UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op 23-42

Before the Court in Kent International, Inc. v. United States, Court No. 15-001135, Slip Op. 23-42 (March, 24, 2023) was Plaintiff’s motion for judgement challenging U.S. Customs and Border Protection’s denial of protests regarding the classification of Kent’s “WeeRide” child safety seat for bicycles under heading 8714 of the Harmonized Tariff Schedule of the United States. Plaintiff contended that Customs violated the treatment provision in § 1625(c), and that the subject merchandise is classifiable as “Seats . . . Other” under HTSUS. Kent argued that Customs established a treatment of classifying Kent’s child safety seats as seats under HTSUS heading 9401 by disregarding the contrary Customs Ruling on the same issue that had instead classified the subject merchandise under heading 8417. Kent maintained that heading 9401 treatment is reflected in the approval by Newark Customs of 14 protests covering 35 entries between August 2008 and October 2010, plus the PEAs covering nine other entries in November 2010. Kent contended that the approval of these protests and PEAs were the only actual determinations made by Customs on the classification of Kent’s merchandise between August and November. Further, Kent argued that no other decisions or actions were taken by Customs anywhere in the country regarding Kent’s child safety seats, nor were any other interpretive rulings or decisions made with respect to Plaintiff’s merchandise.

The issue turned on whether the two prongs of the 19 C.F.R. § 177.12(c)(1)(i) test Namely, whether there was (1) an actual determination made by a Customs official regarding the claimed treatment and (2) that the official had responsibility for the subject matter over which the determination was made. Defendant conceded that there were actual determinations made by responsible Customs officials regarding the subject merchandise. In turn, the court concluded that there is no dispute that actual determinations were made by a Customs officer with responsibility for the classification of the subject merchandise and the first two prongs of the §177.12(c)(1)(i) test were met.

The third prong of the test focuses on whether there are (1) substantially identical transactions for which there was a claimed treatment (2) on a national basis (3) over a 2-year period immediately preceding the claimed treatment. The parties did not dispute that the plaintiff’s imports involved substantially identical transactions, so the first element was satisfied. The parties diverged on the second and third elements, however. Citing Administrative Rulings, 67 Fed. Reg. at 53 and 494, the court indicated that the term national basis was inserted into the regulation to replace the phrase “a consistent pattern of decisions” as to liquidations of entries or reconciliations “to ensure that a treatment does not result from a geographically narrow application of a determination that is different from the action taken by Customs on that person’s substantially identical transactions at other locations. Kent’s position was that the national basis element does not require the treatment to have been previously accorded at more than one port, only that different ports may not take inconsistent actions, and that the prior Customs determinations consistently approved Plaintiff’s claims that the subject merchandise should be classified under heading 9401, duty free. On this point, Customs disagreed, maintaining that Plaintiff’s claimed treatment did not exist on a national basis and that the determinations made at the Port of Newark did not reflect Customs’ determinations on a national basis. Customs further argued that although the only actual determinations on Kent’s claims occurred between August 2008 and November 2010 at the port of Newark, this circumstance resulted from Kent’s request that Long Beach Customs suspend consideration Kent’s 2009 and 2010 protests. Customs posited that the § 177.12(c)(1)(ii) test requires the court to consider the fact that there were entries and protests regarding the subject merchandise at a port of entry other than Newark, such as Long Beach.

The court rejected defendants arguments that the informal contact between Long Beach Customs and Kent’s counsel in early 2011 regarding how the agency would rule in the future. Since no other port or office within the agency took a contrary position or action, the court agreed with plaintiff that the determinations by Newark Customs constitute an action as contemplated by the regulation and that Newark Customs determinations satisfied the rational basis element of the third prong treatment test.

Regarding the last element of the third prong of the test, defendant maintained that Kent first asserted a “claim of treatment” with respect to an entry made at the Port of Long Beach. The agency contended that the court must look to the two years immediately preceding the earliest entry at issue to determine if Customs consistently applied a classification determination on a national basis. Whereas, Kent argued that the claimed treatment in this matter arose from Customs’ protest approvals rather than how entries were initially classified. Kent maintained that, following the logic of American Fiber ___, the August 2008-November 2010 should be considered to be the relevant 2-year time frame for its claim of treatment. Following the guidance of American Fiber, the court agreed with plaintiff, and concluded that the existence of a treatment was established.

On the question of which of Kent’s entries may be entitled to the benefit of that treatment the court answered that Customs violated that treatment in issuing the 2015 Ruling without the notice and comment required by 19 U.S.C. § 1625(c). The court held the entries of child safety seats for bicycles that protested after the 2-year period of consistent Customs’ action were ones that qualified for relief under Kent’s claim of treatment.