel. I do not know for certain that this is the same product, but based on the description, it seems to be. The image comes from Heathsong.com, which is mysteriously close to Plow & Hearth, the party that requested the ruling, so I am going with this being it. The product comes with four cans of paint, one brush, and four sponges. Custom initially classified this item as furniture in 9403.70.4015 or 9403.70.8015, depending on...

Frankly, I am not the most thoughtful person in the world. I know that. I try my best to make up for it. Rarely does that effort include a greeting card. When forced by circumstances, I stand at the local Walgreen's card racks staring into an abyss of cards that are never quite right. Finding something in the sweet spot between excessively sappy and an infantile effort at humor is incredibly frustrating. Often, I end up with a call, email or the dreaded Facebook message. So, it surprises me to learn that people still buy boxes of pre-printed cards as ready-at-hand supplies should the need for a card materialize. Apparently, this happens. This all comes to mind in the context of HQ H305186 (May 8, 2020)  in which Customs and Border Protection classified a set of 60 note cards for Michaels Stores.  The actual cards in the set fell into distinct categories, which will be important for classification purposes. Three styles of cards were printed with an exterior design. Three style...

I had a long run of covering at least one CBP ruling every week. I enjoyed doing that as it allowed me to find an odd ruling and use it as a tool to illustrate some point. That fell by the wayside, mainly because of the time commitment it takes to do actual work and also write other content for the blog. On the other hand, I kind of miss it. Others have tried to fill that space. I am looking at you, Crowell & Moring.  Today, I am inspired to jump back in. That inspiration came in the form of the printed New York Times. In today's Science Times, there was an interesting and entertaining discussion of whether a reasonably functional traffic barrier could be made of Rice Krispies Treats. In the course of that discussion , the author quotes Customs & Border Protection for what seems to be an "official" description of a Rice Krispies Treat. According to the Article: "[T]he Tariff Classification and Marking Branch, a part of U.S. Customs and Border Protection, desc...

I never make an effort to watch Shark Tank . However, for some reason I am always running across it. I always get sucked in. I think the discussions of business valuation and strategy are interesting. I am certain they are very distilled through the editing process, but hearing successful investors critique an entrepreneur's pitch is fascinating to me. Not long ago, I saw a guy pitch an iPhone case that has a monochrome screen affixed to the back. Using its own battery and Bluetooth connection to the phone, the second screen continuously displays updates, pictures, and other data. The device is called a popSlate (review) . How would you classify that? It turns out, not as a radio transmitter/receiver of 8517, which is where CBP previously classified smart watches that use Bluetooth to get updates from the phone. In this case, CBP held that the screen provides the essential character. As such, Customs classified it as an other machine or apparatus having individual func...

You may have noticed that I am not doing a particularly good job of blogging these days. I have no good excuse for that other than the fact that I have a job that is not blogging. But, I realize and am gratified to know that people read this blog and expect it to be up to date. I am making an effort to do that. I will have a lot of time in airplanes this week, so I’ll try and knock out some updates. Kent International, Inc. v. United (Slip Op 17-123) addresses the question of whether Customs and Border Protection had an “established and uniform practice” or a “treatment” applicable to the classification of a product known as the “WeeRide Kangaroo” child bicycle seat. We talk about this product previously here . In the phase of the case we are discussing now, the United States has moved to dismiss the counts of Kent’s complaint alleging an established uniform practice and a treatment. At this juncture, the question presented is whether Kent has alleged sufficient facts to suggest tha...

ORIGINALLY POSTED MARCH 22, 2017. UPDATED APRIL 4, 2017. The customs implications of space travel have always interested me. NASA has confirmed, at least according to this article , that astronauts have to make customs declarations on returning to earth. It is not exactly clear to me whether that would be the case for an orbital flight that departs the U.S. and returns to the U.S. without an intervening stop at the International Space Station or elsewhere. In fact, the Apollo 11 customs entry seems to have been something of a joke, even if it was "official." The future is certainly going to be filled with questions about this sort of thing. What will happen, from a customs-perspective, the first time someone starts a commercial asteroid mining operation? Will we need to expand the notion of "country of origin." The obvious analogy is to ships at sea. Today, the law is clear with respect to fish caught in international waters. According to the Court of Intern...

