International Trade

Author:International Law Group

When presented with appeal from U.S. Court of International Trade which had ruled that improper customs' procedure had been followed in reclassification of Plaintiff's product, Federal Circuit dismisses for lower court's lack of jurisdiction.


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International Custom Products, Inc. (Plaintiff) imports and distributes products sold to makers of processed food. In April 1999, Plaintiffbegan importing "white sauce," a milkfat-based product used in sauces, salad dressings, and other food products. Plaintiffhad gotten an advance ruling from the U.S. Bureau of Customs and Border Protection (Customs) on the classifi cation of the sauce; it issued on January 20, 1999, as New York letter ruling D86228.

The ruling categorized the product under subheading 2103.90.9060 of the Harmonized TariffSchedule of the United States (HTSUS), which has since been renumbered as subheading 2103.90.9091. Relying on the ruling, Plaintiffformed a three-year purchase contract with its foreign supplier and a three-year supply agreement with its largest U.S. customer. Plaintiffalso relied on the advance ruling by preparing to set up a manufacturing business. This consisted of buying a plant site and carrying on product research and development.

In March 2004, Customs told Plaintiffthat it was starting a tariffrate investigation. Based on it, and without providing notice and comment, Customs issued a Notice of Action (NOA) dated April 18, 2005. In it, Customs declared that it would classify 86 unliquidated entries of white sauce under subheading 0405.20.3000, substantially boosting the tariff. On May 6, 2005, 60 of the 86 subject entries were liquidated.

Plaintiffthen sued the U.S. (Defendant) in the Court of International Trade (CIT). The suit alleged that Customs' actions violated 19 U.S.C. ß 1925(c)(1) or (2) by effectively revoking the advance letter ruling without following proper procedures. The trial court held that it had jurisdiction under 28 U.S.C. ß 1581(I)(4) and ruled the NOA null and void for noncompliance with 19 U.S.C. ß 1925(c)(1).

The CIT also ordered Customs to reliquidate the entries, and ordered that the advance ruling remain in full force until properly modifi ed or revoked by Customs. The Defendant appealed.

The U.S. Court of Appeals for the Federal Circuit held, however, that the CIT lacked subject matterPage 210 jurisdiction. In an October 17 ruling, it reverses the CIT's jurisdictional holding, vacates its judgment on the merits, and remands for dismissal of the complaint.

"It is a 'well-established principle that federal courts ... are courts of limited jurisdiction marked out by Congress.'" Norcal/Cosetti Foods, Inc. v. United States, 963 F.2d 356, 358 (Fed. Cir.1992).

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