Customs Law

Join CITBA for a CLE event on April 21 to be held at the Court of International Trade in New York. Details and registration is available here . Registration is a little funky for now. You'll need to click select Event in the box on the left side of the Meetings, then click Buy Now. After that, fill in the registration amount ($60 for general members, $30 for government employees) and your payment method. Please RSVP to info@thegateam.com . We're going to work on improving that process.

Podcasts are a terrible thing if you expect to do work or read books while otherwise leading a productive life. Among the many I listen to somewhat regularly is Tetrapod Zoology , from which I learn all kinds of thing about both real and fanciful zoology. It's worth a listen, though it may be a bit of an acquired taste. I came to it through the side door. Co-host Darren Naish is an actual, credentialed scientist who is willing to talk about allegedly unidentified megafauna (e.g., the Loch Ness Monster, Yeti, and Bigfoot), not because they exist but because the notion that they might is entertaining. He and his co-host John Conway are fully comfortable trying to imagine how something as absurd as the Mongolian Death Worm might exist in the real world (because it does not). Why I am on about this? Because I have been wracking by brain trying to think of puns involving krill and the baleen whales that eat them. It turns out that people eat krill oil as a dietary supplement, whi...

Don't forget to register for the upcoming DiCarlo lecture and the CLE event at the John Marshall Law School in Chicago. It's April 14, 2016. Speakers will include Chief Judge Timothy Stanceu of the U.S. Court of International Trade. Registration information is here .

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...

Congratulations to ICPA on another successful (and sold out) conference. I heard lots of good talks and had fun fake-litigating the classification of chopped olives . Sadly, I lost. I also got to do a last-minute recycling of my talk on tariff engineering , which was both fun and efficient (since the work was already done). Thanks to all the blog readers who introduced themselves. See you next year.

Having already invoked Star Trek: First Contact today, I will now reference Contact. Arecibo, Puerto Rico is probably most famous for being the location of the Arecibo radio telescope observatory . It was there that the fictional astronomer from Carl Sagan's book, played by Jodie Foster in the movie , successfully decoded a message from intelligent aliens. The book is better than the movie, but both are worthwhile. Recently, Arecibo became home to a 360-foot monument to the European discovery of the New World. Note that 300 feet is roughly the size of the Statute of Liberty. The customs issue in NY N272432 (Feb. 26, 2016) does not have to do with the statute. Instead, it has to do with tchotchkes sold as souvenirs in the gift shop near the monument. In particular coffee mugs that have the words "Puerto Rico" or "Arecibo, Puerto Rico" printed on them. The question presented to Customs and Border Protection was how to properly mark these mugs with th...

By my calculation, this is week 10 of 2016 and this is ROTW 8, I am getting close. Today's ruling might make the squeamish among you go "Eww," but it shouldn't. The product in question is a three-dimensional reconstructed human epidermis. When I read that, I pictured a fully human-shaped skin ready for taxidermy or some more nefarious use. The reality is far more mundane and much more scientifically cool. The ruling is NY N270364 (February 19, 2016) . The product turns out to be an "in vitro " epidermis grown from human skin and other cells cultured on a polycarbonate substrate. Here is the technical lowdown on it. The commercial purpose of this is not to build Buffalo Bill-style human skin suits  or to give Mr. Data goosebumps. The idea is to have an in vitro model for testing drugs, cosmetics, etc. Star Trek: First Contact According to Customs, this item is classified as "Human blood . . . vaccines, toxins, cultures of micro-organisms (exc...

First things first, I admit that I am in the tank for Microsoft products. I have multiple Windows 10 computers and a Windows 10 tablet. I am also on my third Windows Phone. I stared with a Samsung Windows 7 device, moved to a Nokia Lumia 920, and now carry a Lumia 950, which I keep slightly ahead of the curve through the Insiders program. I recently got my hands briefly on a Surface Book, on which I have a serious crush. I also have most of my personal data in the Microsoft cloud via OneDrive and Office 365. I am, as you can see, all in on Windows. Nevertheless, I do not have a Microsoft Band fitness tracker. Before we discuss why I have so far skipped the Microsoft Band, we should talk about its tariff classification. I raise this because Customs recently ruled on the question. According to HQ H265035 (Jan. 19, 2016) , the Microsoft Band is classified in subheading 8517.62.00, HTSUS, as an apparatus for the transmission or reception of voice, images, or data . . . ." This...

