Best Key Wins CIT Delay of Yarn Tariff Ruling Revocation Date; Files Legal Challenge to Revocation
CBP’s ruling revocation on Best Key’s yarn will take effect 60 days after the end of the federal government shutdown on Oct. 17, instead of the nominal publication date of Oct. 2, ruled the Court of International Trade on Nov. 4. Although paper copies of the ruling revocation may have been available during the shutdown, CBP is required to give 60 days of public notice before a ruling revocation takes effect, and the ruling wasn’t easily accessible to the public until the government resumed operations, CIT said. The court decision is only the latest chapter in an ongoing dispute over classification of the metal-containing yarn. Best Key is attempting to reverse CBP’s revocation of the ruling in another CIT lawsuit filed Oct. 25.
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CBP’s now-revoked ruling on the yarn, and Best Key’s preferred classification, would result in duty savings for importers of apparel made from the yarn. CBP originally ruled in 2011 that Best Key’s yarn is a “metallized yarn” classifiable under Harmonized Tariff Schedule subheading 5605.00.90. But in April, CBP proposed to revoke its ruling and instead classify the yarn as polyester monofilament yarn under subheading 5402.47.90 (see 13042908). Although metallized yarn is dutiable at higher rates than polyester yarn when it enters on its own, apparel made from metallized yarn is dutiable at lower rates. Best Key argued the proposed revocation was the result of misconduct by CBP officers who cooked the test results to arrive at their desired outcome (see 13061418). Nonetheless, CBP finalized the revocation in the Oct. 2 Customs Bulletin (see 13102315).
CIT Delays Ruling Revocation Effect Date due to Federal Shutdown
The Oct. 2 ruling revocation came just after the beginning of the federal government shutdown, and as a result wasn’t available online. Best Key, which had already filed suit at CIT in an attempt to get CBP to issue the by then long-overdue ruling, argued that the ruling revocation’s effective date should be 60 days from Oct. 17, the date the government reopened and the Customs Bulletin was available online. The government maintained that the effective date would instead be 60 days from Oct. 2.
On Nov. 4 CIT sided with Best Key, setting the effective date to be 60 days from Oct. 17. The court said 19 USC 1625 requires a 60-day notice period, running from the date of publication, before a ruling becomes effective. The relevant Congressional reports from when Section 1625 became law say that the publication requirement is satisfied when the ruling “remains publicly available in an accessible, retrievable format,” CIT said. Although the government argued that Best Key could have ordered a back-dated paper copy of the ruling revocation from the Government Printing Office before the shutdown began, or could have picked up the Oct. 2 Customs Bulletin from a court legal library, CIT said “real and continual” public access to the ruling revocation didn’t begin until the ruling was posted to the GPO website Oct. 17. To rule otherwise would have the perverse effect of forcing companies to subscribe to paper versions of the bulletin just in case of a federal shutdown, CIT said.
New Best Key Lawsuit Seeks to Overturn Ruling
In the meantime, Best Key filed another lawsuit on Oct. 25 that seeks to overturn the content of CBP’s ruling revocation. Best Key argues CBP’s ruling revocation, and classification of Best Key’s yarn as nonmetallic under HTS subheading 5402.47.90, goes against the common meaning of the terms of subheading 5605.00.90, and imposes requirements for classification under that subheading that aren’t found in the tariff schedule. Best Key told the court that the revocation of the ruling was the result of malfeasance by CBP employees, who ignored the customs regulations and intentionally falsified lab reports. The revocation should be overturned, and the court should declare that Best Key’s yarn should be classified under HTS subheading 5605.00.90, Best Key said.
Best Key also asked for an expedited schedule for the case. The ruling revocation is causing Best Key to lose customers who had originally ordered the yarn in anticipation of duty savings from classification under heading 5605. As long as the tariff classification of Best Key’s yarn remains undecided, Best Key will continue to lose business, it said in its Oct. 25 motion.
(Best Key Textiles Co. v. U.S., Slip Op. 13-135, dated 11/04/13, Judge Kelly)
(Attorneys: John Peterson of Neville Peterson for plaintiff Best Key Textiles Co., Ltd.; Marcella Powell for defendant U.S. government)
Email ITTNews@warren-news.com for a copy of Best Key’s Oct. 25 complaint and request for an expedited court schedule.