CIT Says CBP Should Ask for More Facts if Protest Insufficient in Case Involving "Deemed Denial"
In Estee Lauder Inc., v. U.S., the Court of International Trade ruled against U.S. Customs and Border Protection’s motion to dismiss the case, ruling that this court has jurisdiction despite some unclear facts in Lauder’s protest. The CIT stated that rather than allowing a “deemed denial” of Lauder’s request for accelerated disposition to occur, CBP should have sought the necessary factual evidence to evaluate the protest.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Cosmetic Kit Items Were Classified, Entered and Liquidated as Separate Items
In 2005, Estee Lauder imported three different versions1 of its holiday sales promotion cosmetics kits, known as the Blockbuster. The retail model version consisted of a carton containing a brush roll, cosmetic brushes, and a vanity case containing cosmetics.
Lauder entered each kit component separately under its individual tariff classification, based on a ruling it received from CBP on similar kits2. The majority of the items were permitted entry duty-free; however, the vanity case and brush roll were classified under HTS heading 4204 and, together with the cosmetic applicators, were assessed duties. The entries were liquidated as entered in September 2006.
Estee Lauder then Filed Protest, Said Kit Qualified as Duty-Free Retail Set
In November 2006, Lauder filed a protest, stating that although the cosmetics were entered separately, the kits should instead be classified as "goods put up in sets for retail sale" and classified under HTS heading 3304, which covers beauty or make-up preparations and has a duty rate of free.
Protest Requested Accelerated Disposition and Was "Deemed" Denied
The protest was accompanied by a request for accelerated disposition and was deemed denied when CBP failed to act on it within 30 days. Pursuant to statute and regulation, the port director’s failure to allow or deny the request within 30 days from the date of mailing of the request means that the protest was deemed to have been denied as a matter of law at the close of the 30th day. After the denial, Lauder filed the action currently at issue.
CBP Moved to Dismiss CIT Case, Saying Protest Did Not Match Kit at Issue
CBP states that Lauder's protest covered the vanity case and all of the articles inside the case, but did not contain a reference to the imported brush roll container outside the case. Therefore, CBP moved to dismiss Lauder's case for lack of subject-matter jurisdiction, arguing that Lauder's protest and entry documents described a different Blockbuster model and not the retail model at issue.
Lauder Says it Clearly Conveyed its Intent to Include All Subject Kits
Estee Lauder argues that its protest accurately describes either model of the Blockbuster and categorized its merchandise as "cosmetic kits,” which clearly conveyed its intent to include within the protest, all products described by the term "cosmetic kit" covered by the list of entries.
Lauder states that since cosmetic kits were the only products of its three entries, the CBP official charged with reviewing the protest would have understood what merchandise was being protested. Additionally, Lauder notes that Customs courts have applied protest requirements liberally, rather than restrictively, to permit the court to exercise protest jurisdiction whenever possible
CIT Denies Motion to Dismiss, Says CBP Should Have Sought More Facts
The CIT denied CBP's motion to dismiss the case due to any deficiency inset Lauder's protest. The CIT notes that while it agrees with CBP that it is not entirely clear from the protest description and entry documents which of the entered items were part of the cosmetics kits, this fact should not have presented an insurmountable obstacle to CBP acting upon the claim3.
The CIT states that protest sufficiency does not turn on whether CBP can decide the entire claim based solely on information contained in the papers submitted. The protest should have prompted CBP to seek the precise factual evidence necessary to evaluate it, such as obtaining a sample of the merchandise, which would have apprised CBP of the fact of which items were included as part of the kit.
(CBP had argued, among other things, that claims predicated on imported merchandise that were not specifically identified in a protest should be dismissed for lack of subject-matter jurisdiction, and referenced a series of cases it viewed as relevant to this issue. CBP added because Lauder only included items contained in the vanity case in its protest, even if the CIT found jurisdiction over the action, Lauder's protest would still be insufficient to confer jurisdiction over claims regarding the cosmetic items outside the vanity case and that any claims or statements concerning them should be dismissed from the complaint.)
1The PX model of the kit resembled the retail model but excluded certain cosmetics and didn't contain a brush roll. The third model was essentially identical to the retail model, but was a different color.
2The separate entry for each item was done in conformance with a CBP ruling concerning the 2004 Blockbuster, which, according to the description in the ruling, was very similar to the retail model.
3Pursuant to Customs Directive 3550-065, CBP must notify the protestant or filer if the protest is missing vital information and allow the protestant 30 days to remedy the problem.
(See ITT's Online Archives or 02/14/11 news, 11021417, for BP summary of CIT ruling that a customs broker should have filed for the accelerated disposition of its protests even if it expected a "deemed denial.")