CIT Rules Heartland Entries Must Be Liquidated at Non-TRQ Rate as Stated in Advance Ruling

The CIT noted that Heartland had satisfied the heightened burden of establishing jurisdiction under section 1581(h), and had obtained a favorable ruling. Further, if the holding in Heartland II (which re-instated the Revocation Ruling that classified Heartland's entries under the TRQ provision) had been retroactively applied, the purpose of pre-importation review would have been undermined.

Thus, the CIT ruled that Customs was bound by the judgment in Heartland I and must liquidate Heartland's entries of sugar syrup at the non-TRQ duty rate.

Background

Heartland's troubled dealings with U.S. Customs and Border Protection began in 1995 when it sought an advance ruling as to the tariff classification and rate of duty that would apply to imports of sugar syrup from Canada. The advance ruling was issued on May 15, 1995, and indicated that the sugar syrup would be classified under HTS 1702.90.40 at the non-TRQ duty rate.

Having obtained a favorable ruling, Heartland began importing sugar syrup from Canada in 1997. In response to such importation, however, a petition was filed by a domestic trade association seeking reclassification of Heartland's sugar imports, and on September 8, 1999, Customs issued a final notice that revoked the ruling and reclassified Heartland's sugar syrup under HTS 1702.90.10/20 at the higher TRQ duty rate.

From 2002 through 2005 the parties litigated Heartland III, IV and V in cases which pertained to jurisdictional issues. Finally, on September 26, 2005, the Court of Appeals for the Federal Circuit remanded the case (Heartland V (CAFC 04-1515)) back to the CIT to determine the full scope of the original decision by the CIT in Heartland I, and the effect of the CAFC decision in Heartland II.

(Heartland I. On October 19, 1999, the CIT, citing 28 USC 1581(h), ruled that Custom's revocation ruling was unlawful, and concluded that Heartland's sugar syrup was properly classified under HTS 1702.90.40, as established in the advance ruling (Heartland I CIT Slip Op. 99-110). (See BP Note below on section 1581(h)).

Heartland II. Customs appealed the decision in Heartland I, and on August 30, 2001, following the Supreme Court's decision in U.S. v. Mead Corp., 533 U.S. 218 (2001), the CAFC reversed the CIT's decision in Heartland I on the grounds that Customs was entitled to Skidmore deference concerning its classification decision on sugar syrup (Heartland II CAFC 00-1287-1289).

(See ITT's Online Archives or 06/08/99, 09/15/99 and 09/30/99 news, 99060791, 99091452, and 99092999, for BP summaries regarding Customs' revocation of its ruling on this sugar syrup.

See ITT's Online Archives or 11/09/99 and 09/11/01 news, (Ref:99110866B), and 01091130, for BP summary of Heartland I Slip Op. 99-110, Heartland II CAFC 00-1287-1289, and Skidmore deference.

See ITT's Online Archives or ITT's 08/20/02 news, 02082010, for BP summary of The Trade Act of 2002, which amended the superior test to HTS 1702.90.05 to make clear an aspect of Heartland II (i.e., that molasses in one of the foreign substances that must be excluded when calculating the percentage of soluble non-sugar solids under HTS 1702.90.40.))

CIT Slip Op. 07-157 (dated 10/30/07) available at http://www.cit.uscourts.gov/slip_op/Slip_op07/07-157.pdf

CAFC decision 04-1515 (dated 09/26/05) available at http://www.cafc.uscourts.gov/opinions/04-1515.pdf

BP Note

1. USC 1581(h) reads as follows: The CIT shall have exclusive jurisdiction of any civil action commenced to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury, or a refusal to issue or change such a ruling, relating classification, valuation, rate of duty, but only if the party commencing the civil action demonstrates to the court that he would be irreparably harmed unless given an opportunity to obtain judicial review prior to such importation.