Importer Says US Creating Section 301 Exclusion Rule for Goods From FTZs
Responding to a U.S. cross-motion for judgment in its classification dispute, computer parts importer Atlas Power said the government was trying to raise a new argument that none of Atlas’ entries in question were eligible for a Section 301 tariff exclusion because they were entered under a privileged status into a foreign-trade zone (Atlas Power LLC v. United States, CIT # 23-00084).
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Atlas is challenging the imposition of Section 301 duties on four of its entries of NVIDIA CMP 170 HX graphics processing units, or GPUs. It claims the products should be classified under Harmonized Tariff Schedule heading 8473, for parts and accessories for automatic data processing machines (ADPs). It also argues that merchandise under this heading is covered by a retroactive Section 301 exclusion.
That retroactive exclusion applies to “goods entered for consumption, or withdrawn from warehouse for consumption,” starting on Oct. 12, 2021, that either hadn’t yet been liquidated or had been but were within the statutory protest period, Atlas said. It said three of its entries were entered into the U.S. from an FTZ between Nov. 1 and Nov. 4 in 2021.
But the exclusion makes no mention of excluding privileged entries into FTZs, it argued.
In fact, that interpretation goes against prior practice by CBP, it claimed. It said that in 2009, the agency issued a binding ruling holding that it was basing its antidumping duty assessment decision for privileged entries into FTZs after the revocation of an order on “when the merchandise was entered, or withdrawn from warehouse, for consumption.” This wasn’t affected by anything in the FTZ statute because AD assessment is based on “the date of entry for consumption into the Customs territory of the United States,” Atlas said.
It also cited the 1961 case Inter-Maritime Forwarding Co., Inc., in which the Customs Court held that a duty rate that came into existence after an importer applied for privileged status for its FTZ merchandise and before it entered its goods for consumption did apply to that entry.
Both rulings “recognized that allowing an importer to ‘lock in’ a tariff rate for privileged FTZ merchandise would also allow the importer to game the system,” it said.