"How much duty will I pay?" is perhaps one of the most important and frequently asked questions from clients who import merchandise into the United States. In nearly all cases, the amount of customs duty to be assessed is a critical factor in computing an importer's cost of doing business. The answer to this question depends on how the merchandise will be classified and valued upon its importation into the United States. However, the more difficult task is to understand the principles of classification and value and to predict how they will be applied.
After reviewing relevant statutes, regulations, and rulings, this Article looks to judicial decisions for guidance in gleaning the appropriate rule of law that will answer our client's question. Hopefully, these decisions form a predictable body of law that will allow businesses to conduct transactions in a manner consistent with both current global business practices and U.S. international obligations under the Trade Agreements Act of 1979.(1) However, decisional law may not always adequately achieve this objective. One theory, explored below, asks if that goal remains unrealized in the context of valuation issues because the Court of International Trade (CIT) and its appellate court defer too greatly to Customs decisions in that area. Undue deference to these determinations would thwart the congressional goal in establishing the Court of International Trade, which was "intended to provide a complete system of judicial review with respect to matters arising under the customs laws."(2)
Congress enacted the Customs Court Act of 1980 to provide "for significant and much-needed reform and clarification in the laws governing the United States Customs Court."(3) By creating the U.S. Court of International Trade ad granting it exclusive jurisdiction over actions arising under the customs laws of the United States, Congress sought to eliminate many complex questions that had arisen under the former Customs Court. These question included confusion about the court's status, jurisdiction, and power to resolve particular issues. Among the many clarifications provided, 28 U.S.C. [section] 2640(4) emphasized the scope and standard of review in civil actions contesting the denial of a protest under Section 515 of the Tariff Act of 1930.(5) Specifically, judicial review of the denial of a protest contesting Customs' appraisement or classification of imported merchandise is to be conducted de novo.(6)
While the standard of review is de novo, the Customs Court Act of 1980 nevertheless grants to these Customs determinations a presumption of correctness.(7) The co-existence of a presumption of correctness with de novo judicial review of Customs decisions should not in and of itself provide any confusion or conflict.(8)
The presumption of correctness has been incorporated into U.S. jurisprudence practically from its inception.(9) Similarly, judicial review of administrative decisions is a basic tenet of the statutory scheme authorizing agency action.(10) With this background, these two concepts must be properly integrated so that the presumption of correctness does not operate as a limit on the judicial review of administrative decisions.
The government tends to argue for such a limitation, especially when the decision under review involves a position adopted under authority delegated to the agency to prescribe rules, regulations, or instructions necessary to carry out a congressional or presidential mandate.(11) However, whether findings of fact or interpretations of law are implicated in the contested decision, Congress intended to assure de novo review, or what has been described as judicial review of an "extensive character,"(12) to a litigant who seeks adjudication of the proper assessment of duty on imported merchandise.
The Court of International Trade has applied a heightened level of scrutiny to Customs decisions in recent classification, drawback, and country-of-origin cases. …