On the day that additional 25% tariffs were scheduled to go into effect on French handbags and cosmetics, the Office of the U.S. Trade Representative and CBP made no public statement about the tariffs' fate, leaving importers in the dark about what they should do.
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.
CBP was correct when it found against an importer's use of price paid to a related factory in China, rather than the price paid by the importer's customers, the agency found in a Sept. 9 ruling. The director of the Industrial and Manufacturing Materials Center of Excellence and Expertise (CEE) requested an internal advice ruling after Mayer Brown asked for a further review of protest on behalf of the importer, World Wide Packaging. The import entry involved two line items of “plastic tubes used for personal care products, which were the subject of purchase orders from two unrelated U.S. customers of WWP.”
CBP issued the following releases on commercial trade and related matters:
CBP published the quarterly Internal Revenue Service interest rates used to calculate interest on overdue accounts (underpayments) and refunds (overpayments) of customs duties. For the quarter that begins Jan. 1, 2021, the interest rates for overpayments remains 2% for corporations and 3% for non-corporations, and the interest rate for underpayments will be 3% for both corporations and non-corporations. These interest rates are subject to change for the April-June quarter, CBP said.
Customs brokers, after many years of lobbying (see 09021315), won a change to the treatment of duties transferred to them by importers that later go bankrupt. The brokers had argued that these duties should not be subject to clawback provisions under the U.S. Bankruptcy Code, where payments to vendors within 90 days can be seized by the bankruptcy courts for redistribution.
CBP should work with the Commercial Customs Operations Advisory Committee to “clarify the types of audits or reviews to which trusted trader partners may be subject regarding compliance, including forced labor,” the COAC Trusted Trader Working Group said in a recommendation that was approved during the Dec. 16 COAC meeting. Working group co-chair Alexandra Latham said CBP last month began Risk Analysis & Survey Assessments (RASAs) around forced labor (see 2012020046).
A federal grand jury in Houston indicted eight for criminal wire fraud and entry of goods by means of false statements for allegedly evading antidumping and countervailing duties by undervaluation and falsely declaring exporters with lower rates, the Department of Justice said in a Dec. 15 news release.
The Treasury Department published its fall 2020 regulatory agenda for CBP. The agenda now mentions a proposal to end the de minimis exemption for goods subject to Section 301 tariffs. The proposal was previously disclosed by the Office of Management and Budget (see 2009040026), where it remains under review. Brenda Smith, CBP executive assistant international trade commissioner, recently cited some operational concerns with the idea (see 2011100034).
A California clothing importer and its owners were indicted over schemes to undervalue apparel and evade customs duties, the U.S. Attorney’s Office for the Central District of California said in a Dec. 10 news release. The importer, C'est Toi Jeans (CTJ), and owner Si Oh Rhew, of La Canada Flintridge, and his son, Lance Rhew, of Los Angeles, a CTJ corporate officer who owns another company that did business with CTJ, were the subjects of a 35-count indictment from a federal grand jury, the Department of Justice said. The charges include “conspiracy; entry of goods falsely classified; entry of goods by means of false statements; passing false and fraudulent papers through customhouse.”
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.