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Court Rules on Use of CF 29 to Effectively Revoke Classification Ruling

Thursday, April 17, 2014
Sandler, Travis & Rosenberg Trade Report

The Court of Appeals for the Federal Circuit upheld this week in International Custom Products Inc. v. U.S. a Court of International Trade decision that U.S. Customs and Border Protection improperly used a form CF 29 (Notice of Action) to effectively revoke a prior classification ruling.

In 1999 Customs issued a ruling classifying white sauce primarily composed of milkfat and used to make various food products as sauces and preparations therefor (currently HTSUS 2103.90.9091), subject to a 6.6% duty rate. After ICP had imported large quantities of the white sauce under this classification for five years, CBP conducted an investigation that resulted in its issuance of a CF 29 stating that all of ICP’s pending and future entries of white sauce would be classified as dairy spreads (HTSUS 0405.20.3000), which carries a duty rate of $1.996/kg plus applicable safeguard duties. The result was a tariff increase of about 2,400%.

The CAFC finds that the CF 29 effectively revoked the initial classification ruling without following the notice and comment procedures in 19 USC 1625(c). While CBP argued that a CF 29 is an “entry specific document” that has no effect on a prior policy or ruling, the court states that because the CF 29 in this case required all pending and future entries of white sauce to be classified under a different heading, it effectively revoked the earlier classification ruling and amounted to an interpretive ruling or decision subject to 1625(c). This does not mean that all CF 29s are now subject to notice and comment procedures, the court states, only those that may be used “to surreptitiously revoke ruling letters.”

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