00 pike friedman fmt 11/30/11 1:11 PM Page i
Customs Law
00 pike friedman fmt 11/30/11 1:11 PM Page ii
Carolina Academic Press
Law Casebook Series
Advisory Board
❦❦
Gary J. Simson, Chairman
Case Western Reserve University School of Law
John C. Coffee, Jr.
Columbia University Law School
Randall Coyne
University of Oklahoma College of Law
Paul Finkelman
Albany Law School
Robert M. Jarvis
Shepard Broad Law Center
Nova Southeastern University
Vincent R. Johnson
St. Mary’s University School of Law
Michael A. Olivas
University of Houston Law Center
Kenneth L. Port
William Mitchell College of Law
H. Jefferson Powell
George Washington University Law School
Michael P. Scharf
Case Western Reserve University School of Law
Peter M. Shane
Michael E. Moritz College of Law
The Ohio State University
Emily L. Sherwin
Cornell Law School
John F. Sutton, Jr.
Emeritus, University of Texas School of Law
David B. Wexler
James E. Rogers College of Law, University of Arizona
University of Puerto Rico School of Law
00 pike friedman fmt 11/30/11 1:11 PM Page iii
Customs Law
Damon V. Pike
President, The Pike Law Firm, P.C.,
Adjunct Professor of Law,
Emory University, Atlanta
Lawrence M. Friedman
Partner, Barnes, Richardson & Colburn,
Adjunct Professor of Law,
Center for International Law,
John Marshall Law School, Chicago
Carolina Academic Press
Durham, North Carolina
00 pike friedman fmt 11/30/11 1:11 PM Page iv
Copyright © 2012
Carolina Academic Press
All Rights Reserved
ISBN: 978-1-59460-920-6
LCCN: 2011935466
Carolina Academic Press
700 Kent Street
Durham, North Carolina 27701
Telephone (919) 489-7486
Fax (919) 493-5668
www.cap-press.com
Printed in the United States of America
00 pike friedman fmt 11/30/11 1:11 PM Page v
Contents
List of Primary Cases
About the Authors
Acknowledgments
Chapter 1 • The Evolution of Customs Law and Litigation
Crowell v. M’Fadon
Elliot v. Startwous
Rhone Poulenc, Inc. v. United States
Protecting Our Borders — This Is CBP
Chapter 2 • The Entry Process
A. The Entry
United States v. Legg
B. The Parties
1. The Importer of Record
Top Form Brassiere Mfg. Co. v. United States
2. Customs Brokers
National Customs Brokers and Forwarders Ass’n of America v.
United States
§ 1641. Customs Brokers
C. Entry Documentation
1. Invoices
2. Surety Bonds
Hera Shipping, Inc. v. Carnes
National Fisheries Institute, Inc. v. U.S. Bureau of Customs and
Border Protection
Chapter 3 • Tariff Classification under the Harmonized System
A. Generally
B. The Harmonized System and U.S. Law
1. Generally
Cummins Inc. v. United States (2005)
Cummins Inc. v. United States (2006)
2. Explanatory Notes
Archer Daniels Midland Co. v. United States
C. The Classification of Imported Merchandise
1. General Rules of Interpretation
Sharp Microelectronics Technology, Inc. v. United States
Honda of America Manufacturing, Inc. v. United States
2. Eo Nomine Classifications and Relative Specificity
Len-Ron Manufacturing Co., Inc. v. United States
v
xiii
xv
xvii
3
3
5
11
20
25
25
27
29
29
29
39
39
43
47
48
50
51
54
71
71
72
72
72
75
76
76
78
78
80
85
89
90
00 pike friedman fmt 11/30/11 1:11 PM Page vi
vi
CONTENTS
Bauer Nike Hockey USA, Inc. v. United States
The Pillsbury Co. v. United States
3. Classification by Use
Automatic Plastic Molding, Inc. v. United States
Clarendon Marketing, Inc. v. United States
4. Ejusdem Generis and Noscitur A Sociis
Avenues in Leather, Inc. v. United States
Jewelpak Corp. v. United States
5. The Classification of Parts
United States v. Willoughby Camera Stores, Inc.
