Customs & Import Matters

Antidumping & Countervailing Duties

Antidumping Duties (ADD) are duties assessed (on top of regular duties) on certain types of imported merchandise which are sold to purchasers in the United States at a price less than the fair market value. Often, these duties may be multiples higher than the regular duties. Countervailing duties (CVD) are a way to restrict imports in the home market, in situations where a foreign country subsidizes merchandise exported to the U.S. causing the price of the merchandise to be unnaturally low and resulting in an economic “injury” to U.S. industries.

Determining the precise boundaries of the scope and duty rates in ADD and CVD duty orders is very difficult. Our firm represents clients before the International Trade Administration (ITA) during the investigation and administrative review phases, and in procuring Scope Rulings once the scope has been determined. Our firm also counsels clients on the market and business implications of potential and existing actions.

Tariff Classification

All commercial products entering the United States must be assigned a tariff classification found in the Harmonized Tariff Schedule (HTS), which dictates the duty rate applied to the product. Under U.S. Customs law, importers (and not their customs brokers or freight forwarders) are ultimately responsible for assigning the correct tariff classification for all imported items. Failure to classify correctly could result not only in overpayment of duties, but also significant monetary penalties imposed by Customs.

Givens & Johnston assists clients in classifying merchandise to avoid penalties and to obtain the lowest duty rate legally obtainable. In cases where Customs disagrees with the classification, our firm will assist importers in challenging Customs administratively through protests and rulings, and if necessary, judicially at the U.S. CIT and CAFC.

NAFTA, GSP and other preferential tariff treatment programs

The North American Free Trade Agreement (NAFTA), Generalized System of Preferences (GSP), and other preferential tariff/free trade agreements minimize customs duties, reduce trade barriers, and provide other trade advantages to importers and exporters. However, these laws are often confusing and are traps for the unwary. Our firm assists clients in taking full advantage of these trade preferences by ensuring compliance with FTA requirements. Specifically, we provide a comprehensive range of FTA services and counseling including tariff classification, country of origin determination and marking, rules of origin, valuation, audit preparation, and compliance assessments.

Country of Origin

Determining the proper country of origin of products is one of the most misunderstood areas of law for importers and exporters, often resulting in costly mistakes. Country of origin issues affect every aspect of international trade, such as:

• Marking requirements
• Preferential tariff program eligibility (e.g., NAFTA or GSP)
• Antidumping/countervailing duties
• Product admissibility and quotas
• “Buy America” requirements
• Jones Act issues

Our firm assists clients in complying with country of origin laws, and also defends clients in investigations and penalties relating to country of origin issues. Through its affiliate CO Vouch, companies can also establish a system to verify a product’s country of origin to avoid foreseeable issues, such as allegations of transshipment.

Customs Valuation

Importers are responsible for declaring the correct dutiable value at the time of entry in order for Customs to estimate the duties owed. For instance, valuation can become an issue when a company imports commingled goods or uses an inventory-management system, the transaction is between related-party, the importer provided “assists” to the supplier, or when the product was sold abroad through more than one person (e.g.., First Sale Rule).

Givens & Johnston assists clients with all Customs valuation issues in order to avoid potential Customs liability and also to reduce the duties paid, if this option is legally available.

Intellectual Property (Trademark; Copyright)

In recent years, Customs has made intellectual property rights (IPR) enforcement a priority trade issue and increased its efforts to seize products that infringe IPR such as trademarks, copyrights, and patents. In 2013, Customs seized more than $1.7 billion in goods that violated intellectual property rights. Our firm represents clients to challenge Customs’ seizure of goods that allegedly violated trademarks, copyrights, or patents. We also represent clients at the forfeiture, and penalty action stages. Our attorneys are experienced in navigating the Customs laws and regulations surrounding intellectual property and stand ready to defend clients against any Customs action.

Penalties; Civil & Criminal Investigations

To allay the impact of or to avoid altogether Customs investigations and subsequent large penalties, we assist importers in carefully responding to Requests for Information (CBP Form 28) and Notices of Action (CBP Form 29) and filing prior disclosures or taking other actions, as may be necessary.

If Customs issues a penalty, our firm represents clients in the defense or mitigation of these penalties. Penalties are the result of Customs investigations against a company or individual and are usually civil in nature. In cases of negligence or gross negligence, Customs can pursue unpaid duties plus penalties (2 to 4 times loss of revenue) on entries going back 5 years. Most penalties are brought under 19 U.S.C. 1592, but numerous other statutes are used, as well. In the event of a criminal investigation, we will associate experienced criminal counsel and vigorously defend against any accusations and allegations.

