A former jewelry importer will pay more than $400,000 to settle a False Claims Act whistleblower lawsuit that alleges it intentionally misclassified imported earrings to avoid paying higher customs duties, the Justice Department said in a Dec. 8 news release. A TSI Accessories Group subsidiary allegedly classified the earrings based on the value of pairs or larger groups, when they should have been classified based on the value of each single earring, said the whistleblower complaint, subsequently joined by the Justice Department.
Customs duty
A customs duty is a tariff or tax which a country imposes on goods when they are transported across international borders. Customs Duties are used to protect countries' economies, residents, jobs, and environments, by limiting the flow of imported merchandise, especially restricted and prohibited goods, into the country. The Customs duty rate is a percentage determined by the value of the article purchased in the foreign country and not based on quality, size, or weight. U.S. customs duties are listed in the Harmonized Tariff Schedule of the United States.
The U.S. and Ecuador signed a phase one trade agreement that goes beyond the World Trade Organization's Trade Facilitation Agreement with requirements for online publication of customs information and customs brokers requirements; duties and fees; electronic submission of customs declaration and phytosanitary certificates; a single window for import and export; and advanced rulings that cover classification, valuation, origin, and application of quotas. Ecuador also agreed to no penalties on minor errors, unless they're part of a consistent pattern, and a procedure to correct errors without penalties.
The Customs Rulings Online Search System (CROSS) was updated Dec. 4. The following headquarters rulings were modified recently, according to CBP:
Importers must file protests to preserve their rights to Section 301 tariff exclusions issued after an entry has already liquidated, the Department of Justice said in a motion to dismiss a pair of lawsuits that seek to have the exclusions applied past the protest deadline. CBP’s failure to apply the exclusions was a protestable event, even if the exclusions did not exist at the time, and the Court of International Trade’s jurisdictional scheme means CIT can’t hear cases wherein the importer skipped the protest scheme, DOJ said.
The National Customs Brokers & Forwarders Association of America is urging members to lobby their representatives for a provision that would allow companies to receive refunds for Section 301 duties paid when they learned too late that the product qualified for a tariff exclusion. If an entry had been liquidated before the exclusion was announced, CBP cannot refund the duties paid, even though the exclusions are designed to be retroactive. The group is hoping this provision can be included in the omnibus spending bill that may pass this month, it said.
Lawyers for importers that have filed suit under the extensive ongoing Section 301 litigation have established an “informal” steering committee to manage the case, law firm Neville Peterson said in a Dec. 1 blog post, adding that the committee “confers with some regularity.” Most observers expect the U.S. Court of International Trade will pick the first-filed Section 301 complaint from HMTX Industries and Jasco Production as the lead case, and stay the roughly 3,700 other actions while HMTX is litigated, the law firm said.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said stakeholders are telling him they appreciate his 16-month Generalized System of Preferences benefits program renewal, and that those same groups are pushing back on Democrats' desires to make revisions to eligibility requirements. Grassley said that he hasn't spoken directly to House Ways and Means Chairman Richard Neal, D-Mass., but that the trade staffs are telling him that Neal and Finance ranking member Sen. Ron Wyden's trade staff are frustrated by the GSP advocates' criticisms. He said stakeholders are telling Democrats that they are “using the GSP expiration as a hostage to achieve Democratic trade priorities,” and said he agreed with that argument.
The International Trade Commission will recommend leaving in place current safeguard tariffs on large residential washers, it said in a Nov. 25 news release. The tariff rate quota, in place since 2018, “continues to be necessary to prevent or remedy serious injury to the U.S. industry,” and “the domestic industry is making a positive adjustment to import competition,” the ITC said.
A Finding Nemo story and picture book doesn't meet the classification requirements for heading 4903, which covers “Children’s picture, drawing or coloring books,” CBP said in a Sept. 15 ruling. CBP previously ruled that the book wasn't classifiable as a children's book and the company, Phidal Publishing in Montreal, requested reconsideration of that ruling. CBP's earlier ruling found the book to be classifiable in heading 4901 for “printed books.”
Just as the recent flood of Section 301 litigation had appeared to slow to a trickle, importers added more than two dozen more lawsuits last week to the multitude of cases currently before the Court of International Trade. But while the new complaints restate the same arguments made by thousands of other plaintiffs in the sprawling litigation, many of the new cases differ in that they seek to invalidate only List 4 tariffs, excluding List 3 from the requests.