It is not uncommon for CBP officers at the port level to issue rate increases (through CBP Form 29’s) basing their decision on binding rulings that are not related to a transaction on point (i.e. issued to a different party). The practice presumes faith of CBP port officers to the applicability of reasoning of their colleagues in New York (national commodity specialists) and Washington (of Office of Regulations and Rulings) to the transaction under port officer’s review. A typical statement on CBP Form 28 (precursor to CBP Form 29) would state:
After careful review on the item listed above along with the ruling [ruling number] Customs believes the correct classification should be …
In a way, CBP port officer is following a chain of command based on CBP current structure. We must be mindful that both port officer and her colleagues in New York and Washington are human beings prone to make mistakes just as any one of us. We also must be mindful that the once the question is raised (e.g. via CBP Form 28), the burden is on the importer to show that CBP port officer views are incorrect (if they are indeed incorrect). This burden of proof mentality probably comes from legislative treatment afforded to CBP before our judicial branch under 28 U.S.C. §2639: “in any civil action commenced in the Court of International Trade … the decision of the Secretary of the Treasury, the administering authority, or the International Trade Commission is presumed to be correct. The burden of proving otherwise shall rest upon the party challenging such decision…” Burden of proof can be further subdivided into (1) burden of persuasion, and (2) burden of coming forward with evidence. This article is mostly about the former.
Start by holding CBP port officer responsible to her own statements. In the citation above, for example, CBP officer used phrase “careful review” without mentioning specifics of the review or what exactly was reviewed (binding ruling aside). If entry documents included supplemental information (e.g. material safety data sheets) sufficient to establish your position, then state that on record in your response. Details may reveal that the review was not as careful as it was claimed on CBP From 28.
Next, focus on the ruling itself. Begin by building strong foundation (i.e. binding ruling principles). While CBP officer probably has best intentions, she may be in captivity of intellectual bias. Strong foundation is helpful in piercing the bias because it shows your awareness of legal principles. A binding ruling letter “represents the official position of the Customs Service with respect to the particular transaction or issue described therein and is binding on all Customs Service personnel in accordance with the provisions of this section until modified or revoked.” 19 C.F.R. § 177.9(a) (emphasis supplied). Emphasize “particular transaction or issue” saying that your transaction is different from one addressed in the cited ruling. For example:
The “issue” cannot be characterized as “particular,” because the product addressed by [Binding Ruling Number] is imported by the different entity, produced by publicly undisclosed manufacturer, and utilizing publicly unknown manufacturing process. [Binding Ruling Number] did not address importers “particular transaction or issue” and therefore cannot be binding on this importer as a matter of law. 19 C.F.R. § 177.9(a)
For classification issues, we have 19 C.F.R. § 177.9(b)(2) which mandates binding ruling application “only with respect to transactions involving articles identical to the sample submitted with the ruling request or to articles whose description is identical to the description set forth in the ruling letter. However, at the face value 19 C.F.R. § 177.9(b)(2) presumes that the transaction involves same application. Since HTSUS classification can be based not only on article’s make but also on article’s use, classification can differ even for identical articles. Additional U.S. Rules of Interpretation 1(a), 1(b); 19 C.F.R. §§ 10.132-10.139.
After establishing regulatory foundation begin building the structure. Here, we have tools that include democratic principles our society so deeply values and architectural design suggested by the U.S. Supreme Court in the famous decision Skidmore v. Swift & Co., 323 U.S. 134 (1944). Skidmore was written by famous Justice Jackson (shortly before leaving to head Nuremberg trials conducted over Nazi war criminals). The case involved labor dispute and interpretation of labor law by the Office of Administrator. Skidmore requires to afford weight to administrative agency’s interpretations, even if they do not carry the force of law, in light of the agency’s “more specialized experience and broader investigations and information.” Id. at 139. The United States Supreme Court explicitly extended the application of Skidmore principles to CBP binding ruling practice in United States v. Mead Corp., 533 U.S. 218 (2001). Notably, we should make CBP officer aware that according to the U.S. Supreme Court, CBP binding rulings do not carry the force of law like regulations because they are not preceded by notice and comment as under the Administrative Procedures Act, 5 U.S.C. § 553. United States v. Mead Corp., 533 U.S. 218, 226 (2001). Further, CBP itself regards classification binding rulings as conclusive only as between itself and a party to whom it is issued, and even then only until CBP has given advance notice of intended change. See United States v. Mead Corp., 533 U.S. 218, 233 (2001), citing 19 C.F.R. 177.9(a) and (c).
Notwithstanding the above, Skidmore requires to afford weight to administrative agency’s interpretations, even if they do not carry the force of law, in light of the agency’s “more specialized experience and broader investigations and information.” Id. at 139. But! The amount of weight that must be given to binding rulings is not absolute. Rather, the weight accorded to CBP’s binding rulings depends on “its writer’s thoroughness, logic, and expertness, its fit with prior interpretations, and any other sources of weight.” United States v. Mead Corp., 533 U.S. 218, 235 (2001).
