Customs Law

[UPDATE: See this post  clarifying that there is an open issue in this case regarding the increase in duties on products of Turkey from 25% to 50%.]  A three-judge panel of the Court of International Trade has granted the government's motion to dismiss a challenge to Section 232 duties on steel on the grounds that Presidential Proclamation 9705 and subsequent proclamations did not violate the statute. The plaintiffs are several steel importers that claim an injury caused by the tariffs President Trump imposed on certain imported articles of steel after a Commerce Department report found that the imports threaten national security due to the correspondingly lower U.S. production capacity. Plaintiffs challenge the imposition of the duties on procedural arguments related to the requirements of Section 232 itself and the Administrative Procedure Act . To leverage the Court's opinion, Plaintiffs allege: (1) the Steel Report is a reviewable, final agency action, is procedurally def...

UPDATED: On second look, my typing was atrocious in this post. My muscle memory typed "court" several times when my brain wanted "count." I fixed that and a few other things without changing the substance. Also, I am now kicking myself for not using the obvious pun: this case is a "nail biter."  On January 27, a three-judge panel of the U.S. Court of International Trade denied a government motion to dismiss PrimeSource Building Products, Inc. v. United States , which is the lead case challenging the extension of Section 232 duties to so-called derivative products.  PrimeSource's complaint contained five counts challenging the former President's imposition of duties on steel nails. As a general matter, the argument is that the initial 232 investigation and the resulting Proclamation did not cover nail and that the extension of the remedy to derivative product violates the law and is void. The question is exactly what law was violated and how? To cov...

 The ongoing litigation over whether the Section 232 duties were properly extended to cover certain downstream products of steel and aluminum took an interesting detour in Slip Opinion 21-6 , which covers multiple related cases with the lead case being Primesource Building Products v. United States. This opinion addresses the effort by the American Steel Nail Coalition to intervene in the case as a defendant in support of the United States and the continued application of the duties to imported steel nails. The Coalition is an ad hoc group that is not a formal entity as would be, for example, a trade association organized as an entity under state and federal law. Essentially, the Coalition wants a seat at the table in this litigation to protect its own economic interest in the continuation of the tariffs. Intervention is permitted in federal courts like the Court of International Trade either by right or by leave of the Court. Take a look at CIT Rule 24 for the details. To have a ...

  Plexus Corp. v. United States is a decision of the U.S. Court of International Trade in which the Court denied cross motions for summary judgment on the tariff classification of printed circuit board assemblies and chassis imported by Plexus for use in encoders, multiplexers, and remultiplexers. These devices are used to compress audio and video digital data, including voice so that it takes up less digital storage space and transmission bandwidth. While not technically required to successfully transmit data in networks, these devices make it cost effective to do so in a cost-effective manner, which is SMART . The compressed output can be viewed on computers, smartphones, television screens and other devices. The classification of the PCBA and chassis that are parts of the encoders, multiplexes, and remultiplexers are classified based on the classification of the devices of which they are parts. Henceforth, unless there is a reason to differentiate, I am going to refer to all th...

 As mentioned in my last post, tariff classification is all about giving every word of the relevant heading, subheading, and tariff item its proper meaning. We do that by looking for definitions in the Section and Chapter Notes, commentary in the Explanatory Notes, and prior court decisions. In Starkist Co. v. United States , the first word in question was " minced ." The imported merchandise was prepared tuna fish salad. The tuna was classifiable in Heading 1604, which covers, among other things, prepared or preserved fish. Immediately under Heading 1604 is a subheading dividing the heading into "Fish, in whole or in pieces, but not minced" versus "Other prepared or preserved fish." Customs determined that the tuna in question was not mined and was packed in oil. As a result, the merchandise was subject to a 35% base rate of duty under 1604.14.10. Plaintiff argued that the tuna was minced and not packed in oil, making it classifiable as a prepared meal of...

Sometimes I am forced to explain to non-customs and trade lawyers the basics of tariff classification and why it is an interesting area of law. I often use the metaphor of doing a complicated puzzle. There are rules to be followed (i.e., the General Rules of Interpretation, Section Notes, and Chapter Notes). Solving the puzzle requires properly applying the rules to the available facts. When you are lucky enough to have an issue that includes some ambiguity, you can use the rules and facts to advocate for the desired outcome. But, like all legal questions involving the interpretation of a statute, it is important that you focus on all the words. That is the main take away from SGS Sports, Inc. v. United States .  In a nutshell, this case is about whether swimwear imported from Canada could enter the U.S. duty free under HTSUS item 9801.00.20. That provision allows for duty-free entry for:  Articles, previously imported, with respect to which the duty was paid upon such previou...

