CITBA's Customs Corner
* Many thanks to Lydia Pardini, Tebsy Paul, and John Peterson for their contributions to this update.
¡Customs Corner!
DID YOU MISS IT? On November 9, 2021, the CITBA Customs Committee hosted a panel discussion on first sale versus last sale under the U.S. and Canadian customs regimes. The panelists included Albena Peters, an attorney at U.S. Customs and Border Protection, Office of Trade – Regulations and Rulings, William Baldwin, a partner at Cassidy Levy Kent’s Washington D.C. office, and Michael Milne, a partner at Cassidy Levy Kent’s Ottawa office. Ms. Peters provided a brief overview on the U.S. Government’s policy on first sale and what CBP looks for in determining the legitimacy of first sale transactions. Ms. Peters noted that this is a fact specific matter but typically CBP looks for the complete paper trail including (but not limited to): purchase orders, invoices, proof of payment and entry documents both from the manufacturer to middle man and middle man to the U.S. importer. Mr. Baldwin discussed the first sale rule from the U.S. trade perspective. Mr. Baldwin noted that importers should always review all documents for consistency and provided a brief overview on red flags that CBP is concerned with such as flash title transfers for imported merchandise. Lastly, Mr. Baldwin briefly discussed the CIT’s 2021 decision in Meyer Corp., U.S. v. United States, which is currently under appeal before the U.S. Court of Appeals for the Federal Circuit. Finally, Mr. Milne provided a synopsis on Canada’s approach to the last sale rule. Mr. Milne also noted that the Canadian Government may introduce changes to the customs valuation laws such as amending the definition of certain statutory terms through regulation.
INTERESTING DECISION OUT OF ALASKA: Do not forget to review the case summaries section to keep up on all the recent decisions from the U.S. Court of Appeals for the Federal Circuit and the U.S. Court of International Trade. Our federal courts also have jurisdiction over certain customs matters, and it can be hard to keep track of it all! Below is a summary of an interesting decision out of the United States District Court for the District of Alaska:
Kloosterboer International Forwarding LLC v. United States, No. 3: 21-cv-00198 (D. AK.) involves a Customs issuance of more than $400 million in penalties to companies accused of participating in transportation, which allegedly violated the Jones Act. Customs imposed the penalties, contending that the transportation of frozen Alaskan fish from Dutch Harbor, Alaska to Bayside, New Brunswick, and continuing transportation to Calais, Maine was in violation of the Jones Act, since the ocean transport was done by foreign-flag vessels. The focus is on whether the fish was transported in part by Canadian rail lines, a requirement of the Third Proviso to the Jones Act.
Kloosterboer, the plaintiff, along with an affiliate, sought to enjoin the collection and enforcement of the Jones Act penalties while the case is underway. At the heart of the case is whether certain old Customs rulings approving similar transportation remain in force and whether the plaintiffs had a right to rely on them. The plaintiffs contend that they relied on these rulings, which were never revoked or modified and which still appear in Customs’ CROSS rulings database. They further contend that Customs could not take action contrary to the rulings unless it first follows the “notice and comment” procedures found in Section 625(c) of the Tariff Act of 1930 [19 U.S.C. § 1625(c)].
In a decision issued on October 10, 2021, the district court, per Judge Sharon Gleason, granted the plaintiffs a preliminary injunction allowing them to import fish without fear of penalty while the injunction remains in place, and prohibiting Customs from enforcing any penalties previously issued to parties other than the litigants. In issuing the injunction, the court noted that the plaintiffs had placed considerable reliance on the rulings published on CROSS and any treatment resulting therefrom. In indicating that the plaintiffs had a strong likelihood of success on the merits, the court noted plaintiffs' contention that the shipments in question were “substantially identical” transactions to those that were approved in previous Customs rulings letters, and thus CBP’s actions would appear to have the effect of modifying the treatment previously accorded to those transactions. The court found that the plaintiffs had made a showing of serious questions going to the merits of the claim and thus granted the injunction.
WOULD YOU LIKE TO JOIN THE CUSTOMS COMMITTEE? The Customs Committee is open to any CITBA Member who would like to join! We meet quarterly (July, October, January, & April) around lunch time to give us all a chance to stay in the “know” on current customs events. Each meeting starts with a short informal presentation giving us a “heads-up” about interesting current customs matters. We will then open the meeting for discussion, questions, or anything else that occurs organically. We hope you will join us! If you would like to join and receive updates regarding meeting times and logistics, please email: citbacustomscommittee@gmail.com.
OUR NEXT MEETING will be January 12, 2022, at 12:30. The meeting with start with a short presentation by Dana Watts, Counsel, Miller & Chevalier Chartered, on CBP’s enforcement of forced labor restrictions.
DO YOU HAVE THESE FORCED LABOR RESOURCES AT YOUR FINGERTIPS?
Must-Have Links:
¡Customs Corner!
