Letter to Customs on Proposed Tariff Classification Revocation--July 8, 1999

July 8, 1999

Mr. Stuart P. Seidel
Assistant Commissioner
U.S. Customs Service
Office of Regulations and Rulings
1300 Pennsylvania Avenue, NW
Washington, D.C. 20229
Attention: Commercial Rulings Division

Re: Proposed revocation of tariff classification ruling letter and the treatment relating to the classification of certain sugar syrups

Dear Mr. Seidel:

The Joint Industry Group (“JIG”) appreciates the opportunity to comment on the proposed revocation of NYRL 810328 dated May 15, 1995. JIG is a coalition of more than one hundred and fifty members representing Fortune 500 companies, brokers, importers, exporters, trade associations, and law firms actively involved in international trade. JIG membership represents over $350 billion in annual trade.

It is unusual for JIG to comment on a private classification dispute. As an industry association, it is our general policy not to get involved in the correctness of any particular classification. Our concern is with the use and misuse of Customs procedures because those procedures affect all our members. Therefore, our comments on the proposed revocation of the ruling letter only address what we believe is the failure of Customs to follow the procedures set forth in 19 CFR Part 175 -- Petitions by Domestic Interested Parties.

The Notice in the Customs Bulletin states, “Customs has received a joint petition under 19 U.S.C. 1516 and/or 19 U.S.C. 1625, dated January 14, 1998, from the United States Cane Sugar Refiners’ Association and the United States Beet Sugar Association contesting the classification of the sugar syrup in subheading 1702.90.4000 . . .” These two provisions of law provide procedural safeguards to importers that have exercised reasonable care by obtaining and relying on administrative rulings issued by the Customs Service. They prevent the Customs Service from acting before the public has had an opportunity to be heard. However, Section 1516, as implemented by 19 CFR Part 175, sets forth detailed procedures to be followed by domestic interested parties and the Customs Service when a domestic petitioner contests the classification, appraised value and rate of duty of designated merchandise. Section 1625 simply directs Customs to seek public comment when a proposed interpretative ruling or decision would modify or revoke an interpretive ruling or decision that has been in effect for at least 60 days. These two sections are not inconsistent; Section 1516 is simply far more specific as to the procedures to be followed when a domestic interested party challenges a Customs classification or appraisement.

The decision by Customs to shortcut and ignore the procedures it has prescribed in 19 CFR Part 175 for handling petitions from domestic interested parties is troubling to JIG. As Customs points out in the notice proposing the revocation of the letter ruling, both Customs and the trade community are subject to the concepts of “informed compliance” and “shared responsibility.” Thus, JIG expects that Customs will follow the regulations it prescribes after public notice and comment. Customs has not done so in this matter.

By relying on Section 1625 as authority for revoking a ruling that has been challenged by a domestic interested party, Customs has, in effect, written Section 1516 out of the law. JIG submits that in doing so, Customs has acted unconstitutionally, usurping the authority of Congress. Only the Congress can decide that the procedures it prescribed in Section 1516 are no longer necessary.

We believe the procedures contained in 19 CFR Part 175 afford greater protection to importers than the limited procedures contained in Section 1625. For example, 19 CFR 175.21(a) requires Customs to publish notice of the filing of a domestic interested parties petition in the Federal Register “identifying the merchandise which is the subject of the petition, and its present and claimed appraised value or classification or rate of duty” and to invite interested persons to comment. Clearly, such publication is intended to provide Customs with pertinent information before it makes its decision. Thereafter, under 19 CFR 175.22, if Customs agrees with the domestic petitioner, it must again publish its decision in the Federal Register.

Under Section 1625, Customs does not inform the public of a challenge to a ruling or seek information or comment from the public until it has arrived at a proposed decision to revoke or modify a ruling. Thus, public participation in the process is severely limited inasmuch as Customs is receiving information from only the party that believes the ruling is incorrect during the period in which Customs is formulating its proposed decision. Moreover, because Customs need only publish its proposed action in the Customs Bulletin, public awareness of the proposal is far more limited than if it were published in the Federal Register.

Finally, JIG is very concerned about the Customs Service abuse of Section 1625. A key to “informed compliance” and the exercise of reasonable care is the ability of the trade community to rely on administrative rulings of the Customs Service. Importers and domestic producers alike make business decisions involving the investment of millions of dollars based on rulings of the Customs Service. That is why Customs in the past has taken the position that it will only disturb a practice if there exists a “compelling reason” to do so, and only after fully considering public comment. However, since Section 1625 was enacted in 1993, Customs has demonstrated by its actions that it has abandoned the longstanding policy and procedures which assured importers that administrative rulings on which they have relied would only be reversed after full consideration of all the facts and only for the most compelling reasons.

This is such a fundamental issue to all importers that if Customs does not clarify the relationship between 19 U.S.C. 1315, 19 U.S.C. 1516 and 19 U.S.C. 1625 and restore the policy that assures the trade community that it can rely on Customs administrative rulings, then JIG will have to determine whether it should seek corrective legislation. A first step in demonstrating to the trade community that it can indeed rely on Customs rulings and existing procedures for modifying them would be for Customs to withdraw the proposed revocation of the sugar syrups ruling under Section 1625 and initiate the procedure called for in Section 1516 and 19 CFR Part 175.

Sincerely,
Richard H. Abbey
Chairman, Import Programs and
Informed Compliance Committee