Remember JBLU, Inc. v. United States ? It was an interesting Court of International Trade decision involving whether the use of a geographic terms in a trademark required a country of origin marking in close proximity when the trademark was not registered with the U.S. Patent and Trademark Office. What is at issue here is 19 CFR §§ 134.46 and 134.47. Under § 134.46, when a geographic location is indicated on an imported article or its container, and that indication may mislead the ultimate purchaser as to the actual country of origin, then the article must also be marked with it correct country of origin in close proximity. Section 134.47 provides a more lenient rule where the geographical indication is part of a trademark or trade name. According to the Court of International Trade, without a registration or a pending application, the use of the geographic indicator triggers the more strict requirement for a close-by country of origin marking. The Court of Appeals for the Federal...

If you area a compliance person in the Chicago area, please come to the DiCarlo Lecture and CLE event at the John Marshall Law School on April 14. The event will end with a talk by Chief Judge Stanceu of the U.S. Court of International Trade. There will be a two hour CLE event leading up to his talk. The first panel will focus on international corporate compliance and ethics. The second panel, which I will moderate, will focus on Customs and Border Protection penalty cases. Judge Stanceu is expected to talk about the international harmonization of tariff law and its impact on U.S. court cases. The CLE event requires a registration fee. The DiCarlo Lecture, which is Chief Judge Stanceu's talk, is free, but registration is required. Click the link above to register.

Here is a classic classification ruling I use for teaching. It is a good example of how applying General Rule of Interpretation 1 almost always gets to the result, even if that result seems counterintuitive. The ruling is NY J82174 (Mar. 31, 2003) .  Just to be clear, I know the ruling was subsequently modified , but not in a way that is meaningful for this analysis. I'll deal with that at the end. The products involved are rotary knobs for household appliances. They go on washing machines, dryers, electric stoves and gas stoves. They are all made of plastic with small amounts of metal at the insertion point for to attached to the post from the internal workings of the device. All of the knobs have an indicator mark used to line up to the control variable on the appliance. In other word, there is pointer on the knob that will show whether the stove is set to high, medium, low or what have you. With one exception, all of the appliances are classified in Section XVI, Chapter...

Discovery is the legal process through which each side to a law suit asks the other side to disclose the facts relevant to the claims and defenses. It usually consists of depositions of knowledgeable witnesses, written questions and requests for production. Discovery disputes are unusual in customs litigation. More often than not, the parties can reach an agreement on the material facts. The dispute is usually, but not always, over the conclusions to be reached from those facts after the applicable law is properly interpreted. When a discovery dispute does arise, people notice (and by "people" I mean "me"). Meyer Corporation, U.S. v. United States  is about a discovery dispute. The underlying issue is that Customs and Border Protection audited Meyer and determined that its application of the first sale methodology of valuation was unacceptable. If you don't know what that means, go back and read this classic post from 2005. Customs also denied duty-free claim...

There used to be a time when I was able to keep this blog up, make each post funny, and occasionally interesting to the customs compliance pros. But, as periodically happens, then I get busy. It turns out that this is week 8 of 2016 and I am about to post ROTW number 5. I am not happy about that. Let's see what we can do to catch up. Today's ruling is HQ H270670 (Feb. 17, 2016)  and continues our focus on value questions. Value is complicated enough to make many compliance professionals quake . The ruling involves purchases by "The Cereal Company" of premiums or toys. The only Cereal Company I can find online purports to be in Zambia. Thus, my assumption is that the Cereal Company is a pseudonym for an actual cereal company and that these toys are headed into boxes of puffed sugar and artificial color. This case is honeycombed with players. The Cereal Company buys the toys from suppliers in China. An unrelated third party in the U.S. called Insight Promotions...

[Updated because sometimes proofreading is useful. I corrected some typos and clarified a bit.] The Court of International Trade has been asked to decide the classification elfa-brand racks and hanging standards made of epoxy-bonded steel for the Container Store . No, this is not a repeat and you are not experiencing legal Deja vu. The issue has been raised again. The interesting point is that the result has changed, so read on. Before we get too far down this rabbit hole, re-read this post on stare decisis at the Court of International Trade. It is useful background. Then, here is my post on the prior Container Store case. There are two items at issue in this case. elfa top tracks and hanging standards. The top tracks look like this: The top track can be screwed into place on a wall or other surface and serves an an anchor for the handing standards, which look like this when attached to the top track: The hanging standard lets consumers attach components such as shelve...

