Newly Released CBP HQ Rulings July 22
The Customs Rulings Online Search System (CROSS) was updated on July 22 with the following headquarters rulings (ruling revocations and modifications will be detailed elsewhere in a separate article as they are announced in the Customs Bulletin):
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H298165: Application for Further Review of Protest Number 2809-18-100059; Deemed Liquidation
| Ruling: MHW’s drawback claims at issue under protest number 2809-18-100059 deemed liquidated pursuant to 19 U.S.C. § 1504(a)(2)(A) and as a result must be liquidated at the drawback amounts asserted by each claim. |
| Issue: Whether the drawback entries were deemed liquidated by operation of law pursuant to 19 U.S.C. § 1504(a)(2). |
| Item: On Oct.16, 2013, MHW filed drawback entry number XXX-XXXX196-2, and on Nov. 6, 2013, it filed drawback entry number XXX-XXXX211-9. The drawback claims were made pursuant to 19 U.S.C. § 1313(j)(1). MHW claimed that the underlying import entries of denizen rum were subject to internal revenue taxes on alcohol. CBO liquidated drawback entry number XXX-XXXX196-2 on Jan. 26, 2018 and drawback entry number XXX-XXXX211-9 on Feb. 9, 2018. Both entries were liquidated without drawback. Pursuant to practice in 2018, the drawback office’s decision was based on the position that CBP could not refund drawback of internal revenue tax paid to the Alcohol and Tobacco Tax and Trade Bureau. |
| Reason: The statutory deadline for CBP to liquidate a drawback entry or claim, absent suspension of liquidation or extension, is “within 1 year from the date of entry or claim.” 19 U.S.C. § 1504(a)(2)(A); see also 19 C.F.R. § 191.81(e)(2). Failure to comply with this statutory deadline results in the entry’s deemed liquidation “at the drawback amount asserted by the claimant or claim.” In the instant case, the drawback claim filed on Oct. 16, 2013, was liquidated on Jan. 26, 2018, and the drawback claim filed on Nov. 6, 2013, was liquidated on Feb. 9, 2018. Both claims were liquidated without drawback. The liquidation period for the two drawback claims was neither suspended nor extended, and the import entry identified in the drawback claims was liquidated at the time the claim was made. Therefore, the drawback claims at issue were deemed liquidated on Oct. 16, 2014 and Nov. 6, 2014, respectively, at the drawback amounts asserted by the claimant or claim. As was the practice at that time, the drawback office represented that even if the claims deemed liquidated by operation of law, CBP could not refund internal revenue tax that was paid to a different agency. Furthermore, no evidence was proffered by MHW to prove that such tax was paid to TTB. In HQ H277463 (Sept. 27, 2024), CBP held that internal revenue, or excise, taxes for distilled spirits were eligible for drawback, including instances where excise taxes were paid to TTB rather than CBP. That ruling also describes the historical events leading to refunding of excise taxes. Accordingly, the internal revenue tax need not have been paid to CBP in order to be eligible for drawback. |
| Ruling Date: Sept. 30, 2024 |
H337673: Application for Further Review of Protest No. 270424169122/Request for Internal Advice; Tariff Classification of Docking Stations and Dual High-Definition Multimedia Interface Adapters
| Ruling: The subject docking stations and HDMI adapter are classified under subheading 8471.80.10, which provides for “Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included: Other units of automatic data processing machines: Control or adapter units." |
| Issue: Whether the subject docking stations and HDMI adapter are classified under heading 8471 or under heading 8517. |
| Item: Leancode Inc. d/b/a Plugable Technologies' docking stations, a hub, and a dualhigh-definition multimedia interface (HDMI) adapter |
| Reason: The function of the subject docking stations is to allow users to connect an ADP machine to multiple display monitors, the Internet, and several peripherals via a USB cable from the docking station to the ADP machine. The docking stations enhance the functionality of an ADP machine by providing various downstream outputs. This function is described under heading 8471, which provides for “units of ADP machines.” CBP also considered docking stations that share some similarities with the subject merchandise. Just like the merchandise discussed in NY N307285, the function of the subject docking stations is to allow users to connect an ADP machine to multiple display monitors, the Internet, and several peripherals via a USB cable from the docking station to the ADP machine. Based on the subject merchandise’s functionality, CBP found that the docking stations are properly classified under heading 8471 as units to an ADP machine. Furthermore, the main function of the HDMI adapter is to allow additional peripheral device (monitors) the ability to connect to a PC. Therefore, the HDMI adapter is classifiable in heading 8471. This decision is consistent with NY N292574, dated Dec. 21, 2017. |