United States v. Pompeo
Bauerhin Technologies Limited Partnership v. United States
Chapter 4 • Customs Valuation
A. WTO Valuation Code
1. Transaction Value
2. Circumstances of Sale
B. Customs Valuation in the United States
1. Transaction Value
a. Price Actually Paid or Payable
Generra Sportswear Co. v. United States
b. Transaction Value Based on a Formula
HQ H021424
c. Post-Importation Price Decreases and Increases
1. Price Increases
Chrysler Corporation v. United States
HQ H086775
2. Price Decreases
HQ H092575
2. Total Price Actually Paid or Payable
a. Additions
1. Packing Costs
HQ 548257
2. Commissions (Selling)
Monarch Luggage Co., Inc. v. United States
3. Assists
Texas Apparel Co. v. United States
Calculating the Value of an Assist
HQ H044163
4. Royalties
HQ H024566
5. Proceeds of a Re-Sale
b. Bona Fide Sales for Export
1. Bona Fide Sales
2. Bona Fide Sales for Export
Nissho Iwai American Corp. v. United States
General Notice (T.D. 96-87), Determining Transaction Value
in Multi-Tiered Transactions
3. Arm’s Length Price
HQ 547382
97
101
104
104
111
116
116
120
125
125
130
133
139
139
140
141
141
142
142
142
146
147
149
149
149
156
159
160
162
162
163
163
166
168
171
171
176
177
180
181
185
185
185
187
189
195
197
198
00 pike friedman fmt 11/30/11 1:11 PM Page vii
CONTENTS
c. Deductions
HQ 547074
3. Related Party Transactions
a. Income Tax “Arm’s Length” Transfer Pricing Rules
Section 1059A
b. Customs “Arm’s Length” Pricing Rules
1. Relevance of APAs
HQ 546979
HQ H029658
2. Transfer Pricing Studies
HQ H032883
4. Transaction Value of Identical Merchandise
5. Transaction Value of Similar Merchandise
6. Deductive Value
7. Computed Value
8. Fall-Back Method
HQ H019710
9. Miscellaneous Valuation Issues
a. Defective Merchandise
Saab Cars USA v. United States
b. Foreign Inland Freight
Appendix
Chapter 5 • Country of Origin and Marking
A. History
B. Rules of Origin
1. Non-Preferential/Substantial Transformation
Texas Instruments v. United States
HQ H112725
2. NAFTA
HQ H008509
Bestfoods v. United States
3. Textiles and Apparel
HQ 967172
C. Marking Laws
United States v. Friedlaender & Co. Inc.
D. Exceptions to Marking Laws
1. Ultimate Purchaser
National Hand Tool Corp. v. United States
2. “J-List”
3. Other Exceptions
HQ H073916
E. Method and Manner of Marking
HQ 563275
F. Marking of Containers
G. Enforcement of Marking Laws
1. Redelivery
2. Liquidated Damages
3. Marking Duties
Pentax Corp. v. Robison
vii
203
204
208
208
209
210
210
211
215
222
222
234
235
235
236
236
236
241
241
241
246
249
281
281
282
283
283
290
294
295
299
304
307
309
310
317
317
317
320
321
322
327
327
331
331
331
332
332
333
00 pike friedman fmt 11/30/11 1:11 PM Page viii
viii
CONTENTS
Chapter 6 • Duty Reduction Opportunities
A. Duty Drawback
International Light Metals v. United States
Texport Oil Co. v. United States
718 Fifth Avenue Corp. v. United States
Merck & Co., Inc. v. United States
Delphi Petroleum, Inc. v. United States
B. U.S. Goods Returned after Assembly under HTSUS Heading 9802
United States v. Haggar Apparel Co.
