In October 2015, Department of Justice published conviction and penalty information of Lumber Liquidators Inc.’ criminal activities (also available here). The fine is $13,150,000. According to February 2, 2016 Google Finance report, (holding) company’s market cap is about $354,470,000. This means that Lumber Liquidators Inc.’s criminal activities cost company 3.7 percent of its market cap (attorneys’ fees not included). According to DOJ, it is “the largest financial penalty ever under the Lacey Act.” Now that the Lacey Act criminal precedent is set to cost 3.7% of the corporate market cap, it is a good reason to revisit Lacey Act itself, especially since its has been over four years since LawCustoms published on the topic. In a nutshell, Lacey Act makes it unlawful to import, export, sell, acquire, or purchase fish, wildlife or plants that are taken, possessed, transported, or sold: 1) in violation of U.S. or Indian law, or 2) in interstate or foreign commerce involving any fish, wildlife, or plants taken possessed or sold in violation of State or foreign law. Lumber Liquidators Inc. pleaded guilty to violation of 18 U.S.C. § 542 (entry of goods by means of false statements). Lacey Act requires importer of to submit a…
EPCA’s Non-Tariff Barrier. CBP adopts a new regulation – 19 C.F.R. § 12.50 – to help its sister agencies FTC and DOE bring Energy Policy and Conservation Act of 1975 (EPCA) mandate to U.S. borders. Now CBP has regulatory framework to see if certain products are labeled and manufactured in compliance with EPCA. Now, if CBP finds that importer does not follow FTC and DOE EPCA recommendations, that product will be refused admission into the United States. Obvious questions that follow include: What are these certain products? What are manufacturing standards? What are the labeling requirements? Before this inquiry is made, establishment of basic jurisdictional responsibilities between FTC, DOE, and CBP may probably help. Basically, DOE is responsible for technical side of EPCA standards for “certain” appliances. FTC’s responsibility mainly pertains to labeling requirements of DOE’s EPCA standards. CBP responsibility is to see that FTC and DOE rules in fact apply to imports. According to the DOE’s Building Technologies Office, there are over 50 products that have EPCA standards. The list is broken down into (1) residential products, (2) commercial and industrial products, (3) lightning products, and (4) pluming products. But, if an importer finds that no standards – according…
The Internal Revenue Service (IRS) has issued its publication on excise taxes (IRS Publication 510) which, among other things, summarizes the tax the IRS imposes on the sale or use of: chemicals that deplete the ozone-layer (ozone-depleting chemicals, ODCs); and imported products containing or manufactured with ODCs (e.g. dusting sprays, television receivers, certain microwave ovens, foam sofas and mattresses, etc). The IRS explains that Form 6627 is used to calculate the environmental tax on ODCs, imported products containing or manufactured with ODCs, etc. This figure is then entered and reported on Form 720, to which Form 6627 must be attached. (In addition to providing information on environmental taxes (i.e. ODC taxes), IRS Publication 510 also provides information on communications and air transportation taxes, fuel taxes, heavy truck taxes, etc.) Taxable ODCs IRS Form 6627 states that the following ODCs are taxable : Post-1989 ODCs: CFC-11, CFC-12, CFC 113, CFC-114, CFC-115, Halon-1211, Halon-1301, and Halon-2402. Post-1990 ODCs: Carbon tetrachloride, methyl chloroform, CFC-13, CFC-111, CFC- 112, and CFC-211 through CFC-217. Tax on ODCs Generally Imposed when ODC is First Used or Sold. IRS Publication 510 states that this tax is imposed on an ODC when it is first used or sold by…
Consumer Product Safety Commission (CPSC) administers Poison Prevention Packaging Act pursuant to 15 U.S.C. §§ 1471-1476, 16 CFR Subchapter E; §§ 1700 – 1702. CPSC, broadly speaking, provides regulation standards for the special packaging of any household substance that the Commission finds pose degree or nature of the hazard to children in the availability of such substance, by reason of its packaging, is such that special packaging is required to protect children from serious personal injury or serious illness resulting from handling, using, or ingesting such substance. If the product fits the scope above, then the importer and/or the person placing the product in the United States commerce is subject to certain labeling and packaging requirements. Specifically, the statement “This Package for Households Without Young Children” shall appear conspicuously on the package of any household substance subject to the special packaging requirements that is supplied in noncomplying packaging, unless the package bears the substitute labeling statement (see Sec. 1700.5(a) for details). Substitute statement “Package Not Child-Resistant” may be used (see Sec. 1700.5(b) for details). Also, the packaging must conform to the requirements under Sec. 1700.15.
