US Import Compliance - The Use Provision

Issue 017, June 21, 2007

We would like to advise you about the following US Import Compliance issue.

The Court of International Trade (CIT) recently confirmed that the “Use” provisions of HTS 9817.00.50 require an Importer to meet several conditions and one of these is to clearly demonstrate an intention of use at the time of importation. Here is an example of an Importer who didn’t do so until a year after importation, and the Court refused to allow duty-free treatment.

Tradewind Farms, Inc., imported a plastic clamshell container under #3923.10.0000, (plastic article for the conveyance or packing of goods) and paid duty. A year later, during the Protest period, TradeWind filed a protest to reclassify the article under the duty-free provisions of 9817.00.50, (machinery, equipment and implements to be used for agricultural or horticultural uses,) which is a classification controlled by actual use. This requires three (3) activities not normally part of the entry process.

The HTS’ Additional US Rules of Interpretation and 19CFR10.133 both list the three activities:

1. Such use is intended at time of entry, (in this case, that the plastic container is to be used for agricultural or horticultural uses,
2. The article is to be so used,
3. Proof of such use must be provided within three (3) years after entry.

The CIT held that the rules are clear and Tradewind was supposed to demonstrate a clear intention of the actual use when they entered the goods. For example, Tradewind might have included a written declaration with the other entry documents. In fact, simply by classifying the goods in 9817.00.50 Tradewind would have shown intent.

In their protest, they acknowledged they did nothing at time of entry, but insisted that the filing of the protest was evidence that the product was imported for agricultural or horticultural purposes. The CIT refused the argument, saying that the filing of a “…protest one year after entry is simply not evidence of the presence of the necessary intention at the time of entry.”

For your information, here is some other information about the mechanics of the Use Provision. Condition #3 says proof of use must be furnished within three years after entry. Customs actually suspends normal liquidation until the proof is received. Per 19CFR10.138, this proof can be something like a statement from the manager of the facility using the equipment or someone with such knowledge. If nothing reaches Customs by the three year limit, Customs will liquidate without duty free privilege and the Importer will receive a bill for late duty, fees, and interest.

For additional information, please contact:

Ron Reuben
Regulatory and Customs Compliance Consultant;
Licensed Customs Broker; NCBFAA Certified Customs Specialist
Ron.Reuben@DHL.com