DaimlerChrysler Corp. v. United States
C. U.S. Goods Returned When Not Advanced in Value or Improved in
Condition under HTSUS Heading 9801
HQ 559496
HQ 557771
D. Generalized System of Preferences
Dal-Tile Corp. v. United States
E. Foreign Trade Zones
Nissan Motor Mfg. Corp. v. United States
Citgo Petroleum Corporation v. The United States Foreign-Trade
Zones Board
HQ H017624
Chapter 7 • NAFTA and Preferential Duty Agreements
A. Generally
B. Constitutionality
Made in the USA Foundation v. United States
C. Duty Reduction and Claim Formalities
1. Originating Goods
a. Preference Criterion A: Wholly Obtained or Produced
b. Preference Criterion B: Tariff Shift, Tariff Shift and RVC
c. Preference Criterion C: Made Exclusively of Originating Material
d. Preference Criterion D: No Tariff Shift Possible and Pass RVC
e. Other Considerations
2. Claim Formalities
3. Verification and Enforcement
4. Conclusion
Corrpro Companies, Inc. v. United States
D. NAFTA Drawback
Nufarm America’s, Inc. v. United States
E. Verification and Recordkeeping
United States v. Ford Motor Company
Chapter 8 • Customs Rulings
U.S. Customs and Border Protection, Informed
Compliance Publication, U.S. Customs and
Border Protection Rulings Program
Chapter 9 • Liquidation and Protests
A. Finality of Liquidation
United States v. Cherry Hill Textiles, Inc.
B. Posting at Customhouse v. Courtesy Notice
Goldhofer Fahrzeugwerk GmbH & Co. v. United States
341
341
341
352
357
361
369
375
375
379
385
385
386
388
388
393
393
397
402
407
407
409
409
422
423
424
424
426
426
426
428
429
430
430
434
434
438
438
451
451
477
477
477
485
485
00 pike friedman fmt 11/30/11 1:11 PM Page ix
CONTENTS
C. Liquidation by Operation of Law
United States v. Cherry Hill Textiles, Inc.
D. Protestable Events
Swisher International, Inc. v. United States
E. Timeliness of Protest
Fujitsu Compound Semiconductor, Inc. v. United States
F. Specificity of Protest
Saab Cars USA, Inc. v. United States
G. Accelerated Disposition
Hitachi Home Electronics (America), Inc. v. United States
Chapter 10 • Penalties and Enforcement
A. Reasonable Care
United States v. Optrex America, Inc.
United States v. Golden Ship Trading Co.
B. Administrative Procedure for Civil Penalties
C. The Penalty Amount and Mitigation
Customs Regulations, Guidelines for the Imposition and
Mitigation of Penalties for Violations of 19 U.S.C. § 1592
D. Prior Disclosure
United States v. Ford Motor Co.
United States v. Ford Motor Co.
Chapter 11 • Customs Litigation
A. Jurisdiction
1. “(a)” v. “(i)” Jurisdiction
United States Shoe Corporation v. United States
2. Commencing an Action under 1581(a)
Pollak Import-Export Corp. v. United States
DaimlerChrysler Corp. v. United States
3. Declaratory Judgment and “Ancillary Jurisdiction”
Heartland By-Products, Inc. v. United States
B. Standard of Review
1. De Novo Review
2. Chevron/Haggar/Mead Deference
United States v. Mead
C. Burdens and Presumptions
Jarvis Clark Company v. United States
Goodman Manufacturing, L.P. v. United States
Universal Electronics, Inc. v. United States
D. Common and Commercial Meaning
Alexandria International, Inc. v. United States
Timber Products, Co. v. United States
Airflow Technology, Inc. v. United States
E. Unique Aspects of Customs Litigation
1. Res Judicata and Stare Decisis
United States v. Stone & Downer Co.
