Customs Law

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...

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...

[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...

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. ...

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 class...

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...

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 ...

As of July 1, 2018, importers of archaeological pieces have to report their merchandise to U.S. Customs and Border Protection with new detail. That is because the U.S. has added a new statistical breakout for these items and two related statistical notes. Prior to January of 2018, Heading 9705 provided, in its entirety: Click Image for Better View For people who trade in these items, those who study the legal and illegal trade in antiquities, and (presumably) enforcement agencies, lumping archaeological, historical, and ethnographic pieces together did not provide adequate detail about what is entering the country. As previously drafted, 9705.00.0070 covered items as diverse as a 1936 Bugatti race car and an Egyptian Stone Ushabti  from the 18th Dynasty . Working on behalf of the U.S. Committee of the Blue Shield and with the support of several interested not-for-profit entities, we asked the 484(f) Committee to further divide this provision to separately identify, ...

Heading 9817 of the Harmonized Tariff Schedule of the United States includes a subheading covering the following: Articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons; parts and accessories (except parts and accessories of braces and artificial limb prosthetics) that are specially designed or adapted for use in the foregoing articles:  The question presented to the U.S. Court of International Trade in Danze, Inc. v. United States is whether certain toilets and toilet tanks fall within this subheading and are, therefore, entitled to duty-free entry to the United States. The basis for the plaintiff's argument is that the merchandise complies with the Americans With Disabilities Act . The toilets include the Orrington High-Efficiency One-Piece model shown here and the Cirtangular Two-Piece. The tank involved is the Orrington tank. Note that none of these products have any obvious adaptations for ...

The United States Department of Agriculture has the important obligation to protect American farms, orchards, forests, parks and backyards against the damage that can be caused by plant diseases and pests that enter the United States through our ports of entry. This is derived from the Plant Protection Act, 7 USC 7701 . For commercial importers, the most common pest vector is the humble wooden pallet, which can house and transport a number of pests including horntails (AKA wood wasps). From http://mobugs.blogspot.com/ The problem with these critters and many like them is that they bore into trees to lay eggs. That can result in bugs emerging from processed lumber or even from completed structures. When pests are discovered by Agriculture Inspectors at port of entry, the USDA will issue an Emergency Action Notice. Generally, the EAN requires that the offending shipment be turned around and exported from the U.S. 7 CFR 319.40-3 . To prevent that from happening, the USDA ha...

The saga of the Active Frontier penalty case has been going on since 2011. The CIT has just issued a default judgment against the company, ending this phase of the litigation. For background, start with this post . The important take-away from this case is how the Court set the penalty amount. The alleged material false statement in this case is the country of origin. Under the circumstances, this is a non-revenue violation and the maximum penalty is 20% of the value of the goods. 19 USC 1592(c)(3) . The United States sought the maximum allowable penalty, which was about $80,000. Despite the defendant not showing up to refute the claims or assert any mitigating factors, the Court did not say it was bound to assess the maximum penalty. On the contrary, it noted that the penalty is to be set de novo by the Court on the basis of the available information. Here, the Court noted that the true bills of lading clearly showed the true origin of the merchandise. Defendant, exercising eve...

Antwerp is a lovely city in which to spend a few days talking about trade law, European privacy regulations, and eating everything in sight. There were also more than a few Belgian beers involved. I am now on a train from Antwerp to Amsterdam. On the way, I figured I would read OMG, Inc. v. United States . "Why?," you might reasonably ask. [Is that remotely the correct way to punctuate that sentence?] Well, it is what I do for you. Despite the caption, OMG is not about internet-age acronyms. Nor is it about products intended for teenage girls in poorly written CW dramas. [Note: I don't actually know that teenage girls on CW dramas ever say "OMG," but I feel like they might.] Rather, it is about the scope of the antidumping duty order on steel nails from Vietnam. The scope of that order states, in part: The merchandise covered by the Orders is certain steel nails having a nominal shaft length not exceeding 12 inches.  Certain steel nails include, but...

I have trying to get to this one, and now is the time. Bell Supply Co, LLC v. United States is an important decision from the Court of Appeals for the Federal Circuit. The issue presented is whether, when making a scope determination, Commerce should apply the traditional substantial transformation test to determine the origin of the merchandise that was partially manufactured in a country subject to the order and partially manufactured outside that country. In this case, the question was whether unfinished oil country tubular goods initially fabricated in China and finished in Indonesia are within the scope of the order covering OCTG from China. Bell purchased "green tubes" from China and sent them to Indonesia where they were heat treated and finished. In 2014, the Department of Commerce issued a scope ruling finding that the OCTG shipped from China as green tubes and then finished in third countries remain products of China for purposes of the application of the antid...

[Note: Updated to properly identify the organization supporting the litigation.] I often tell students and other lawyers that the great thing about my practice is the lack of human drama. In most cases, getting to the right result in a dispute with Customs and Border Protection is about knowing the law and making sure everyone applies it properly to the facts. Usually, no one cries and rarely is anyone subject to imprisonment. But, that is not always the case. One thing we do in my office is help people with currency seizures. Just to be 100% clear on this: It is illegal to bring over $10,000 in or out of the country without declaring it to Customs. This is very useful information for law enforcement on a number of fronts. The money might be from illegal activity, it might be going to support terrorist organizations, it might be part of a money laundering scheme. When entering the country, there is an obvious time and place to make this declaration. If you are using a paper decla...

Sometimes, the most interesting customs cases are not litigated at the Court of International Trade. They are in the U.S. district courts and involve important constitutional and administrative law principles not related to duties and penalties. Two of those deserve note here. This post will cover the first. And, yes, I know there are more routine CIT and CAFC cases to address. Someone [a former government official who, despite this crack, I still like] event recently chastised me for being behind here. I promise you that my self-appointed obligation to the trade community weighs heavily on me. I will try to catch up. But first is U.S. v. Kolsuz . This case involves CBP's suspicion-less search of a cell phone. As background, you need to know that the law has been clear for decades that Customs and Border Protection is allowed to search cargo and the personal effects of arriving passengers without a warrant and without even particularized suspicion that they might contain evid...