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Under the Flammable Fabrics Act, CPSC can issue mandatory flammability standards. Standards have been established for the flammability of clothing textiles, vinyl plastic film (used in clothing), carpets and rugs, children’s sleepwear and mattresses and mattress pads. The importer, at the time of importation, executes and furnishes to the U.S. Customs and Border Protection an affidavit stating: These fabrics (or articles of wearing apparel) are dangerously flammable under the provisions of section 4 of the Act, and will not be sold or used in their present condition but will be processed or finished by the undersigned or by a duly authorized agent so as to render them not so highly flammable under the provisions of section 4 of the Flammable Fabrics Act, as to be dangerously flammable when worn by individuals. The importer agrees to maintain the records required by 16 CFR 1610.39(c)(1). Textile Classes: Class 1 textiles, those that exhibit normal flammability, are acceptable for use in clothing. §1610.4(a)(1) & (2). Class 2 textiles, applicable only to raised-fiber surfaces, are considered to be of intermediate flammability, but may be used in clothing. §1610.4(b)(1) & (2). Class 3 textiles, those that exhibit rapid and intense burning, are dangerously flammable and…
Wilton Industries Inc., v. United States case caused a great deal of excitement in the import and legal communities. After all, provided that certain criteria are met, utilitarian articles were eligible for duty free treatment all these years, and the CBP official interpretation was, at best, misleading? The practical benefits, usually coming in the form of duty refunds, are marginal for those importers that are/were not directly involved in these cases. The commodities addressed in Wilton, would not qualify for chapter 95 if entered after February 3rd, 2007, the time when chapter 95 note 1 (v) came in force. Then, one has to consider limitation of Park B. Smith invoked by CBP on April 5th, 2006. It is very important to note, that the question of limitation had almost no mention in Wilton. In the slip opinion it is briefly noted that “neither party has relied in any way on Customs’ recent action seeking to limit the application of Park B. Smith to the entries before the courts in that case.” There are good reasons for no mention: your protests are likely to be denied on the basis of that limitation. With this in mind, the procedural timeline does not…
It appears that Customs and Border Protection (CBP) is changing its long time practice with regards to interpretation of Additional U.S. Note 6 (b) to Chapter 69 HTSUS, which dates back to August 8th, 1994, the date of issuance of HQ 955838. The practice pertains to the interpretation of nearest to maximum dimensions. CBP has regarded the word “maximum” in the note as meaning “the greatest possible quantity or degree”; the greatest quantity or degree reached or recorded; the upper limit of variation (Customs Bulletin Vol. 41 No. 23 Pg. 48). Ceramic article, therefore, cannot exceed dimensions specified in the Additional U.S. Note 6 (b). Importers who are bringing ceramic dinnerware / tableware in sets, were stuck to that dimensions or had to pay almost double the duty for articles as being not “available in specified sets.” CBP position now is that an article may exceed the dimensional descriptions of Additional U.S. Note 6 to Chapter 69 and be classified as being “available in specified sets.” The change in interpretation was due to acceptance of several court cases as a precedent for the interpretation. Previously, CBP dismissed any court cases, legislative history and interpretations thereof by claiming that the meaning…
We classify a lot of products, usually decorative figurines, that a claimed to be made from “polystone” sometimes mixed with “polyresin” binding material. Most of it goes into statistical reporting number 6810.99.0080. This publication focused on narrowing the definition of artificial stone. It is not just the natural stone binded with plastic resins, cement, or lime… but it also must be “uniformly agglomerated together throughout the body of the article.” If it is not uniformly distributed, then GRI (3) is applicable, where if natural stone is essential character, then it goes into heading 6802. This effectively brings the duty up from zero to six percent. Publication further implies that in order for artificial stone to qualify for 6810, it must be made from “natural” stone. As an example of non-natural stone, publication mentions calcium carbonate in the form of a synthetic chemical. Interestingly, assumed percentage requirement by weight, is not a factor in determining the essential character of agglomerated article. For example, stone uniformly mixed with plastics (polystone/polyresin compound) is 6810 by GRI (1) regardless of weight predominance. Yet, it goes on to say that even in the absence of standard, if natural stone by weight is less than 20…
Read More Informed Compliance Publication on Agglomerated Stone