Schott Optical Glass, Inc. v. United States
2. The Test Case and Suspension Process
Generra Sportswear, Inc. v. United States
Eastalco Aluminum Co. v. United States
ix
489
489
493
493
502
502
506
506
512
512
519
519
520
527
533
540
540
551
551
555
557
557
559
560
578
578
583
590
590
598
598
598
599
608
608
615
617
623
623
629
636
641
641
641
645
647
648
652
00 pike friedman fmt 11/30/11 1:11 PM Page x
CONTENTS
x
3.
Three-Judge Panels
Aectra Refining and Marketing Inc. v. United States
4. Hearings Outside of New York
Turbon Products, Inc. v. United States
Chapter 12 • Customs’ Role in Enforcing Intellectual Property Rights
A. Trademarks
Bourjois & Co., Inc. v. Katzel
Prestonettes, Inc. v. Coty
Lever Bros. Co. v. United States
Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc.
Customs Directive No. 2310-008A
B. Copyrights
Quality King Distributors, Inc. v. L’Anza Research International Inc.
Omega, S.A. v. Costco Wholesale Corp.
Costco Wholesale Corp. v. Omega, S.A.
C. Patents
Customs Directive No. 2310-006A
Alice Alexandra Kipel, The Role of the United States Court
of International Trade in the Enforcement of Intellectual
Property Rights
Chapter 13 • Border Searches and the Fourth Amendment
United States of America v. Nzelo Chinedu Okafor
United States of America v. Michael Timothy Arnold
United States of America v. Hilario Alfaro-Moncada
U.S. Customs and Border Protection Directive No. 3340-049
Chapter 14 • Other Government Agency Laws and Regulations
A. U.S. Department of Agriculture (“USDA”)
1. Animal and Plant Health Inspection Service (“APHIS”)
Animal and Animal Products
Plants and Plant Protection
Biotechnology
2. The Lacey Act (16 U.S.C. §§ 3371–3378)
3. Food Safety and Inspection Service (“FSIS”)
Meat, Poultry, and Egg Products
Public Health Information System
B. Food and Drug Administration (“FDA”)
1. Food Facility Registration
2. Operational and Administrative System for
Import Support (“OASIS”)
3. Selected Excerpts from Statutes and Regulations Enforced by FDA
Federal Food, Drug, and Cosmetic Act
Egg Products Inspection Act (21 U.S.C. § 1031 et seq.)
Code of Federal Regulations Title 21: Food and Drugs
C. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”)
1. Statutes and Regulations
2. Licenses and Registration
3. Selected Excerpts from Statutes and Regulations Enforced by ATF
National Firearms Act
655
655
656
656
659
660
660
661
663
673
683
691
691
700
706
707
707
709
715
715
718
723
730
739
740
740
740
740
740
740
741
741
741
741
742
742
743
743
744
745
746
746
747
748
748
00 pike friedman fmt 11/30/11 1:11 PM Page xi
CONTENTS
D.
E.
G.
H.
Index
Arms Export Control Act of 1976
Gun Control Act of 1968
Alcohol and Tobacco Tax and Trade Bureau (“TTB”)
1. Basic Permit Requirements
Alcohol Importers
Tobacco Importers
2. Selected Excerpts from Statutes and Regulations Enforced by TTB
Code of Federal Regulations Title 27: Alcohol, Tobacco and Firearms
Environmental Protection Agency (“EPA”)
1. Primary Statutes and Regulations Enforced by the EPA
2. Categories of Imports Regulated by the EPA
3. Selected Excerpts from Statutes and Regulations Enforced by EPA
Clean Air Act
Federal Insecticide, Fungicide, and Rodenticide Act
Toxic Substances Control Act
Resource Conservation and Recovery Act
National Highway Transportation Safety Administration (“NTHSA”)
1. Federal Motor Vehicle Safety Standards (“FMVSS”)
Specific Regulatory Requirements
2. Selected Excerpts from Statutes and Regulations Enforced by NHTSA
The National Traffic and Motor Vehicle Safety Act
Federal Communications Commission (“FCC”)
1. Basic FCC Importation Requirements
2. Selected Excerpts from Statutes and Regulations Enforced by FCC
xi
748
749
750
750
750
750
751
751
751
751
752
753
753
754
755
757
758
758
758
759
759
763
763
764
769
00 pike friedman fmt 11/30/11 1:11 PM Page xii
00 pike friedman fmt 11/30/11 1:41 PM Page xiii
List of Primary Cases
718 Fifth Avenue Corp. v. United States
Aectra Refining and Marketing Inc. v. United States
Airflow Technology, Inc. v. United States
Alexandria International, Inc. v. United States
Archer Daniels Midland Co. v. United States
Automatic Plastic Molding, Inc. v. United States
Avenues in Leather, Inc. v. United States
Bauer Nike Hockey USA, Inc. v. United States
Bauerhin Technologies Limited Partnership v. United States
Bestfoods v. United States
Bourjois & Co., Inc. v. Katzel
Chrysler Corporation v. United States
Citgo Petroleum Corporation v. The United States Foreign-Trade Zones Board
Clarendon Marketing, Inc. v. United States
Corrpro Companies, Inc. v. United States
Costco Wholesale Corp. v. Omega, S.A.
