CIT Tosses Case Seeking to Compel CBP Response on Tariff Classification Ruling

The Court of International Trade on March 18 dismissed a lawsuit brought by a domestic pipe producer seeking to compel CBP to provide it with information related to an alleged duty evasion scheme by two importers. Judge Timothy Stanceu said that while the trade court did have jurisdiction to hear the case, Wheatland Tube Company improperly submitted its requests for information to CBP, and the agency properly rejected Wheatland's request to revoke a ruling letter.

Wheatland had alleged that Shamrock Building Materials and Liberty Products, doing business as RYMCO USA, were mislabeling their imports to qualify for an exception to Section 232 steel tariffs (see 2201120064). Wheatland said Shamrock and Liberty had initially imported their electrical conduit under subheading 7306.30.5028, which is subject to the tariffs, but after Mexico agreed to a strict export licensing system in 2020, switched to subheading 8547.90.0020, which is not.

Wheatland then went to CBP, making three submissions over the tariff classification of Shamrock's and Liberty's imports. CBP didn't answer, leading Wheatland to file suit at CIT. DOJ then moved to dismiss the case since CBP responded to Wheatland's requests, telling the manufacturer that the matter of how to classify the importers' pipe entries is currently under dispute at CIT in a different case (see 2202030031). CIT initially seemed sympathetic to this position, denying Wheatland's bid for a preliminary injunction as the company is unlikely to succeed (see 2202230070).

In his decision, Stanceu disagreed with DOJ over whether the court had jurisdiction over the case -- with the judge finding that jurisdiction resides under the Administrative Procedures Act -- but found the court could not take the actions requested by Wheatland. Though CBP refused to tell Wheatland under what tariff classification the importers brought in their merchandise, the judge ruled that the law does not require the U.S. to divulge this information. Wheatland had argued that the U.S.'s interpretation of the law leads to an "absurd result," where a domestic manufacturer has no recourse against misclassification.

"The court is unconvinced by plaintiff’s hyperbole," Stanceu said. "Section 516 establishes a procedure by which a domestic interested party may 'contest the appraised value, classification, or rate of duty' imposed upon the designated imported merchandise if the domestic party is 'dissatisfied with the determination of the Secretary' on those matters. ... The interested party has the opportunity to contest CBP’s classification decision in an action brought in the Court of International Trade on a future entry." Judicial review "scarcely can be described as 'altogether meaningless,'" the opinion said.

Stanceu dubbed Wheatland's position "misguided and also puzzling" relating to CBP's response to the company's tariff ruling request. CBP, in its response to Wheatland, said that no ruling revocation could be issued since CBP's regulations prevent the agency from issuing a ruling letter on any issue currently under litigation. The court found Wheatland's arguments stating its disagreement with the tariff classification decision puzzling.

"It is misguided in reflecting Wheatland’s incorrect interpretation that the word 'classification' as it appears in Section 516(a)(1) refers to entered classification as opposed to the classification as determined by Customs," the opinion said. "The argument is puzzling in asserting that the designated merchandise continues to be misclassified. Wheatland’s position on the Request for Information is that Customs failed to submit a proper response to its inquiry as to whether Shamrock and RYMCO USA were entering their merchandise according to what Wheatland considered to be incorrect tariff provisions."

(Wheatland Tube Company v. United States, Slip Op. 22-22, CIT #22-00004, dated 03/18/22, Judge Timothy Stanceu. Attorneys: Roger Schagrin of Schagrin Associates for plaintiff Wheatland Tube; Antonia Soares for defendant U.S. government)