Customs law is an interesting practice because we get to see all of the interesting things that come into the country. Granted, a lot of it is pieces of machinery, chemicals, and goods for resale. Now and again, something strange or unexpected shows up. Couple that with my belief that the Harmonized Tariff Schedule of the United States provides the legal means of determining important philosophical questions such as whether something is art or is holy. These questions are, sort of, the issue in HQ H136955 (Aug. 6, 2014) , which for some reason was only recently published. The merchandise at issue is the 3/4 round depiction of Our Lady of Guadalupe with surrounding rays of light. The issue is whether this is a statuette or ornament of wood of HTSUS heading 4420, an original sculpture of Heading 9703, or an article for use by a religious institution of HTSUS item 9810.00.25. The starting place for this analysis is that Note 1(r) to Chapter 44 excludes works of art of Chapter 97. T...

This one will be quick, for lots of reasons. Mostly, I don’t have much to add to the ruling other than a question. The ruling at issue is HQ H128416 (Feb. 9, 2017). It involves the tariff classification of digital wide-format ink-jet printer used to print and cut vinyl graphics for outdoor advertising and similar applications. The printer is a combination of a printing machine and a cutting machine. As such, the competing tariff provisions are in Heading 8443 (Printing machinery) and 8477 (Machinery for working rubber or plastic). That is the sole question addressed in the ruling. To resolve the classification, Customs and Border Protection applied Note 3 to Section XVI of the HTSUS, which states in relevant part: Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified ...

There are a number of Chapter 98 tariff items that permit partial duty exemptions for items of the United States that are sent abroad and returned to the United States. Given the current trade rhetoric, it might be worth explaining why that is the case. After all, why give a benefit to companies that send goods abroad for further processing? The short answer is that the duty exemption encourages the use of U.S. origin materials in manufacturing abroad. After all, if there is going to be manufacturing abroad, the U.S. should encourage that it take advantage of U.S.-origin components and materials. The alternative is to manufacture abroad entirely from foreign components. The HTSUS item at issue in HQ H281950 (Jan. 26, 2017) 9802.00.60, which provides a partial duty exemption for: Any article of metal (as defined in U.S. note 3(e) of this subchapter) manufactured in the United States or subjected to a process of manufacture in the United States, if exported for further processing, a...

This is a good week to be talking about trade with the Middle East. I am talking about trade in goods, which is what I do. I don't talk about immigration issues. That's too bad because yesterday was a doozy of day in the history of immigration law in America. Congratulations to the ACLU  and everyone who helped secure a stay of the President's order barring entry for people from seven majority-Muslim countries (including those already holding green cards and visas). That was a tremendous effort at ensuring the rule of law, not to mention humane treatment for people who had the bad luck of being on a plane at the moment he signed the order. There were many examples of lawyers showing up at airports around the country to help stranded travelers. Some of them were affiliated with the International Refugee Assistance Project . Both the ACLU and IRAP deserve your support. That said, I will focus on something entirely superficial: the customs treatment of mewakh pipes. Fro...

I do a lot of NAFTA-related work. At least I do this week. It remains to be seen whether that changes soon. Secretary of Commerce designee Wilbur Ross told the Senate committee considering his nomination that his top priority would be renegotiating NAFTA . So, this may all change. As we sometimes have to tell clients, the situation is fluid. In the meantime, the NAFTA rules of origin continue in place. Often, for a product to qualify as originating, it must have a Regional Value Content of 50% when calculated with the net cost methodology or 60% when calculated with the transaction value methodology. There are exceptions, especially for automotive products. You need to check the rule applicable to your product in HTSUS General Note 12. Sometimes, producers are close but cannot hit the required RVC. There are a few means provided in the regulation for adding to the RVC. One of the best is the designation of a self produced material as an intermediate material. HQ H273100 (Jan. 6, 20...

I like this ruling.  It is HQ H273101 (Nov. 4, 2016). This is a case where the importer made a NAFTA claim. When asked by Customs and Border Protection, the importer either could not or just did not support the claim. It happens. Sometimes, subsequent review turns up a problem with the NAFTA documentation. Sometimes, the broker should not have made the claim to start with. Lots of things happen in the real world. This particular product is a multi-sensor electro-optical surveillance and targeting turret from Canada. As you might imagine, a multi-sensor electro-optical surveillance and targeting turret is a piece of military equipment. When the NAFTA claim failed, the importer asserted that the merchandise is entitled to duty-free entry as war material certified as such by a military procuring agency under HTSUS item 9808.00.30. It submitted the necessary certificates. Customs liquidated the entry at the applicable 4.5% rate of duty and the importer protested. Custom...

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...

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...