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Court Throws Out Importer’s Challenge to Classification with Favorable Duty Rate Change

Tuesday, December 17, 2013
Sandler, Travis & Rosenberg Trade Report

The Court of International Trade ruled Dec. 13 that a yarn importer does not have standing to challenge a classification that gives it a favorable duty rate but could negatively impact its sales to garment manufacturers.

The case was filed by Best Key Textile Inc. in an effort to overturn U.S. Customs and Border Protection’s revocation of a ruling on the classification of its proprietary “BKMY” yarn. The initial ruling classified the yarn under HTSUS 5605.00.90 as metalized yarn (13.2% duty), but the revocation ruling concluded that the yarn is properly classified under HTSUS 5402.47.90 as synthetic filament yarn of polyesters (8% duty).

Best Key argued that the CIT has jurisdiction to hear its complaint under 28 USC 1581(h), but the court states that cases brought under this provision may only be commenced under certain conditions, including that the plaintiff would suffer irreparable harm absent judicial review. In this case, the court said, the revocation ruling resulted in a lower tariff on Best Key’s yarn and thus poses no harm to direct importations of that yarn.

Best Key countered that it has suffered harm because its customers (foreign garment manufacturers) may no longer purchase its yarn unless the garments they make from it can be imported by other “strangers to this action” (garment importers) under the favorable duty rate accorded to garments made of metalized yarn. However, the court said that the essence of this argument “amounts to a request for the protection of others’ interests” and that even if Best Key is “protecting its own financial interests by extension” it has no authority or standing to assert the claims of the others under 1581(i).

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