U.S. Customs and Border Protection (CBP) issued a release (CSMS #19-000275) noting that pursuant to a presidential proclamation, India’s designation as a beneficiary developing country is terminated, effective June 5, 2019, and that measures of the Harmonized Tariff Schedule of the United States (HTSUS) will be modified to reflect this change. India will no longer be exempted from application of the Section 201 safeguard measures on certain crystalline silicon photovoltaic (CSPV) cells and large residential washers and parts, effective June 5, 2019. Imports of CSPV products and washers and parts from India are now subject to the duties and tariff rate quotas on these products.
CBP noted that any merchandise from India admitted into a U.S. foreign trade zone on or after 12:01 AM Eastern Standard Time on June 5, 2019, must be admitted as “privileged foreign status,” and will be subject upon entry for consumption to certain safeguard measures.
[Ford Motor Co. v. United States, 2018-1018 (Fed. Cir. June 7, 2019)]
The car company manufactured vehicles in Turkey and imported them into the United States. The vehicles were made to order and were ordered as cargo vans (subject to customs duty at a rate of 25%). The company manufactured and imported the vehicles with a second row seat, declaring them as passenger vehicles (subject to customs duty at a rate of 2.5%). After clearing customs but before leaving the port, the car company (using a subcontractor) removed the second row seat and made other changes, and delivered the vehicles as cargo vans.
Customs and Border Protection (CBP) determined that the inclusion of the second row seat was an improper artifice or disguise that was masking the true nature of the vehicles at importation and that such vehicles were properly classified under subheading 8704.31.00 of the and subject to a 25% customs duty. The car company countered that this was “legitimate tariff engineering.” The trade court found that the subject imports were properly classified under subheading 8703.23.00, HTSUS, as motor cars and other motor vehicles principally designed for the transport of persons, and thus granted the car company’s motion for summary judgment.
The Federal Circuit reversed the decision.
The appeals court noted that HTSUS heading 8703 “inherently requires looking to intended use” of the vehicle and that the word “principally” clearly indicates that a vehicle’s intended purpose of transporting persons must outweigh an intended purpose of transporting goods and further, that in making this determination, “both the structural and auxiliary design features must be considered”.
The Federal Circuit noted that “this appeal presents one of the very limited circumstances where the relevant heading, HTSUS Heading 8703, is an eo nomine provision for which consideration of use is appropriate because HTSUS Heading 8703 inherently suggests looking to intended use.” The appeals court then found that on balance, the structural design features, auxiliary design features, and inherent or relevant use considerations established that the vehicles were not classifiable under HTSUS Heading 8703 because the vehicles were not principally designed for the transport of persons.
Between on or about April 22, 2011 and on or about October 16, 2014, Expedia dealt in property or interests in property of Cuba or Cuban nationals by assisting 2,221 persons — some of whom were Cuban nationals — with travel or travel-related services for travel within Cuba or between Cuba and locations outside the United States. These transactions appear to have violated § 515.201(b) of the CACR. OFAC determined that the apparent violations were voluntarily self-disclosed to OFAC and occurred prior to agency notice.
Settlement: Expedia has agreed to pay $325,406 to settle its potential civil liability for providing Cuba-related travel services in apparent violation of the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR).
Hotelbeds USA Inc.:
Between the approximate dates of December 2011 and June 2014, Hotelbeds USA provided Cuba-related travel services to 703 non-U.S. persons in apparent violation of § 515.201(b) of the CACR. OFAC determined that the apparent violations were not voluntarily self-disclosed to OFAC and occurred prior to agency notice.
Settlement: Hotelbeds USA has agreed to pay $222,705 to settle its potential civil liability for assisting persons with unauthorized Cuba-related travel services in apparent violation of the CACR.
The Individual and Cubasphere dealt in property in which Cuba or Cuban nationals had an interest, in apparent violation of § 515.201(b) of the CACR, by engaging in unauthorized Cuba travel-related transactions by assisting 104 persons on four separate trips to and within Cuba, from on or about December 30, 2013 to on or about February 22, 2014. OFAC determined that the apparent violations were not voluntarily self-disclosed to OFAC and occurred subsequent to agency notice.
Settlement: Individual and Cubasphere have agreed to pay $40,320 to settle their potential civil liability for apparent violations of the CACR.
Western Union Financial Services Inc:
Between December 9, 2010, and March 13, 2015, Western Union processed 4,977 transactions totaling approximately $1.275 million, which were paid out to third-party, non-designated beneficiaries who chose to collect their remittances at a Western Union Sub-Agent in The Gambia, Kairaba Shopping Center (KSC), an entity that was designated by OFAC pursuant to the GTSR on December 9, 2010. OFAC determined that Western Union voluntarily self-disclosed the apparent violations and that the apparent violations constitute a non-egregious case.
Settlement: Western Union has agreed to settle its potential civil liability for 4,977 apparent violations of the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 (GTSR).
Persian Gulf Petrochemical Industries Company:
Action taken against Iran’s largest and most profitable petrochemical holding group, Persian Gulf Petrochemical Industries Company (PGPIC), for providing financial support to Khatam al-Anbiya Construction Headquarters (Khatam al-Anbiya), the engineering conglomerate of the Islamic Revolutionary Guard Corps (IRGC). In addition to PGPIC, OFAC is designating PGPIC’s vast network of 39 subsidiary petrochemical companies and foreign-based sales agents. PGPIC and its group of subsidiary petrochemical companies hold 40 percent of Iran’s total petrochemical production capacity and are responsible for 50 percent of Iran’s total petrochemical exports. As a result of these actions, all property and interests in property of these entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons. In addition, persons that engage in certain transactions with the designated entities may themselves be exposed to designation. Furthermore, any foreign financial institution that knowingly facilitates a significant financial transaction or provides significant financial services for entities designated in connection with Iran’s proliferation of weapons of mass destruction or any Iranian person on OFAC’s List of Specially Designated Nationals and Blocked Persons could be subject to U.S. correspondent account or payable-through account sanctions.
India has announced increases to the rates of customs duty imposed on imports of certain goods from the United States. The rate increases were announced in Customs Notification No. 17/2019 (15 June 2019). A list of goods for which there is an increase in the rates of customs duty includes almonds, walnuts, apples, diagnostic reagents (other than for medical diagnosis), and specified iron and steel products.