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Recent Court
Decisions
Recently, the U.S. Supreme Court upheld
earlier decisions of the Court of Appeals for the
Federal Circuit (CAFC) relating to maquiladora
textile assembly operations under HTSUS Chapter 98.
Specifically, on March 5th, the Supreme
Court issued final decisions denying claims for refunds
of duty paid on American components subjected abroad to assembly and incidental processing
in the forms of enzyme washing (stonewashing) and permapressing (oven baking) in test cases
brought by Levi Strauss and Haggar. More generally,
these decisions extend the deference that the courts
will extend to the discretionary decisions of the
U.S. Customs Service on certain matters and types
of issues. In short, these decisions underscore
the willingness of the appellate courts to permit
Customs to say, in effect, what the law is through
regulatory fiat. Because the new court decisions
substantially weaken the rights of all importers to judicial
review, companies should carefully review any claims
for favorable treatment in customs regulations
and particularly those involving "807"
(9802) operations and double their efforts to
secure favorable rulings at the administrative level.
The final decisions were issued when the
Supreme Court declined to review the federal
appellate court's (CAFC) decisions holding that the
claims must be denied under Customs' regulatory definition of "incidental to assembly" in
subheading 9802.00.80 of the HTSUS. In a rare but
pointed expression of frustration at the Supreme Court
and CAFC rulings, the judge in the Levi Strauss test
case, warned that the effect of "Chevron"
deference being adopted for customs cases is that "an
agency employee, who may have little or no background
in the law, is now both the enforcer and interpreter of the law."
If your company filed protests and court cases
that raise refund issues similar to those in the Levi
Strauss or Haggar test cases, those importations should
be reviewed to determine whether the claims should
be abandoned (if indistinguishable from the Levi
Strauss and Haggar processes) or further pursued (if
involving processing that materially differs from the
processing and regulation involved in the Court cases). In
any event, both Customs and the Courts will set
deadlines for importers to: (1) voluntarily abandon the
actions; or (2) proceed with the cases by presenting our
new arguments. The Court will shortly issue notices
to dispose of all pending Court cases by a date
certain; Customs will issue denials of all pending protests.
For further information on how these
decisions might affect your importations, contact either
Lee Sandler or Ronda Angell in Miami at (305) 267-9200,
Ron Gerdes in Washington, D.C. at (202) 638-2230, Beth Ring or Arthur Purcell in New York at (212)
883-1300 or Lawrence Hanson in Houston, Texas at
713 236 7715.
Low risk importers
U.S. Customs Service Acting Commissioner
Charles Winwood recently recognized the first group
of importers to receive a low-risk designation for
trade compliance. This initial evaluation of risk was
achieved by 150 importers for their high compliance with
U.S. trade laws. Each will be contacted for details on
what being "low risk" means to them.
"This is a win-win initiative for both the
importers and Customs," said Acting Commissioner Winwood. "Low risk importers will be rewarded for their
efforts with fewer cargo exams, fewer requests for
information and fewer reviews. U.S. Customs in turn can divert resources to focus on companies
most likely to violate U.S. laws."
"Customs will deliver on
the benefits earned by low risk importers," said
Assistant Commissioner Bonni G. Tischler, Office of Field Operations. "Our
goal is to have the trade see and feel the impact of those benefits."
The low risk designation
means that Customs has conducted a comprehensive review of
the importer's compliance and found no significant problems. The
review is a combination of compliance assessments, targeted cargo
exams and document reviews, account manager evaluations,
compliance measurement, enforcement results, and financial health.
Customs is committed to a significant reduction in
examination rates for low risk importers. They will be removed from the
general universe of importers where cargo exams are generated by local
and national criteria. They also will receive the minimum number of exams required as part of
Customs compliance measurement system. For cargo exams based on issues
that develop with a particular shipment, objective national standards will
be applied before the exam is authorized.
Low risk importers will receive
fewer requests for data. Requests for information, site visits, samples,
and documentation will be kept to a minimum and will be
nationally coordinated through account managers.
Customs will review activity
reports for low risk importers nationally and at the ports to monitor activity in
the ports.
Cuban cigars
The number of attempted importations of Cuban cigars
into the United States is rising and because dealing in such cigars may lead
to Treasury enforcement actions, the public should be aware of - and make every effort to observe - the prohibitions which are in effect. Only persons returning from
Cuba after a licensed visit there are permitted to bring Cuban cigars
into the United States, provided the value of such cigars does not exceed $100
dollars and the cigars are for that individual's personal use and
not for resale. All offers to buy or sell such cigars in the United
States involve cigars that were imported illegally. Contrary to what
many people may believe, it is illegal for travelers to bring into the
United States Cuban cigars acquired in third countries (such as Canada,
England, or Mexico).
Larry Hanson is the partner in
charge of Houston office of the law firm of Sandler, Travis and Rosenberg.
He can be reached at (713) 236-7715 or by email at lhanson@strtrade.com.
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