CIT Rules "Rate Advance" That is Contrary to Binding Ruling is Subject to 1625(c) Notice and Comment (CIT Upholds Raised Bond Amount)
In June 2005, the Court of International Trade ruled in International Custom Products (ICP), Inc. v. U.S., that a U.S. Customs and Border Protection (CBP) Notice of Action (Rate Advance) reclassifying certain "white sauce" is null and void as CBP failed to observe 19 USC 1625(c) which requires, among other things, advance notice and comment when such an action would revoke or modify a binding ruling.
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According to the CIT, ICP had been importing "white sauce" for over 10 years under NY D86228, which had classified the merchandise under HTS 2103.90.9060 (now 2103.90.9091 (6.4%)) as other sauces and preparations. Although the composition of the product had not changed, in April 2005, CBP issued a Notice of Action based on the results of an investigation, which reclassified unliquidated entries and all future shipments of the white sauce as butter substitutes under HTS 0405.20.3000 ($1.966/kg).
CBP had argued that its Notice of Action was due to changed circumstances, as the country of origin had changed, the white sauce was a soft material rather than a thick liquid, it required processing beyond that described in the ruling, and its use changed.
However, the CIT found that the Notice of Action to retroactively modify or revoke a ruling or treatment previously accorded is not permitted by CBP regulation (19 CFR 177.12) or statute (19 USC 1625(c)), and that ICP's entries of white sauce must be reliquidated consistent with NY D86228.
(In an emergency enforcement motion for this same case, ICP claimed that CBP was subverting the above decision by demanding that ICP post single-entry bonds of three times the value of its entered goods and requiring that ICP pay two times the applicable duties and fees before placing the white sauce in a bonded warehouse.
However, the CIT states that its June 2005 judgment relates solely to the Notice of Action and the entries included therein. The new bond requirements are not an effort to change the tariff classification on the white sauce. As such, the CIT does not have subject matter jurisdiction over the increased import bond requirements. However, the CIT does state that ICP is free to file a new case with respect to CBP's newly imposed bond requirements.)
CIT June 2005 ruling (Slip Op. 05-71, dated 06/15/05) available at http://www.cit.uscourts.gov/slip_op/Slip_op05/05-71.pdf
CIT emergency enforcement motion (Slip Op. 05-117 dated 09/01/05) available at http://www.cit.uscourts.gov/slip_op/Slip_op05/05-117.pdf
BP Note
In the November 2, 2005 CBP Bulletin (Vol. 39, No. 45), CBP issued HQ 967780 which revoked NY D86228 in order to classify the white sauce under HTS 0405.20.3000. This revocation applies to merchandise entered or withdrawn from warehouse for consumption on or after 60 days from November 2, 2005. (See ITT's Online Archives or 11/16/05 news, 05111635, for BP summary of this revocation.)