| Ruling Date: May 20, 2025 |
H340345: Application for Further Review of Protest No. 2720-23-104854; E-cigarettes; Valuation under 19 U.S.C. § 1401a
| Ruling: The e-cigarettes should be appraised under the fallback method set forth in 19 U.S.C § 1401a(f) based on their “wholesale value per piece net packed." |
| Issue: What is the proper method of appraisement for the entered merchandise? |
| Item: Electronic cigarettes imported by Shenzhen Joecig Technology. From May 18, 2022 through July 19, 2022, the importer filed 10 entries of e-cigarettes. The sales between the importer and its U.S. customers Baylabs and Performance Plus were governed by vendor agreements signed on May 1, 2022, in which the parties agreed to a price of $0.35 per unit “after performance plus sold out.” On Aug. 5, 2022, CBP issued a Request for Information (CBP Form 28) for 10 entries asking for “legible and clear invoices, entry packet, color photos, product details and clear product description/literature for all products.” The importer’s response was due by Sept. 4, 2022. The Electronics Center of Excellence and Expertise did not receive a response from the importer by Sept. 4, 2022. On Sept. 9, 2022, the importer uploaded into CBP’s Document Image System the commercial invoice, packing list, air waybill, and entry summary for one entry. On Sept. 30, 2022, CBP issued a Notice of Action (CBP Form 29) reclassifying all declared items as e-cigarettes under subheading 8543.40.0030, which was subject to additional 25% duties under subheading 9903.88.02. The notice also notified the importer that the merchandise should be appraised based on the “wholesale value per piece net packed” and that “CBP corrected the value of the goods to $3.83-$5.06 per piece based on CBP research and industry standards.” On March 25, 2025, the CEE explained that the price listed on the entry summary package invoices ($.35 per e-cigarette device) was undervalued and that the CEE determined the proper values based on the number of puffs each device contained. The appraised value was $3.83-$5.06 per piece based on the number of puffs of similar or identical e-cigarettes sold on the Internet. The protestant asserts that the $0.35 per unit price should be used to determine the price actually paid or payable at time of entry under transaction value and that it represents a discount or price adjustment. According to the protest, due to poor market conditions for e-cigarettes, the consignees renegotiated the unit price ($.35/unit) of the e-cigarettes and agreed to longer payment terms of 180-270 days. |
| Reason: Since the importer/foreign manufacturer and the U.S. customers are unrelated, the sale between them is presumed to be at arm’s length. While the e-cigarettes originated in China, the air waybills reveal that the manufacturer did not ship them directly from the factory in China to the United States. Rather the documentation indicates that the subject merchandise departed for the United States from South Korea. The protestant has not provided any information on the movement of the merchandise from China to South Korea. None of the purchase orders, invoices and packing lists indicate that the e-cigarettes moved under bond from China to South Korea, bore the logo of the U.S. purchaser, and met any special U.S. labeling requirements. Therefore, the protestant has not refuted the possibility that a contingency of diversion into the commerce of South Korea existed. Further, the manufacturer/importer has not sufficiently demonstrated that it was functioning as a bona fide seller with the U.S. customers. While the manufacturer provided purchase orders and invoices between itself and the U.S. customers, some of them were issued on the same day, did not contain Incoterms, and the payment terms were 180-270 days. The vendor agreements do not reveal when the U.S. customers assumed the risk of loss and received title to the imported goods. Therefore, CBP could not conclude that the transactions between the importer and U.S. customers were bona fide sales for exportation to the United States and transaction value cannot be used to appraise the merchandise. CBP must appraise the goods in accordance with the remaining methods of valuation, applied in hierarchical order. The CEE went down the hierarchy of appraisement methods and used “reasonable ways and means” under fallback to determine the value of the e cigarettes based on their “wholesale value per piece net packed.” The price on the entry summary package invoices was $.35 per device, while per the bill of materials for the particular types of e-cigarettes, the cost of the e-cigarettes ranged from $1.48 to $1.72 per piece. The CEE concluded that the e-cigarettes were undervalued and determined the wholesale value using prices of similar/identical e-cigarettes found on the Internet ranging from $3.83-$5.06 per atomizer based on the number of puffs each device contained. This is consistent with CBP’s authority under 19 U.S.C. §§ 1401a(1)(F) and a(f), and 19 U.S.C. § 1500. |
| Ruling Date: May 21, 2025 |