Trade court - Prepayment of customs duty required for jurisdiction  

June 26: The U.S. Court of International Trade today denied an importer’s motion for reconsideration in a case concerning the classification and liquidation of 99 entries of white sauce. Under the prepayment provisions for jurisdictional purposes, the importer would first have to pay $28 million to invoke subject matter jurisdiction. International Custom Products, Inc. v. United States, Slip Op. 14-74 (CIT June 26, 2014)

Read the trade court’s opinion [PDF 497 KB]

Summary

  • In 1999, the importer obtained a ruling letter classifying imported white sauce under HTSUS 2103.90.90 as “sauces and preparations therefor…” subject to a duty rate of 6.4%.
  • In 2005, CBP issued a “Notice of Action” that 99 entries of white sauce were being reclassified and liquidated under HTSUS 0405.20.3000 as “dairy spread”—with this reclassification increasing the duties owed by approximately 2400% for about a $28 million assessment.
  • The importer challenged the Notice of Action, asserting that CBP did not follow statutory and regulatory requirements, and prepaid the customs duty on one entry.
  • The trade court in 2005 held that the importer had not challenged the classification, but rather had challenged an “illegal agency revocation of a binding ruling letter.”
  • On appeals, the Federal Circuit in 2006 reversed and “assumed that the claim centered on the classification of white sauce” and not on the CBP action.
  • The Federal Circuit’s decision forced the importer to seek relief via 28 U.S.C. § 1581(a) and also to comply with its prepayment requirements.
  • On remand to the trade court, the importer filed a motion for the trade court to reconsider a 2013 opinion that granted the government’s motion to dismiss because of the “financial impediment” it faced in first having to pay $28 million under the prepayment requirements, for jurisdiction under 28 U.S.C. § 1581(a).
  • Today, the trade court denied the importer’s motion to reconsider and/or to amend its complaint.


    • For more information, contact a professional with KPMG’s Trade & Customs practice:


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      Luis A. Abad

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      Amie Ahanchian

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      Or your local KPMG Trade & Customs professional.




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