The CAFC is the appeals court for cases that are heard at the U.S.C.I.T. for which appeal is sought by a party that is unhappy with the lower court’s decision. The U.S.C.I.T. hears cases that both relate to US Customs and Border Protection issues, such as those regarding the classification or valuation of merchandise, in addition to hearing what are known in the industry as “trade” cases which deal with anti-dumping duties (ADD) and/or countervailing duty (CVD) issues, whose duties and the rules are governed by the U.S. Dept. of Commerce (DOC).
Last week I had the pleasure of going to the Court of Appeals for the Federal Circuit (CAFC) in Washington D.C. to attend a seminar that dealt, in part, with court decisions and ambiguities therein. Among the speakers was Sandra Bell, Executive Director for the Office of Regulations and Rulings at U.S. Customs, who shared a few thoughts from her agency’s perspective.
US Customs primary interest in court decisions is their impact on the agency to have a clear mandate follow after the decision is made. That is, in her own words, she wanted to see a “bright line rule” so that US Customs could have clear guidance for setting regulatory policy that would be in accordance with court decisions.
Ms. Bell spoke about 2 cases in which US Customs “learned” a bright line rule. In the first case, the court had to consider whether or not US Customs had erred by not accepting certain information from an importer regarding ADD which had not been provided at the time of entry, but which had been later provided pre-liquidation.
When it comes to ADD, US Customs is merely supposed to follow instructions set by the DOC regarding the treatment of imported goods subject to an ADD. US Customs does not have the authority to make independent decisions or rules regarding the cargo when it comes to the application of ADD rules on imports.
Despite this, US Customs nonetheless denied the acceptance of the importer’s post-entry submission of information with respect to ADD, deeming it to be untimely as it had not been filed at the time of entry, and ultimately denied the Protest made by the importer (who claimed it had filed all of the requisite information) despite it having been timely filed.
The outcome of this case - or in other words, the Bright Line Rule - was that when applying DOC instructions, US Customs is required to consider additional information properly provided in a Protest and by not doing so, it’s actions had been wrong.
Another example of a case that had a “bright line” was CBB Group, Inc. v. United States, Slip Op. 11-75.
This case dealt with a detention by US Customs of plush toys with a protected trademark on the toys. Rather than seizing the goods, US Customs merely detained them without making a decision on the status of the goods. It detained them for so long that they were ultimately considered a “deemed exclusion.”
CBB Group filed a Protest which was denied by US Customs and the very next day CBB Group went to the U.S.C.I.T. and filed a Summons to begin the process of judicial review of the action taken by US Customs. Oddly enough, US Customs decided at virtually the same time, but not before the Summons had been filed, to seize the goods.
The question presented to the court was thus a jurisdictional one: Whether or not Customs was still able to control the cargo now that a court case had been commenced, or if instead, that jurisdiction was now with the court.
The outcome of this case was that once jurisdiction had already been attached by the U.S.C.I.T., it was no longer within the purview of US Customs to take further action with respect to the cargo.
Both of these cases reflected outcomes that were unfavorable to US Customs however, both provided guidance with respect to how to treat cargo under specific circumstances, and for this they were instructive and of value to the agency according to Ms. Bell.
Whether the case was favorable to the agency or not, what mattered was that there was clear guidance with respect to agency action that came out of the decision.
Contrasting these decisions to a different one, another speaker made reference to the Le Mans Corporation v. US, 2010-1295 case, in which sportswear for motorcross activity had not been considered as being properly classified under Chapter 95 as articles of sports equipment but were instead classified under Chapter 61 and 62 as apparel.
In this case, a long-established designation for what had been considered sportswear was prima facie challenged (however, upon further discussion it was pointed out by an audience member that a distinction had been made with respect to the padding within the garment itself, causing it to be categorically ineligible - something I am sure other members of the bar could have argued about in disagreement.)
As many other sports equipment cases had been decided under this long-established designation, the court’s decision to not treat these articles in a similar fashion was considered by many to have created an ambiguity within the classification of such products.
Ambiguities may make it harder to know how to classify a particular item, and some would argue that it does. On the flip side of this however, it is the flexible nature of an ambiguous decision itself that can provide for a broader application of a certain set of rules across a wider variety of imports.
Questions/comments? Post below or email me at clark.deanna@gmail.com