Seizures & Forfeitures

Our firm represents clients in challenging Customs’ seizure and forfeiture of their goods that were allegedly imported or exported contrary to laws, such as those pertaining to:

• Monetary Instruments and Currency
• Intellectual Property Rights (Trademark; Copyright)
• Cultural Property
• Country of Origin/Marking
• Customs also seizes goods to enforce the laws of other agencies such as the U.S. Food and Drug Administration (FDA), Fish and Wildlife Service (FWS), Environmental Protection Agency (EPA), DOT, USDA, FCC, CPSC, OFAC, and many others. We defend against all of these actions to seize and forfeit property.

Customs Audits

Our firm represents clients in all stages of Customs Regulatory Audits, whether it is a Focused Assessment audit or Quick Response audit. Regulatory Audits are used by Customs, after entry, for the purpose of ensuring compliance with the Customs laws, and also allows Customs determine if any loss of revenue occurred. Customs can pursue unpaid duties on entries going 5 years back through a penalty action, or it can order reliquidation of recent entries.

It is Customs’ policy to allow the audited importer the opportunity of prior disclosing error found by Customs, thereby greatly minimizing penalty liability. However, when errors are found that Customs deems fraudulent or criminal in nature, all bets are off. And, the guidelines are very subjective for differentiating between violations that are “grossly negligent” and “fraudulent” or “criminal.” Therefore, we caution importers to consult with experienced Customs counsel prior to undergoing a Customs audit. There is usually plenty of time to do it so that Customs is not alerted, and an otherwise possibly terrible experience is avoided.

C-TPAT Certification

Customs-Trade Partnership Against Terrorism or C-TPAT is a partnership between importers and exporters to protect the supply chain, identify security gaps, and implement security measures and best practices. C-TPAT members are considered low-risk and receive several benefits such as:

• Reduced merchandise exams, inspection times, cargo theft, and penalties
• Access to Free and Secure Trade (FAST) lanes
• Our firm guides clients in applying and obtaining tiered C-TPAT certification in order to receive the above-referenced benefits.

Protests, Rulings and Internal Advice

Our firm will fight to obtain the lowest possible duty payment for importers through Customs administrative processes such as protests and binding Customs rulings obtained locally or in Washington; and if necessary, we will fight on in the U.S. Court of International Trade. These duty disputes involve tariff classification, Customs Valuation, applicability of Duty preference programs (e.g., NAFTA, KORUS, Singapore FTA, etc.), and many other issues wherein Customs attempts to take or keep more money than it should.

Bonded Warehouses; Foreign Trade Zones

Givens & Johnston counsels clients with legal issues arising from the entering, storing, or withdrawal of merchandise in bonded warehouses and Foreign Trade Zones (FTZ’s), each of which are covered under different sets of laws and regulations. Bonded warehouses and FTZ’s are often utilized by importers and exporters to defer payment of duties or to manipulate the merchandise, and in many cases, can be utilized to reduce payment of duties.

Recordkeeping

Most importers and exporters are unaware of the various recordkeeping requirements applicable to them, and mistakenly rely upon third parties (such as customs brokers) to keep import/export records. Under Customs laws, recordkeeping penalties start at $10,000 per violation, and can reach as high as $100,000 per violation, depending on the level of culpability.

Our firm assists clients in implementing a customized compliance program to ensure that the necessary records are kept. If a penalty has been issued, our firm represents clients in mitigating civil penalties being sought by the government, whether via petitions to the appropriate government agency, requests for early release, or court actions in a Federal District Court, the Court of International Trade, or other appropriate courts.

Duty Drawback

Drawback is a program whereby an importer can obtain a substantial refund (not exceeding 99%) of duties paid on goods that are exported or destroyed after importation into the United States. Givens & Johnston assists clients with determining whether the importer’s goods are eligible for drawback, and if they are eligible, our firm counsels clients in establishing proper procedures and filing necessary paperwork to receive a drawback refund.

Customs and International Trade Litigation (CIT & CAFC)

If during the Customs administrative process, an importer receives an adverse decision, our firm will fight the decision in the U.S. Court of International Trade (CIT); and if necessary, the U.S. Court of Appeals for the Federal Circuit (CAFC). Our firm has appeared before the CIT and the CAFC to successfully fight Customs decisions regarding tariff classification, Customs valuation and other issues.