CIT Upholds Customs Denial of AGOA Apparel Claim
In Polly U.S.A., Inc. et al, v. U.S., the Court of International Trade upheld Customs' decision to deny Polly's claim for a trade preference under the African Growth and Opportunity Act, due to deficiencies and discrepancies in production documentation submitted to support the claim.
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In March 2005, Polly exported unisex medical uniforms from Swaziland to the U.S. that were entered under Harmonized Tariff Schedule subheading 9819.11.12, which provides for duty free entry of garments wholly assembled in one or more designated AGOA countries.
Polly U.S.A. stated that their uniforms were fully manufactured in Swaziland, which is an AGOA country. On entry, Customs requested production records including cutting and sewing records, and information about production processes and timelines, to verify the claim that these uniforms were fully manufactured in Swaziland.
Customs was not satisfied with the submitted documentation stating that not all the information was supplied, and it also contained discrepancies. Customs denied free entry and imposed a 16 percent duty rate under HTS 6211.33.00.
(The CIT noted that Customs had found many inconsistencies in the cutting and sewing records supplied by Polly U.S.A., as well as the times and dates of the worker and the work performed. In particular, some of the records supplied indicated that sewing had occurred before the actual cutting of the cloth-an impossibility. Further, when time cards provided by Polly were correlated to the sewing records, there were multiple instances where the sewing reports indicated that the sewing was performed by a worker not shown to be at work that day.)
Polly U.S.A., while agreeing with Customs that there were discrepancies in their paperwork, put forward two arguments to the Court. Initially, they argued that the discrepancies were immaterial because their country of origin declaration declaring the garments were fully manufactured in Swaziland should be sufficient to receive the AGOA duty free preference.
However, as an alterative, Polly U.S.A. also argued that even if Customs could request this additional documentation, their submitted information should be accepted because Customs should not focus on recordkeeping discrepancies which were unavoidable and normal with the current economic situation in Swaziland.
The CIT noted that 19 C.F.R. 10.217 permits a port director of Customs to require whatever verification is deemed necessary for an AGOA preference claim. In addition, 19 C.F.R. 10.178a goes further, requiring an importer to implement internal procedures which allow for periodic review of the accuracy of the declarations or other records. The CIT ruled that in light of these regulations, Polly U.S.A.'s. country of origin declaration alone could not establish entitlement to AGOA duty free preference.
While stating their sensitivity to the purpose of AGOA and the economic hardships in sSwaziland, the CIT concluded that Polly had failed to establish a traceable production timeline. The CIT ruled that Customs could not be faulted for denying a preferential claim in which the documentation is determined to be substantially insufficient.
Polly U.S.A., Inc. et al., v. U.S. Slip Op. 09-80 (dated 08/06/09) available at http://www.cit.uscourts.gov/slip_op/Slip_op09/Slip%20Op.%2009-80.pdf