CIT Rules Importer Cannot Challenge Classification of Merchandise On Behalf of “Remote Parties”

On December 13, 2013, the U.S. Court of International Trade (CIT) dismissed plaintiff importer’s challenge to a yarn tariff classification because the importer did not have standing to bring the action.

Importer Best Key Textiles Co. Ltd. (Best Key) filed the case in CIT seeking to overturn U.S. Customs and Border Protection’s (CBP) Headquarters Rulings Letter HQ H202560 (dated Sep. 17, 2013) (Revocation Ruling) which had revoked NY Customs ruling N187601 (dated Oct. 25, 2011) (Original Ruling) classifying importer’s proprietary yarn as “metalized” yarn under heading 5605, HTSUS, at 13.2% duty and held, instead, that the yarn was classifiable as “of polyesters” under heading 5402, HTSUS, at 8% duty. 

To establish jurisdiction for declaratory judgment under 19 U.S.C. 1851(h), plaintiff had to establish, in relevant part, that “irreparable harm will occur unless judicial review is obtained prior to importation.” The Court stated that it “failed to discern how the “contemplated transaction of an importation of the yarn into the U.S., has been harmed in any way by the Revocation Ruling.”

Best Key argued that the Revocation Ruling, which resulted in a lower tariff for the yarn at issue, has caused it harm because its customers “may no longer purchase its yarn unless the garments they make from it can be imported under the “favorable” duty rate accorded to importations of garments made of “metalized” yarn by garment importers.” 

CIT held that Best Key did not have standing in this case because the importer did not suffer harm resulting from “direct importation of the yarn,” rather than importation of garments made from the yarn. In addition, CIT stated that a justiciable case or controversy does not exist where the tariff rate is favorable and “does not result in a duty refund.”  

 “The duty rate charged to [the importers of garments] is beyond any of the plaintiff’s interests that the provisions of section 1581 are meant to protect.” The Court compared plaintiff’s claim to attempts to protect “others,” i.e., importers of garments manufactured by purchasers of the plaintiff’s yard. Therefore, the Court held that the importer had no authority or standing to assert the claims of those remote parties under 1581(i).