Crowell v. M’Fadon
Cummins Inc. v. United States (2005)
Cummins Inc. v. United States (2006)
DaimlerChrysler Corp. v. United States
DaimlerChrysler Corp. v. United States
Dal-Tile Corp. v. United States
Delphi Petroleum, Inc. v. United States
Eastalco Aluminum Co. v. United States
Elliot v. Startwous
Fujitsu Compound Semiconductor, Inc. v. United States
Generra Sportswear Co. v. United States
Generra Sportswear, Inc. v. United States
Goldhofer Fahrzeugwerk GmbH & Co. v. United States
Goodman Manufacturing, L.P. v. United States
Heartland By-Products, Inc. v. United States
Hera Shipping, Inc. v. Carnes
Hitachi Home Electronics (America), Inc. v. United States
Honda of America Manufacturing, Inc. v. United States
International Light Metals v. United States
Jarvis Clark Company v. United States
Jewelpak Corp. v. United States
Len-Ron Manufacturing Co., Inc. v. United States
Lever Bros. Co. v. United States
xiii
357
655
636
623
76
104
116
97
133
299
660
149
397
111
430
706
3
72
75
379
583
388
369
652
5
502
142
648
485
615
590
51
512
85
341
608
120
90
663
00 pike friedman fmt 11/30/11 1:41 PM Page xiv
xiv
PRIMARY CASES
Made in the USA Foundation v. United States
Merck & Co., Inc. v. United States
Monarch Luggage Co., Inc. v. United States
National Customs Brokers and Forwarders Ass’n of America v. United States
National Fisheries Institute, Inc. v. U.S. Bureau of Customs and Border Protection
National Hand Tool Corp. v. United States
Nissan Motor Mfg. Corp. v. United States
Nissho Iwai American Corp. v. United States
Nufarm America’s, Inc. v. United States
Omega, S.A. v. Costco Wholesale Corp.
Pentax Corp. v. Robison
Pollak Import-Export Corp. v. United States
Prestonettes, Inc. v. Coty
Quality King Distributors, Inc. v. L’Anza Research International Inc.
Rhone Poulenc, Inc. v. United States
Saab Cars USA v. United States
Saab Cars USA, Inc. v. United States
Schott Optical Glass, Inc. v. United States
Sharp Microelectronics Technology, Inc. v. United States
Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc.
Swisher International, Inc. v. United States
Texas Apparel Co. v. United States
Texas Instruments v. United States
Texport Oil Co. v. United States
The Pillsbury Co. v. United States
Timber Products, Co. v. United States
Top Form Brassiere Mfg. Co. v. United States
Turbon Products, Inc. v. United States
United States v. Cherry Hill Textiles, Inc.
United States v. Cherry Hill Textiles, Inc.
United States v. Ford Motor Co.
United States v. Ford Motor Co.
