Post-Entry 'Actual Use' Declaration Not Allowed, Even in Case of Broker Error, Says CBP

CBP rejected a protest filed by Kenton Tobacco that asked the agency to reclassify tobacco under "actual use" tariff provisions despite being previously entered under a different subheading. The July 18 ruling, HQ H240589, also looked at whether broker error, which the company said resulted in the misclassification, can negate the requirements for actual use provision declarations. The ruling, a further review of protest, found that a declaration had to be made at time of entry for classification under the actual use provision. The actual use provisions at issue requires the importer to demonstrate the planned use for the unmanufactured tobacco.

The ruling (here) involves four shipments of unmanufactured tobacco from India that was initially misclassified as cigar filler in 2012 at the Port of Norfolk. After CBP contacted Kenton, the company admitted the entries were misclassified and subsequently asked its broker to redeclare the entries in tobacco subheadings 2401.20.8310 (flue-cured) and 2401.20.8320 (burley), both actual use tariff provisions, said the ruling. The broker instead filed post entry amendments for the entries to reclassify them under a tariff rate quota provision 2401.20.8510 at 37.5¢ per kilogram, the same duty rate as Kenton's requested classifications if submitted before the quota is filled, the company said. CBP rejected the broker's PEAs because the quota was already filled and rate advanced two of the entries at 350%.

Kenton responded that the entries should have been reclassified under the actual use provisions. The company also submitted letters from parties that bought tobacco from Kenton and a letter declaring intent to sell the remaining tobacco for pipe tobacco and cigars. CBP disagreed that a reclassification is allowable. The Court of International Trade has previously ruled that "if an importer does not enter the goods under actual use provision or file a separate declaration of intended use at the time of entry, then it cannot enter its goods under actual use tariff provisions," CBP said in the ruling. The broker did not declare the intended use at the time of entry, so the actual use subheading is not applicable, it said.

While Kenton argued that the actual use provision may be corrected within an amended entry summary and that CBP has ruled that "information asserted in an amended entry summary to have been asserted 'at the time of entry,'" CBP said Kenton's case is different. The ruling that Kenton cited involved a change made by a CBP officer at entry, but "if the importer rather than CBP officials had tried to amend the documents after entry, as in this case, CBP would not accept those amendments," said CBP.

The company's claims that it's the broker's fault also are not convincing, said CBP. The courts have already found customs brokers to be an agent of the importer and CBP has previously found broker error not to be an excuse for failure to declare intent at entry, said CBP. Even "if the importer can show actual use by providing evidence that it sold the tobacco for pipe use, the importer is still required to declare intended use at the time of entry in order to proceed under an actual use tariff provision," the agency said. "Therefore, Kenton Tobacco’s requested relief that the Port withhold action until it submits certificates of actual use is moot since Kenton Tobacco did not properly declare intent at time of entry. Every action that Kenton Tobacco cites to in support of its argument regarding actual use happened after entry."