Court Upholds Rejection of Bid for Lower Import Duty

The U.S. Court of Appeals for the Federal Circuit recently affirmed a decision by the Court of International Trade rejecting an importer’s attempt to secure a lower duty rate on imported Christmas ornaments. The case centered on whether these goods, shipped from China to Canada before entering the U.S., qualified for appraisal under a deductive value method rather than the higher transaction value method.

The importer argued that its sales occurred entirely in the U.S. and that transaction value should not apply because the statute allegedly requires an international sale. The company instead sought to use deductive value, which typically results in lower duties. Additionally, the importer challenged U.S. Customs and Border Protection’s decision to extend the liquidation deadline beyond the standard one-year period, which it claimed was unlawful and an abuse of discretion.

The CAFC agreed with the CIT’s interpretation of 19 USC 1401a(b)(1), which does not mandate that a sale occur abroad for transaction value to apply. The court emphasized that domestic sales can serve as the basis for transaction value under certain circumstances. Furthermore, the CAFC said, the CIT’s fact-specific analysis showed that the importer shipped goods to Canada with the clear intention of later selling them in the U.S., making the sales “for exportation to the United States.”

On the liquidation issue, the court upheld the CIT’s conclusion that CBP acted within its discretion, stating that the extension was justified to allow multiple rounds of audits and ensure compliance and that the government’s explanations were supported by the record.

The CAFC’s decision thus reinforces the principle that intent and destination of goods play a critical role in valuation and that statutory interpretation favors transaction value in such contexts. It also provides clarity for importers on CBP’s discretion in liquidation timelines.