 This is going to be my first catchup post and will hit the most salient points from some of the CIT and CAFC decision of the last six months. I may not cover everything, but as long as I am trying to read them, I may as well give you at least a blurb. You should read the full cases for details and keep in mind that the details matter. Vietnam Finewood Company Ltd.  involved a challenge to an ongoing enforcement action under the Enforce and Protect Act, 19 USC 1517 . Under this law, U.S. Customs and Border Protection is obligated to investigate allegations that an importer has avoided the payment of antidumping or countervailing duties through "evasion." In this context, evasion is the use of "any document or electronically transmitted data or information, written or oral statement, or act that is material and false, or any omission that is material, and that results in any cash deposit or other security or any amount of applicable antidumping or countervailing duties be...

I am often amused when someone says "It goes without saying . . ." and then goes ahead and says it anyway. Nevertheless, I am going to do that very thing. It goes without saying that 2020 was a strange year. For many, it was tragic and sad. The world had to cope with COVID-19 and the resulting deaths, illnesses, isolation, and economic fallout. Some also experienced terrible property loss and environmental damage from wildfires and other natural disasters. All of that happened during the least civil time in American politics in my memory and ongoing culture clashes along the seams in the American population including education levels, rural versus urban, and racial and religious groups. For the trade community, the last four years have been unlike any we can remember. You have faced threats for a unilateral withdrawal from NAFTA, Section 232 duties on steel and aluminum, Section 301 duties on products from China, and the too-fast transition to the the U.S.-Mexico-United State...

In TransPacific Steel v. United States , the United States Court of International handed the Commerce Department and the President a defeat with respect to the Section 232 duties imposed on aluminum and steel products from Turkey. This case is narrow in scope but important. The specific issue before the Court was whether Presidential Proclamation 9772  which made aluminum and steel products from Turkey subject to twice the rate of Section 232 duty than has been applied to products of other countries. Plaintiffs in this case raised several arguments seeking to overturn the proclamation and recover the excess duties paid. The first argument is statutory and procedural. Section 232 duties are the result of a process that begins when the Commerce Department initiates an investigation. The results of that investigation are then communicated to the President who can chose to take action. The President only has 90 days in which to decide whether he (in this case) is going to act and what ...

Once again , the Court of International Trade has been asked to consider the status of apparel made from a synthetic yarn that includes zinc nanoparticles. This time, the decision is Lockhart Textiles Inc. v. United States . The decision ultimately turns on whether the yarn from which the apparel was made is of synthetic fibers or whether the addition of the zinc in the yarn production process makes it "metalized" and, therefore, an "other yarn." The result is significant. If the plaintiff's contention is correct, the apparel is classified in HTSUS item 6104.69.80, which carrier a rate of duty of 5.6%. If the United States is correct, the proper classification is 6104.63.20, which carries a rate of duty of 28.2%.  I know this is not true, but I can't read about clothing made of metalized yarn without assuming it looks like something from the closet of a Star Trek alien or the original Robinson family from Lost in Space. Reading this case, I was left with the...

Last year, the Court of International Trade decided that plastic iPad Smart Cases, which function as both protective covers and stands are properly classified in HTSUS Heading 3926. Apple, on the other hand, wanted these covers classified in the duty-free provision covering accessories of computers in Heading 8473. We discussed the CIT decision here . Apple appealed and now the Court of Appeals for the Federal Circuit has affirmed the CIT . There is not a lot new in the CAFC decision, but it does a really good job of setting out the legal process of tariff classification and the analysis that produced the result. So, if you are new to this stuff, read the decision. The nub of the issue is what to do with the Explanatory Notes of Heading 8473 and how to interpret the relevant note. The heading covers "Parts and accessories ( other than covers , carrying cases and the like) suitable for use solely or principally with the machines of headings 8470 to 8472." The relevant language...

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...

This is the second decision involving whether the United States properly served a summons and complaint on Chu-Chiang "Kevin" Ho, one of the defendants in a penalty case. The alleged violation  is the false description of imported HID headlight kits. The kits are not admissible merchandise because they violate U.S. Department of Transportation safety rules. On the entry documents, the merchandise was described as ballasts for interior track lights.  Assuming the truth of that allegation, the question remains whether Mr. Ho was properly served. Without proper service the Court of International Trade does not have person jurisdiction over him and the case cannot proceed. The rules related to this are covered in the prior post . Here, we are dealing with an opinion involving a separate but related case. This decision is slip opinion 20-66 . The principal question presented is whether the process server hired by the government successfully served Mr. Ho at his home. The facts are...