United States v. Ford Motor Company
United States v. Friedlaender & Co. Inc.
United States v. Golden Ship Trading Co.
United States v. Haggar Apparel Co.
United States v. Legg
United States v. Mead
United States v. Optrex America, Inc.
United States v. Pompeo
United States v. Stone & Downer Co.
United States v. Willoughby Camera Stores, Inc.
United States of America v. Hilario Alfaro-Moncada
United States of America v. Michael Timothy Arnold
United States of America v. Nzelo Chinedu Okafor
United States Shoe Corporation v. United States
Universal Electronics, Inc. v. United States
409
361
168
39
54
317
393
189
434
700
333
578
661
691
11
241
506
645
80
673
493
171
283
352
101
629
29
656
477
489
551
555
438
310
527
375
27
599
520
130
641
125
723
718
715
560
617
00 pike friedman fmt 11/30/11 1:11 PM Page xv
About the Authors
Damon V. Pike is President of The Pike Law Firm. P.C., a boutique law firm headquartered near Atlanta, Georgia, which specializes in customs and international trade
consulting and litigation. The firm helps multinational companies navigate the complex
rules governing the cross-border movement of goods and services, with the goal of minimizing duty, VAT, and excise tax payments, while maximizing corporate trade compliance to eliminate the risk of costly and time-consuming audits, investigations, and penalty
cases. Prior to launching his own firm in 2006, Damon spent 13 years with Deloitte & Touche
and led the firm’s U.S. customs consulting practice. He also served as a law clerk to the
Honorable R. Kenton Musgrave at the U.S. Court of International Trade from 1989–1990.
Damon is an Adjunct Professor of Law at Emory University in Atlanta and is the current
Chair of the Customs Law Committee of the American Bar Association’s Section of International Law. He graduated with honors from Duke University in 1984 and received
his law degree from Wake Forest University. Damon lives in Decatur, Georgia.
Lawrence Friedman is a partner in the law firm of Barnes, Richardson & Colburn,
which has served the needs of importers and exporters since 1919. Larry started his career as a law clerk to the Honorable Dominick L. DiCarlo of the U.S. Court of International Trade and is an Adjunct Professor of Law at the Center for International Law at
the John Marshall Law School in Chicago. He is a past Chair of the Customs Law Committee of the Section of International Law of the American Bar Association and is currently on the Board and Chair for Trials and Appeals for the Customs and International
Trade Bar Association. In his practice, Larry assists companies in establishing legally compliant import and export processes and litigates customs matters before the Court of International Trade and Court of Appeals for the Federal Circuit. Larry lives in Chicago
with his understanding wife and son. He also covers customs and trade related legal developments on his blog at www.customslawblog.com.
xv
00 pike friedman fmt 11/30/11 1:11 PM Page xvi
00 pike friedman fmt 11/30/11 1:11 PM Page xvii
Acknowledgments
This book is the culmination of a team effort by the co-authors and many people who
provided help and support. Those people include our research assistants from Emory
Law School and the John Marshall Law School: Amy Jensen, Jessica Oldani, and Aaron
Gotlib. Cylinda Parga, a staff attorney at The Pike Law Firm, deserves special thanks for
her efforts. Damon would like to acknowledge the contributions that Steve Wrappe and
Kerwin Chung have made in informing his understanding of transfer pricing rules over
the years and to thank Judge R. Kenton Musgrave of the U.S. Court of International Trade
for being a mentor and friend since 1989. Larry gratefully acknowledges the contribution his partners at Barnes, Richardson & Colburn have made as colleagues, mentors,
and friends. We are both grateful for the contributions of our clients, friends, and family, all of whom provided more support than they may realize. We want to specially acknowledge the invaluable contribution of Judge Leo M. Gordon of the U.S. Court of
International Trade. Judge Gordon, who served as Clerk of the Court when both authors
were law clerks there, provided inspiration and guidance throughout the drafting of this
book and our respective careers.
xvii
