Recent CIT Decision Sets Limits on Domestic Petition Process on Tariff Classification

A recent Court of International Trade decision says domestic industry can’t use the interested party petition process to challenge individual entries, and are instead limited to challenges of how CBP treats the category of merchandise as a whole, customs lawyer Larry Richardson of Barnes Richardson said in a blog post April 4.

But though the trade court’s dismissal of the challenge brought by Wheatland Tube on March 18 sets limits on the use of the petition process under 19 USC 1516 (see 2203210053), domestic industry still has many tools available to it to address alleged importer improprieties, Friedman said.

Suspecting a misclassification scheme by two importers of steel conduit from Mexico to evade Section 232 tariffs, Wheatland had challenged CBP’s refusal to provide it with information on the classifications declared by two specific importers. While CBP had responded by saying that the general class of merchandise identified in Wheatland’s petition was classified in the subheading claimed by the domestic steel company, it said information specific to any entries or importers was business confidential.

CIT said CBP wasn't required to give out the entry-specific information, because the law requires only that it disclose the classification imposed by CBP, not that declared by the importer. CIT also said CBP could not act on a subsequent ruling request filed by Wheatland, because the agency can’t rule on any issue pending before CIT and its courts of appeal.

“The problem here is that what Wheatland apparently challenges remains the classification assigned by the importers at the time of entry and not the classification imposed by Customs. That is not the information Customs is required to disclose under § 1516,” Friedman said. While domestic interested parties can still use the petition process to get CBP to disclose how it’s treating a category of merchandise and challenge the results of the petition if it disagrees, they do not get “to look at entries or entry-specific information, that is business confidential information,” he said.

“There are other tools available including simple tips, more complex Enforce and Protect Act allegations, and even more complex False Claims Act cases,” Friedman said. “It is more than fair to say that domestic producers, for whom many trade remedies including the antidumping laws were created, are not without remedies.”

And while it’s “very frustrating” when a ruling from CBP is blocked by ongoing litigation -- which could mean years before any assurance of what constitutes a compliant entry -- that just means “the importer needs to exercise reasonable care while the litigation is pending and understand that the result in that case may change things going forward,” Friedman said.

“It would be far more useful if CBP would issue a ruling or even an information letter with everyone understanding that the Court's decision might change the result later,” Friedman said. “Without some feedback from CBP, it can be very difficult for importers to manage their supply chain. But, there is a regulation and here we are.”