Product That Was Granted Section 232 Exclusion Identical to Product Entered, Importer Says

In response to a U.S. claim that it couldn't move for a motion on its pleadings before issues of fact were settled by discovery (see 2409260061), an importer of tubing for perforating guns said Oct. 15 that it was “impossible” for CBP to find that one of its products should have been classified under a different Harmonized Tariff Schedule heading between the time the importer sought a Section 232 exclusion request and the time it shipped its entry into the country (G&H Diversified Manufacturing v. U.S., CIT # 22-00130).

“If the HTSUS classification is correct in the Exclusion Request, then it must be correct for the conforming Entry, because the specifications and end use of the steel in the two documents are identical,” it said.

In its brief, importer G&H Diversified Manufacturing first took issue with DOJ’s “‘background’ description of the Section 232 tariffs and the steel exclusion process,” saying it contained “misstatement and omissions that are important for the Court to consider.”

The government stated that CBP has “unfettered discretion” to refuse to apply an exclusion granted by the Commerce Department; but this isn’t true in the Section 232 exclusion process, the importer claimed.

Rather, it said, the exclusion system requires CBP to, first, “verify the accuracy of the classification in an exclusion request prior to it being posted by [Commerce] for public comment,” and then to apply an exclusion upon entry when “the attributes of the excluded product (such as chemistry, dimensions and testing requirements) are identical to those of the entry.”

It said that assuming, as was required by principles of administrative law, that CBP fulfilled its duty to verify the accuracy of an exclusion request’s classification prior to the request being granted, it was “impossible, legally and logically,” for the customs agency to find that classification of G&H’s products differed between the time that the importer applied for the exclusion request and the time that its shipment entered the United States.

“CBP must not disregard its assigned role in ensuring the HTSUS classification in an exclusion request is accurate at the outset,” it said. “If CBP disregards this responsibility, US importers and their customers can never be confident that an Exclusion will result in a refund of duties.”

It acknowledged that “Customs rulings are available in theory,” but argued that these are intended for “prospective” transactions, “not entries that have already taken place.” And G&H’s reliance on the classification in its granted exclusion request was reasonable because the request “had already been approved” by CBP and Commerce. It also said it had used the same classification for its merchandise “several times before 2020.”