Router Importer Seeks Duty Refund on Reimported Entries From China

Importer Netgear filed a complaint at the Court of International Trade on April 26 seeking reliquidation of re-imported LTE routers under duty-free Harmonized Tariff Schedule subheading 9802.00.50. The company is seeking refunds of any overpayments of Merchandise Processing Fees and Harbor Maintenance Fees, along with a refund of Section 301 duties (Netgear v. United States, CIT # 22-00129).

Netgear first imported the goods from China in 2018 and fully paid import duties and Section 301 tariffs under subheading 8517.62.0020, which provides for other "apparatus for transmission or caption of voice, images or other data, including apparatus for communication in a wired or wireless network," and secondary subheading 9903.88.04 for the Section 301 duties. The company said it then exported the goods to China in 2020 "for the sole purpose of being repaired or altered."

The value of the exported goods was $218,500, the complaint said. In China, the routers were disassembled, uploaded with new software then reassembled. In addition, two cracked LCD panels were replaced, costing $11.58, along with the 656 lithium-ion battery packs, which cost $5,182. In all, the total value of the repairs and alterations amounted to $37,800.50, moving the total value of the goods to $256,312.08, the company said.

The routers were reimported to the U.S. in 2020, and Netgear claimed them as fitting under subheading 9802.00.50, which covers goods "returned to the United States after having been exported to be advanced in value or improved in condition by any process of manufacture of other means."

The company noted that to qualify for this subheading, the goods must satisfy CBP's regulations, which include a "declaration from the person who performed such repairs or alterations" and a declaration from the importer and owner confirming that the goods were exported for repairs or alterations without "benefit of drawback" and are the same articles that were exported. The Chinese repair shop provided such a declaration, as did a Netgear executive, the complaint said.

"The change in software to the LTE routers did not destroy the essential characteristics or change the identity of the LTE routers," the brief said. The company added that Section 301 duties only apply "to the value of repairs, alterations, or processing performed in China, as described in the applicable heading."

Netgear now asks the trade court to tell CBP to classify its goods under subheading 9802.00.50, free of duty with a value of $218,500, and reliquidate the entry for the batteries, repairs or alterations under subheadings 8517.62.0020 and 9903.80.04 at a declared value of $42,994.08.