Value's Greatest Hits(and Misses): A Complete History of Judicial Decisions concerning Value under the Trade Agreements Act of 1979 - Volume One

By Hall, Munford Page, II | Law and Policy in International Business, Fall 1993 | Go to article overview

Value's Greatest Hits(and Misses): A Complete History of Judicial Decisions concerning Value under the Trade Agreements Act of 1979 - Volume One


Hall, Munford Page, II, Law and Policy in International Business


I. Introduction

As any customs lawyer knows, one of the most important steps in the imposition of a duty on imported merchandise is the valuation of the goods. Because most tariff rates are ad valorem, the assessed value of the merchandise plays an important role in determining the actual amount of duties to be paid. Since 1979, Section 201 of the Trade Agreements Act of 1979 (TAA) has governed valuation.(1)

Despite the importance of valuation, the jurisdiction covered by the TAA has bee a relative ghost town of judicial activity compared to other areas of customs law. The United States Court of International Trade (CIT) has decided only fifteen cases under the TAA since its passage more than a dozen years ago.

In this paper, I attempt to combine an academic study of all the decisions of the CIT and the United States Court of Appeals for the Federal Circuit (Federal Circuit) concerning the TAA with a practitioner's experience in advising a client about how to determine the dutiable value of imported merchandise. In either case, one must attach some importance to the decisions of the CIT and its appellate court, the Federal Circuit, both for the issues decided and for guidance regarding other value questions. This latter exercise approximates the duty of the United States Customs Service (Customs) Office of Regulations and Rulings to present a proposed ruling of the Chief Counsel's office for a determination of whether it would be defensible if presented to the CIT.

A customs lawyer's introduction to value issues usually occurs as one of the two following general scenarios.(2)

A. Scenario A (Customs Planning)

Your client, Company A, informs you that it is about to begin importing merchandise from Country X and wants to know what value Company A or its customhouse broker should put in the appropriate column of the Entry Summary (Customs Form 7501). What questions should you ask Company A in order to provide it with the guidance it needs? What are the sources of the information you provide to Company A?

Based on this information, most customs lawyers will initially ask the client to provide the lawyer with a detailed description of the proposed transaction. Of course, most clients do not know which facts are important, so the customs lawyer must ask questions that guide the client along. Once the customs lawyer obtains the relevant facts, he or she applies the appropriate legal analysis, comes to his or her own conclusion, and advises the client accordingly. As an added measure of security, the customs lawyer typically advises his or her client to seek a ruling on the issue from Customs.

B. Scenario B (Customs Litigation)

Your client, Company B, informs you that Customs has advised it that the value it claimed on a Customs Form 7501 for imported merchandise is unacceptable and that Customs' appraisal results in a significantly higher value. Company B asks you to solve this problem for it. After you obtain all the relevant information and paperwork from Company B and analyze the problem, to what sources do you turn in order to determine if Customs' position is challengeable? What procedures do you recommend to challenge Customs' position? For example, under what circumstances, if any, do you advise a client that this issue may not be resolved favorably until it is decided by the CIT?

Both of the above scenarios seem rather straightforward and simple, and they fairly typical of routine calls from clients about value issues. Most customs lawyers hope, for their clients' sake, that clients will present them with a proactive Scenario A planning situation rather than a reactive Scenario B situation, but the opposite is usually true.

In order to advise his client properly, a customs lawyer needs some familiarity with the relevant sources. Source materials in the area of value are more plentiful than in most areas of customs law, and this may be one of the reasons for the dearth of Federal Circuit and CIT decisions on TAA issues. …

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