US Tells CIT Not to Allow New Claim Alleging CBP Established Treatment of Pop-Up Tents
The Court of International Trade should not give importer Under the Weather leave to amend its complaint to add a claim in its customs suit on the tariff treatment of its see-through pop-up tent "pods," the U.S. said in a brief filed last week. The government said the proposed amendment to Under the Weather's complaint is "untimely," since it's "now years after" the importer "could have presented its claim to Customs," adding that the claim also fails to state a valid argument (Under the Weather v. United States, CIT # 21-00211).
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Under the Weather imported the pods from 2010 through 2018, receiving duty-free treatment under subheading 6306.22.1000, which covers backpacking tents. CBP then said in 2018 that the entries would be classified as "other" tents under subheading 6306.22.9030, dutiable at 8.8%.
The importer successfully protested the decision before CBP, reverting its goods in 2019 to duty-free treatment. However, in 2020, CBP issued an HQ ruling declaring that the goods fit under subheading 6306.22.9030. Under the Weather sued, claiming that the HQ ruling needed to be accompanied by a notice-and-comment period, since the HQ ruling revoked or modified a previous interpretive decision or ruling.
The trade court rejected that argument last year, finding that the previously decided protest wasn't a "prior interpretive ruling or decision" (see 2409050030). CIT said the prior protest approval wasn't the result of "considered deliberations," didn't have "prospective effect" and wasn't "interpretive."
During discovery on the importer's remaining claims, Under the Weather sought to amend its complaint to effectively renew its claim that CBP needed to impose a notice-and-comment period since it modified a "treatment previously accorded" to its pods. In its motion, the importer cited two alleged examinations of the pods by CBP in 2015.
The U.S. opposed the amendment on two grounds, including that the claim is untimely. The facts underlying the claim "were always known to Under the Weather; the two alleged examinations occurred in 2015," the brief said. "Yet at no point until now -- five years after protesting, nearly two years after filing a complaint, five months after the Court dismissed its original theory of recovery, and two months before fact discovery ends -- has Under the Weather raised a treatment claim."
Under the Weather has offered no reason for the "lengthy delay," and the delay would prejudice the U.S., the brief said. By asking to broaden the scope of the litigation, the importer is widening the scope of discovery by asking for "decades-worth of discovery on entries and internal communications at Customs." So far, the U.S. has already used 21 of its 25 interrogatories on the importer's classification claim and "fast discovery closes in just under two months," the brief said.
"Such a significant, last-minute expansion of this otherwise straightforward classification case would be prejudicial."
Under the Weather's claim also fails to plausibly allege that the pods were previously afforded a certain treatment, the government argued. The new claim "fails to allege, as it must, that a Customs officer with responsibility for classification made any actual determination regarding the classification of Under the Weather’s pods before the claim of treatment," the U.S. said. That two pods allegedly underwent "full examinations" doesn't "plausibly suggest that an import specialist" actually inspected the pods and agreed with the importer, the brief said.
CBP not challenging a classification doesn't equate to approval, the brief said. And even if the 2015 examinations could be considered, "pleading just two examinations of entries of unknown quantity and value is not enough to state a claim for treatment," the brief said. A treatment "requires a 'pattern' or customary application of actions," the brief said. "Here, however, where just two examinations are alleged to have occurred despite 'numerous entries' over the course of eight years and a contrary Notice of Action," it's "not plausible that any pattern or customary practice existed," the U.S. argued.
Under the Weather also said it has reason to believe additional discovery will lead to "additional examinations" being revealed, since the company imported its products for so long. The government said this was "speculation" and clearly a "fishing expedition" that should have been resolved either by turning to its own records or filing Freedom of Information Act requests years ago.