Thus far, Supreme Court architects have given us the outline, with a lot fill-in the blanks waiting to be filled out. Using the court’s yardstick, we may notice that many NY binding rulings are brief and poorly written (HQ rulings are more informative). If CBP port officer cites NY binding ruling, the ruling is likely to be brief and be prone with consclusory statements. Many, but not all, NY binding rulings have very little preliminary legal discussion (e.g. application of General Rules of Interpretation principles). If this is your situation, this is a good opportunity to dive into legal discussion, while emphasizing poor language (under U.S. Supreme Court standards) of the ruling relied by CBP port officer. For example, one GRI 3 argument may go as follows:
Classification of merchandise is a question of law. Universal Elecs. Inc. v. U.S., 112 F.3d 488, 491 (Fed. Cir. 1997) (“The proper meaning of the tariff provisions at hand * * * is a question of law * * *”). All merchandise must be classified under HTSUS pursuant to General Rules of Interpretation. Avenues in Leather, Inc. v. U.S., 423 F.3d 1326, 1333 (Fed. Cir. 2005). [Cite Binding Ruling Author] writer did not to state the general rule of law, nor the specific GRI that guided his conclusion. * * * HTSUS structure is designed to accommodate classification based on both, the use and the make. A binding rulings writer is legally required, pursuant to GRI 3, to at least discern other headings. [Cite Binding Ruling Author] writer, on the other hand, without going into details, considered only heading * * *, which only provides for the make of the product. Even with respect to heading * * *, [Cite Binding Ruling Author] writer’s analysis lacks its thoroughness. Additionally, the writer made conclusions, without laying foundation theretofore, that the product in question is not only a * * *, but rather a * * * . Writer’s brevity followed by short conclusions fail to account for the complexities of product analysis and classification. [Cite Binding Ruling Number] conclusions lack legal discussions and are deprived of mandatory GRI application. The resulting binding ruling, therefore, falls short of the thoroughness requirement mandated by Skidmore. Lack of thoroughness indicates a little weight, if any, that [Cite Binding Ruling] has on parties that are outside of the particular transaction.
Next tool provided by Supreme Court it the logic, that may flow out from brevity of analysis.
The writer’s lack of thorough analysis had a fatal effect on the writer’s logic. The writer made a brief statement of facts. The brief factual assertions were followed by even more brief conclusion of law. Legal foundation and the reasoning are entirely absent. The United States Court of International Trade advised against reliance on CBP rulings that are deprived of logic. In Arko Foods Intl., Inc. v. United States, 679 F. Supp. 2d 1369 (Ct. Int’l Trade 2009), the Court noted that rulings such as NY H83504 (2001) are “barren of any logical explanation for this classification, and therefore lacks any power to persuade.” Arko Foods at fn. 45. The [NY Binding Ruling] writer’s failure to provide logical legal analysis deprives [cite binding ruling] of its persuasiveness. The United States Supreme Court mandates to give no weight to the binding rulings that are deprived of “thoroughness, logic, and expertness, its fit with prior interpretations, and any other sources of weight.” United States v. Mead Corp., 533 U.S. 218, 235 (2001).
Next thing that comes out if the toolbox is the writer’s expertness. Usually, CBP commodity specialist are well developed experts. But, regular readers of CBP Bulletin know that CBP HQ overrules NY commodity specialists all the time. If you can locate that a particular commodity specialist has been overruled by CBP HQ, it is a bullet point to mention as you try to tip the persuasion scale to your favor. This is easily done by placing the name of the writer in CROSS and filtering by HQ rulings.
Next on the list is the fit of the ruling cited by CBP port officer with others of a like and kind. It is not uncommon for CBP commodity specialist to come out with different classifications for similar products. Using the N151535 and N169383 as case study examples, following language may be offered to CBP (again to tip the persuasion scale to your favor).
CBP binding ruling N151535 (2011) is a prima facie evidence of CBP’s classification inconsistency concerning chemical substances that act as plastic and rubber stabilizers. The use of both products, in N151535 and N169383, is to act as an antioxidizing preparation. Both N151535 and N169383 provide for substances that utilize their light absorption qualities to influence physical characteristics of an end-product (e.g. prevent hardening or aging for plastics materials). Both substances are polymers. Yet, without stating any reasons, N151535 calls for HTSUS Chapter 38 applicability, while the N169383 calls for HTSUS Chapter 39. Both rulings evince evidence of similar, if not identical use. Both rulings are published, available for review, and are issued by the same CBP Office. The record calls, if not requires, the legal reasoning discussing GRI 1 or GRI 3 applicability. The record, however, is silent. Prior CBP interpretation in N151535 fails to distinguish the “use” category application, while arriving to the different HTSUS number. Therefore, N169383 does not fit prior CBP interpretations and cannot be afforded the Skidmore deference.
Needless to say, you should intertwine the facts with aforementioned law. Be nice and kind. Most CBP officers are very nice diligent people who are doing their best under multiple constraints (e.g. time and supervisor pressures). Remember, law (should) equally apply to the government and the people (here the international trade community). With enough seeds, you may end up with having a strong tree.