Classification 'Treatment' Nationally Can Be Based on One Port, CIT Says

CBP can confer classification "treatment" on a good through consistent decisions at a single port, the Court of International Trade ruled March 24. Finding importer Kent International's imported child safety seats for bicycles should be classified as seats rather than bicycle parts, Judge Leo Gordon agreed with Kent that the Port of New York/Newark's consistent classification of them as seats constituted treatment on a "national basis" because the standard does not require treatment to have been applied at multiple ports, only that CBP not take inconsistent actions over a two-year period.

The action has been the subject of five prior court decisions, the latest of which, at the U.S. Court of Appeals for the Federal Circuit, remanded the issue of whether the treatment provision governs the classification of the seats.

An importer seeking to establish a treatment must show that CBP formally took significant action in "a particular and consistent manner" regarding the importer’s prior transactions, Gordon noted in his opinion. What gives rise to “treatment previously accorded” is not defined in the statute, he said. However, the implementing regulation provides a three-pronged test for establishing what is meant by that language.

There must be an actual determination by a Customs officer regarding the facts involved and that officer must be responsible for the subject matter of the determination. Over a two-year period immediately preceding the claim of treatment, Customs must consistently apply that determination on a national basis involving materially identical facts and issues.

"There is no dispute" that the first two prongs were met by Newark Customs approving 14 protests covering 35 entries and the post-entry amendments covering nine more, Gordon said. The parties disagreed on whether the claimed treatment was on a national basis and whether that claimed treatment occurred over a 2-year period immediately preceding the claim as required by the third prong.

Kent has long argued that the national basis element does not require the treatment to have been previously accorded at more than one port, only that different ports may not take inconsistent actions. The judge rejected the government's argument that informal contact between Long Beach Customs and Kent in 2011 regarding how CBP would rule in the future constituted an inconsistent “action” by CBP. Gordon was barred by a previous Federal Circuit decision (see 2105250053) from giving any weight to CBP’s consideration of Kent’s Long Beach entries that were liquidated through the bypass procedure. Since no other port or office within CBP took a contrary position, the judge agreed that the determinations by Newark Customs constituted “action” as contemplated by the regulation.

Finally, Kent was required to show that the claim of treatment occurred over a two-year period immediately preceding the claim. Kent argued that the two years of "treatment" began with its protest approvals and not its entry dates. Gordon agreed, saying: "The basis for treatment in this matter arises from CBP’s grant of Kent’s protests rather than how the entries were initially classified."

The court found that the 2015 CBP ruling that Kent’s "WeeRide" child bike seats were properly classified as bicycle accessories violated the afforded treatment for Kent’s entries for which CBP "consistently granted protests for reclassification under heading 9401 since August 2008," Gordon said. In the ruling, CBP classified the seats under subheading 8714.99.80 as “Parts and accessories of [bicycles] ...," which carried a 10% duty rate. Kent claimed that the items were "Seats ... other" under the duty-free subheading 9401.80 (see 2203300023).

(Kent International v. U.S., CIT # 15-00135; Judge Leo Gordon; Attorneys: Patrick Reed of Simons & Wiskin for plaintiff Kent International; Monica Triana for defendant U.S. government)