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Appeals Court Affirms Ruling on Cargo Vans Exported for Conversion Into Motorhomes

Tuesday, January 09, 2018
Sandler, Travis & Rosenberg Trade Report

The Court of Appeals for the Federal Circuit has upheld a Court of International Trade decision that Class B motorhomes produced in Canada from cargo vans shipped from the U.S. are properly classified as motor vehicles under HTSUS 8703.33.00 (2.5 percent duty). The plaintiff had argued for classification as articles returned to the U.S. after having been exported for alteration under HTSUS 9802.00.50 (duty-free under NAFTA).

After being exported to Canada the cargo vans were subject to a variety of operations to turn them into motorhomes (e.g., installing cabinetry, appliances, plumbing systems, etc.). The CAFC affirmed the CIT’s determination that these operations created a new commercial product. The CAFC explained that, compared to the cargo vans, the motorhomes were sold a double or triple the market price, are classified under a different HTSUS heading (8703 vs. 8704), are used in broadly different ways, and have different model names. The court rejected the plaintiff’s claim that what constitutes a commercially different good should depend on whether the altered good is identifiable as the pre-alteration good, pointing out that under the applicable regulation the basis of distinction “has very little to do with whether it is possible to recognize the original embedded in the altered good.”

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