Summary
The United States Court of Appeals for the Federal Circuit affirmed the Court of International Trade’s judgment concerning the customs valuation of Midwest-CBK’s imported merchandise. The court held that the entries were not deemed liquidated by operation of law and that the transactions qualified as sales for exportation to the United States under 19 U.S.C. § 1401a(b)(1), permitting use of transaction value.
Topics
Practice areas
Questions Presented
- Whether Customs properly extended the liquidation deadlines under 19 U.S.C. § 1504(b)(1), or whether the entries were deemed liquidated by operation of law.
- Whether Midwest's sales qualified as sales for exportation to the United States under 19 U.S.C. § 1401a(b)(1), permitting use of transaction value as the basis of appraisement.
- Whether the FOB Buffalo, New York purchase-order term established that the sales were domestic sales that could not support transaction-value appraisement.
Holdings
- Customs did not abuse its discretion by extending liquidation deadlines while conducting multiple audits, verifying the accuracy of the audit results, and reviewing the results for compliance with applicable auditing standards. The entries therefore were not deemed liquidated by operation of law.
- The transactions qualified as sales for exportation to the United States and could serve as the basis for transaction-value appraisement. Section 1401a(b)(1) does not require an international sale or a sale abroad, and domestic sales may qualify in appropriate circumstances.
- The court did not reach the merits of whether the FOB Buffalo term established that the sales were domestic because domestic sales can, in certain circumstances, serve as the basis for transaction-value appraisement.
Key quotations
“We hold that the CIT ruled correctly in granting the government’s cross-motion for summary judgment that (1) the subject entries were not deemed liquidated by operation of law; and (2) Midwest’s transactions qualified as sales “for exportation to the United States” under 19 U.S.C. § 1401a(b)(1).” (2)
“The CIT correctly decided that 19 U.S.C. §1401a(b)(1) does not require an international sale or a sale abroad to have occurred for a sale of merchandise to be considered as a sale “for exportation to the United States.” Domestic sales, in certain circumstances, may qualify as the basis for using transaction value as an appraisement method.” (14)
“After conducting a fact-specific inquiry of whether the sales were for exportation to the United States under 19 U.S.C. § 1401a(b)(1), . . . the undisputed evidence demonstrates that [Midwest’s] sales were for exportation to the United States at the time of the sale.” (14)
Factual background
Midwest, a Minnesota-based retailer, purchased merchandise from foreign suppliers for exportation to Canada and stored the merchandise in an Ontario warehouse. United States-based staff solicited customer orders, which Midwest personnel in Canada reviewed and prepared for shipment from Canada to the United States; the purchase orders stated that prices were FOB Buffalo, New York. Customs audited more than 560 entries, concluded that transaction value rather than deductive value was the proper basis of appraisement, extended the liquidation deadlines during the audit process, and ultimately liquidated the merchandise using transaction value with a 75.75 percent upward adjustment.
Procedural history
Midwest challenged Customs' appraisement of imported merchandise using transaction value rather than deductive value and argued that certain entries were deemed liquidated by operation of law. The Court of International Trade granted the government's cross-motion for partial summary judgment, denied Midwest's motion, and entered final judgment. The Federal Circuit affirmed.