Apparel Importer Needs More Specific Documentation for Duty-Free Re-Imports, CIT Says

An importer of apparel warehoused in Canada does not have enough documentation for its entries to qualify for duty-free entry as previously imported goods exported under agreement and re-imported under subheading 9801.00.20, the Court of International Trade said in a decision issued Aug. 7.

SGS Sports had entered swimsuits under the duty-free special classification provision after first exporting them to Canada for warehousing at a related company’s warehouse, or so it claimed. CBP had rejected that classification, issuing a ruling in 2018 that said SGS Sports and the warehouse operator, 147483 Canada, were actually the same entity under the same ownership, and could not have executed any “agreement” as required for classification in 9801.00.20 (see 1802220037).

CIT sidestepped whether SGS Sports and 147483 Canada were two different companies entirely, finding classification in 9801.00.20 unwarranted because the entries did not meet any of the other requirements of that subheading either.

Subheading 9801.00.20 covers “articles, previously imported, with respect to which the duty was paid upon such previous importation …, if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States.”

The trade court found insufficient the documentation submitted to back up SGS Sports’ claims that the swimwear had been previously imported and duty paid, not advanced in value, and re-imported. For example, one of the documents submitted by SGS Sports, a receiving journal, was a spreadsheet showing a receiving number, shipment number, purchase order number, style or color, warehouse and bin, receiving date, and other related information. It did not provide key information on the import and export of the swimwear, CIT said.

“The court has examined this Receiving Journal document and observes that the document fails to show clearly the date of first importation, that duties were paid upon first importation, that the goods were exported to Canada, were held in a warehouse without increasing in value or changing condition, and reimported back to the United States for or by SGS,” CIT said. Similarly, a “duty relief ledger” submitted by SGS Sports failed to convince the court.

“The evidence before the court shows generally that SGS imported goods and subsequently reimported some goods under the terms of the Warehousing Agreement,” CIT said. The “evidence does not detail whether the entries at issue in this case are the same merchandise originally imported and exported,” it said.

Subheading 9801.00.20 requires a showing that the articles previously imported are the same as those re-importing under the provision, CIT said. “It is not enough to show that generally SGS’ business plan provides for import, export, and reimport of swimwear. A showing must be made that the entries identified in the protest were imported, duties were paid, were exported, and reimported,” it said.

(SGS Sports, Inc. v. U.S., Slip Op. 20-113, CIT # 18-00128, dated 08/07/20, Judge Choe-Groves. Attorneys: John Peterson of Neville Peterson for plaintiff SGS Sports, Inc.; Monica Triana for defendant U.S. government)