Administrative and Regulatory Updates Bill Methenitis

7/28/2019 Administrative and Regulatory Updates Bill Methenitis

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American Petroleum InstituteInternational Trade & Customs Conference

March 27-29, 2011

Houston, Texas

Bill Methenitis

214-969-8585

[email protected]
mailto:[email protected]:[email protected]


2/16

Customs UpdatePage 2

Administrative andRegulatory Updates


3/16


Administrative and Regulatory Updates

Quarterly HMF payments and refund requests may nowbe filed electronically via pay.gov

CBP withdraws Notice of Proposed Interpretation of the

Expression Sold for Exportation in the United States

CBP withdraws Proposed Rule regarding Drawback ofInternal Revenue Excise Tax

Port of Las Angeles-Long Beach Drawback Center Closes Chicago, Houston, New York and San Francisco remain


4/16


Administrative and Regulatory Updates

CBP Attempts to Preclude Prior Disclosure ProtectionBased on CF 28/29 CBP clarifies that CF28 is generally not appropriate to commence

an investigation while CF29 can be an appropriatecommencement document

Proposed Changes to Foreign Trade Zone Regulations Manufacturing and processing replaced with production

New notification procedure for capacity increase

New sections on public utilities and uniform treatment

Conflicts of interest restrictions

Penalties, fines and prior disclosures


5/16


Administrative and Regulatory UpdatesPending Events

NAFTA Country of Origin Rules Treasury and CBP have decided not proceed with proposal

regarding uniform rules of origin for all trade

They will adopt certain proposed amendments to part 102applicable to pipe fittings and flanges among other items

HQ Changes Course on Transfer Pricing Adjustments Current authority suggests making retroactive adjustments is

incompatible with transaction value

A number of companies do it anyway, taking the position that their

pricing is formula based, and report changes through reconciliation HQ anticipates revoking prior rulings and liberalizing position,

presumably to allow transfer pricing adjustments based onobjective factors, but actual text is not yet available


6/16


Case Law Updates


7/16


United States v. UPS686 F. Supp. 2d 1337 (Ct. Intl Trade 2010)

CBP attempting to fine UPS under the Brokers Statute forrepeated misclassifications

Federal Circuit remanded the case to CIT in 2009

because CBP failed to consider all 10 factors in thestatute

CIT entered judgment for UPS holding that CBP had not

established that monetary penalties were imposed inaccordance with the law


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United States v. Tip Top Pants2010 Ct. Intl. Trade Lexis 5

CBP alleged Tip Top made false NAFTA claims after TipTop failed to respond to CF28 or CF29

CBP filed action in CIT to recover penalties from Tip Topand its CEO

CIT rejected claim against Tip Top as a matter of law forfailure to respond in writing to Tip Tops earlier petition.

CBP did issue an amended penalty notice after receivingthe petition, but this was insufficient to satisfy procedural

due process requirements CIT dismissed claim against CEO for failure to state a

claim


9/16


United States v. Pressman-Gutman721 F. Supp. 2d 1333 (Ct. Intl Trade 2010)

CBP claimed Pressman failed to redeliver merchandise

and sought damages from Pressman and its surety

CIT rejected claim because CBPs demand for redelivery

was untimely. Demand for redelivery is to be made within30 days after CBP receives a requested sample.

CIT based their decision not only on regulations but alsoon established agency practice (evidenced in rulings)

In this case, CBP did not forget the deadline, but insteadsent an additional CF28 saying the sample was sent to

the lab for analysis. Conditional release period extended90 days pending lab analysis.

CIT required Pressman to pay partial attorneys fees tosurety pursuant to indemnification clause


10/16


United States v. Callinish Ltd.Slip Op. 10-124 (Ct. Intl Trade 2010)

CBP filed action related to the smuggling of eveningprimrose oil which was banned by FDA

Callinish failed to appear and CBP moved for default

judgement in an amount equal to domestic value ofmerchandise, which CBP claimed to be $17,734,926.

CIT denied judgment by default because CBP failed to

provide any basis in its pleadings of the domestic value ofthe merchandise


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Horizon Lines, LLC v. United States626 F.3d 1354 (Fed. Cir. 2010)

Clarified when ship repairs are dutiable pursuant to 19USC 1455(a)

Entry guides which direct containers into ships hold were

replaced due to new design features

Key factor in courts decision was that original guides werein full proper working order

Whether work is a non-dutiable modification or dutiablerepair is factual inquiry on a case-by-case basis


12/16


Outer Circle Prods. V. United States590 F.3d 1323 (Fed. Cir. 2010), Revd602 F. Supp. 2d 1294 (Ct. Intl Trade 2009)

Classification dispute of soft sided bottle cases eonomine (19.3%) or case law precedent (3.4%).

CIT held that eo nomine provision in 4202 applied,distinguished facts in precedential case (SGI case). 4202specifically states that it applies to bottle cases.

CAFC reversed CIT relying on prior SGI case use ofejusdem generis (of the same kind) to determine 4202did not contemplate containers for food and beveragesuch as those at issue in this case. A common aspect of

the exemplars in 4202, including bottle cases, is thatthey do not carry food or beverages.

HTS was later amended to include insulated food orbeverage bags in eo nomine provision.


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Totes-Isotoner Corp. v. United States594 F.3d 1346 (Fed. Cir 2010)

Totes claimed violation of the Fifth Amendment right toEqual Protection because mens gloves are subject to

higher tariff rates than gloves for other persons

Government challenged claim on political questiondoctrine, standing and failure to properly plead the claim

CAFC affirmed CITs dismissal and held that Totes was

required to allege sufficient facts to establishgovernmental purpose for discrimination and not simply adisparate impact on men who purchase mens gloves


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Norman G. Jenson, Inc. v. United StatesSlip Op. 11-15 (Ct. Intl Trade 2011)

Broker filed 308 protests on behalf of importers in February

2007

More than 2 years after filing protests broker was unable toascertain status after communicating with CBP and filed suit in

April 2010 seeking a court order for CBP to rule on the protests

CIT held that because broker had the ability to seekaccelerated disposition, CIT lacked jurisdiction to order CBP torule on the outstanding protests

Essentially means CBP can sit on a protest indefinitely ifaccelerated disposition procedures are not utilized


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World CustomsOrganization Activity


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Technical Committee on Customs Valuation(pending approval by WCO Council in June 2011)

Commentary 23.1 Provides guidance on using transfer pricing studies to support

transaction value under the circumstances of sale test

While not conclusive, transfer pricing studies should be considered

Commentary 24.1 Clarifies that indirect assists are dutiable Example: importer provides a mold to Company A, who produces

a part purchased by Company B. Company B sells the finishedproduct to the importer. The importer must include the value of the

mold as an addition to value

Administrative and Regulatory Updates Bill Methenitis

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