One would think that if everyone involved agreed that the United States federal government owes a taxpayer a refund of over $6 million that the government would pay it. One would hope that would not be controversial. Unfortunately, it is and it points up a problem in litigation. This thought is brought to you by Ford Motor Company v. United States , in which the Federal Circuit refused to order Customs and Border Protection to pay Ford the refund. Instead, the issue was sent back to the Court of International Trade for another round of litigation. The background on this case is complicated and a bit of a mess. Ford imported some Jaguar cars and deposited estimated duties at the time of entry. It must have flagged the entries for ACS Reconciliation because it subsequently filed nine reconciling entries seeking a $6.2 million refund. The reconciliations were filed between June of 2005 and October of 2006. Normally, Customs has a year to liquidate the entry and can extend th...

Here is something you may not know about me . . . I watch competitive cooking shows the way a normal guy watches baseball. As far as I am concerned, Alton Brown is the Kenesaw Mountain Landis of cooking and Ted Allen is its Howard Cosell . Consequently, when a ruling ( HQ H266149 (Oct. 21, 2015) ) from Customs and Border Protection invokes the name of Curtis Stone , I pay attention. In this case, the question was the tariff classification of "the Curtis Stone Chop Chop Deluxe Food Chopper." Exhibit A: I suspect someone at Customs is a fan because the sentence "Curtis Stone is a celebrity chef from Australia," is irrelevant to the issue. It is, however, a true statement. As you can tell from the picture, this is a hand powered chopper with interchangeable blades. The top handle presses down, pushing the food item through the blade and into the receiving container. Simple. The goods entered the United States classified in 8205.51.30 (3.7%) as handtools ...

I tend to get focused on classification here on the Customs Law Blog. But, this is not the Tariff Classification Law Blog. Our scope if broader. With that in mind, we should also look at the other side of the duty calculation: value. Most importers understand that value is usually "transaction value" plus statutory additions including assists, royalties, and commissions. Look at 19 USC § 1401a . Most of the time, that will get you through the day. But, it does not work when you don't have a sale for export to the United States or when the price is affected by the relationship between the parties. In those cases, we need to turn to an alternative method of valuation. When transaction value fails, the statute requires that the goods be appraised based on a hierarchy of methods. The first alternative is the transaction value of identical or similar merchandise. For purposes of today, I am skipping that and going to deductive value. Why? Because its my blog. The ruling fo...

I realize we are hard on the end of the second week of 2016, so I need to post another ROTW to avoid falling behind so early. So, here goes. Consider this a follow on to the prior ROTW , in which I walked through the classification of a complete ice cream maker. Today, we will discuss the classification of parts. The ruling in question is NY J85598 (Jun. 19, 2003) . In the ruling, Customs and Border Protection was asked to classify three "parts" used in the production of clarinets. The parts are needle springs, flat springs, and hinge screws. All were made of stainless steel. The most obvious place to classify all three items is in 9209.99.40 as parts of musical instruments, in this case woodwinds. That is a good result, if correct, because the duty rate is zero. But, is it correct? How else might the parts be described? Two are obviously springs. The hinge screw seems to be a metal pin with a threaded end. It might be a screw or a pin or part of a hinge. Springs of ...

I am a man of few hobbies. One of the ways I entertain myself is by making ice cream. Since I make it, I must eat it as well. That is probably not the best outcome, but there it is. It occurred to me that I do not know how to classify an ice cream  maker under the Harmonized Tariff Schedule of the United States. Luckily, I could find the answer. In NY N269539 (Nov. 6, 2015), Conair, the parent to the Cuisinart brand of ice cream makers, asked U.S. Customs and Border Protection to classify a machine. I have not been able to find a picture of the specific machine, which is described as model number WCIC20, a two-quart machine with a compressor. That makes it a self-cooling unit and is a big advance over the Cuisinart unit I use, which requires that the tub be frozen prior to starting the process. This machine operates in three modes to mix, freeze, and keep the ice cream cool. Since this is the first  Ruling of the Week for 2016, let's walk through it carefully. First, ...

No one likes it when a pet theory dies. It is even worse when the theory was smart and creative. Unfortunately, this one seems to have finally been put out of its misery. I am talking about the notion pursued with vigor and righteousness by Ford Motor Company concerning post-entry NAFTA claims. There is useful background here  and here . I'm not going to go into detail again, so take the time to read those previous posts. It's OK, I am not going anywhere. The single salient fact here is that Ford made a timely post-entry NAFTA claim but failed to provide Customs with the NAFTA certificate of origin until after the running of the one-year period for a claim. Customs denied the claim on that basis, not on the merits. Ford smartly pointed out that while a post-entry NAFTA claim under 19 USC 1520(d)  requires a certificate of origin, an equally post-entry claim made via the ACS Reconciliation Prototype  does not. Customs specifically and affirmatively waived the requireme...