DID YOU MISS IT? On November 9, 2021, the CITBA Customs Committee hosted a panel discussion on first sale versus last sale under the U.S. and Canadian customs regimes. The panelists included Albena Peters, an attorney at U.S. Customs and Border Protection, Office of Trade – Regulations and Rulings, William Baldwin, a partner at Cassidy Levy Kent’s Washington D.C. office, and Michael Milne, a partner at Cassidy Levy Kent’s Ottawa office. Ms. Peters provided a brief overview on the U.S. Government’s policy on first sale and what CBP looks for in determining the legitimacy of first sale transactions. Ms. Peters noted that this is a fact specific matter but typically CBP looks for the complete paper trail including (but not limited to): purchase orders, invoices, proof of payment and entry documents both from the manufacturer to middle man and middle man to the U.S. importer. Mr. Baldwin discussed the first sale rule from the U.S. trade perspective. Mr. Baldwin noted that importers should always review all documents for consistency and provided a brief overview on red flags that CBP is concerned with such as flash title transfers for imported merchandise. Lastly, Mr. Baldwin briefly discussed the CIT’s 2021 decision in Meyer Corp., U.S. v. United States, which is currently under appeal before the U.S. Court of Appeals for the Federal Circuit. Finally, Mr. Milne provided a synopsis on Canada’s approach to the last sale rule. Mr. Milne also noted that the Canadian Government may introduce changes to the customs valuation laws such as amending the definition of certain statutory terms through regulation.
INTERESTING DECISION OUT OF ALASKA: Do not forget to review the case summaries section to keep up on all the recent decisions from the U.S. Court of Appeals for the Federal Circuit and the U.S. Court of International Trade. Our federal courts also have jurisdiction over certain customs matters, and it can be hard to keep track of it all! Below is a summary of an interesting decision out of the United States District Court for the District of Alaska:
Kloosterboer International Forwarding LLC v. United States, No. 3: 21-cv-00198 (D. AK.) involves a Customs issuance of more than $400 million in penalties to companies accused of participating in transportation, which allegedly violated the Jones Act. Customs imposed the penalties, contending that the transportation of frozen Alaskan fish from Dutch Harbor, Alaska to Bayside, New Brunswick, and continuing transportation to Calais, Maine was in violation of the Jones Act, since the ocean transport was done by foreign-flag vessels. The focus is on whether the fish was transported in part by Canadian rail lines, a requirement of the Third Proviso to the Jones Act.
Kloosterboer, the plaintiff, along with an affiliate, sought to enjoin the collection and enforcement of the Jones Act penalties while the case is underway. At the heart of the case is whether certain old Customs rulings approving similar transportation remain in force and whether the plaintiffs had a right to rely on them. The plaintiffs contend that they relied on these rulings, which were never revoked or modified and which still appear in Customs’ CROSS rulings database. They further contend that Customs could not take action contrary to the rulings unless it first follows the “notice and comment” procedures found in Section 625(c) of the Tariff Act of 1930 [19 U.S.C. § 1625(c)].
In a decision issued on October 10, 2021, the district court, per Judge Sharon Gleason, granted the plaintiffs a preliminary injunction allowing them to import fish without fear of penalty while the injunction remains in place, and prohibiting Customs from enforcing any penalties previously issued to parties other than the litigants. In issuing the injunction, the court noted that the plaintiffs had placed considerable reliance on the rulings published on CROSS and any treatment resulting therefrom. In indicating that the plaintiffs had a strong likelihood of success on the merits, the court noted plaintiffs' contention that the shipments in question were “substantially identical” transactions to those that were approved in previous Customs rulings letters, and thus CBP’s actions would appear to have the effect of modifying the treatment previously accorded to those transactions. The court found that the plaintiffs had made a showing of serious questions going to the merits of the claim and thus granted the injunction.
WOULD YOU LIKE TO JOIN THE CUSTOMS COMMITTEE? The Customs Committee is open to any CITBA Member who would like to join! We meet quarterly (July, October, January, & April) around lunch time to give us all a chance to stay in the “know” on current customs events. Each meeting starts with a short informal presentation giving us a “heads-up” about interesting current customs matters. We will then open the meeting for discussion, questions, or anything else that occurs organically. We hope you will join us! If you would like to join and receive updates regarding meeting times and logistics, please email: citbacustomscommittee@gmail.com.
OUR NEXT MEETING will be January 12, 2022, at 12:30. The meeting with start with a short presentation by Dana Watts, Counsel, Miller & Chevalier Chartered, on CBP’s enforcement of forced labor restrictions.
DO YOU HAVE THESE FORCED LABOR RESOURCES AT YOUR FINGERTIPS?
Must-Have Links:
- CBP’s Forced Labor page: https://www.cbp.gov/trade/forced-labor
- FAQs about the Hoshine Withhold Release Order: https://www.cbp.gov/trade/programs-administration/forced-labor/hoshine-silicon-industry-co-ltd-withhold-release-order-frequently-asked-questions
- International Labour Organization’s 11 Forced Labor Indicators: https://www.ilo.org/global/topics/forced-labour/publications/WCMS_203832/lang--en/index.htm