Holiday Edition

This is one of those posts in which I tell you that there are many cases and rulings sitting on my desk, all of which I plan to use as the basis for upcoming blog posts. It is also the end of the year and the time when I contemplate the state of this blog. [Note: Shaking my fist at the ABA Journal] This has been a good blog year, despite having fallen behind on my coverage of rulings. My personal view is that the content remains of acceptably high quality combined with it usually being timely. So that's good. I did earn recognition from the Expert Institute; fifth place out of a large field is not too bad. Thanks for your votes.

I'll continue to plug along here and hope you stay with me in an 2017. As always, I sincerely appreciate my readers. At the recent Court of International Trade Judicial Conference and at a trade meeting in Chicago, folks introduced themselves as readers. That always makes me happy. I hope to see more of you at upcoming events. Feel free to comment on my posts, I would love to see more reader engagement.

That all sets the stage for me to say to you and your families, "Happy Seasonal Holiday of Your Personal Choosing" and a very Happy New Year to you all.

Vote for Me, Too

Election day is here. If you have not already voted, get out tomorrow and vote.

After you have voted, come back and vote for this blog in the Expert Institute Legal Blog Contest. There are only about six days left to vote and my early surge is fading. Please show your support.

You can vote at this link.

Congratulations to Me

Here's my new profile.

Final Exam 2016: Identity Crisis Edition

You may recall that last year my final exam for Trade Remedies was an elaborate, cinematic fact pattern involving the DC superhero universe. See here for that. Read the comments, which are really quite good.

This year, I was not able to string together quite as detailed a fact pattern for my Customs Law class. I did, however, ask this question. Tell me what you think is the correct answer. I will be flexible, but you should not need to stretch too much.

I'll be back soon. I promise.


QUESTION 3: 25 POINTS

Ralph Dibny is the CEO of Plastico, which imports plastic in various forms from suppliers all over the world into the United States. To find suppliers, Ralph relies on two representatives. Reed Richards is responsible for suppliers in South America. Patrick “Eel” O’Brian is responsible for suppliers in Asia. Neither representative is an employee of Plastico.

When Plastico wants to purchase materials from South America, Dibny contacts Richards who then finds suppliers that can provide the necessary material. Richards facilitates the transaction by locating and approving suppliers to Plastico’s standards, creating Plastico Purchase Orders, reviewing supplier invoices for Plastico, approving payment by Plastico, and arranging transportation. For these services, Richards earns a fee of 5% of the invoice price Plastico pays to the supplier. That amount is not shown on the commercial invoice for the imported product and has not been declared to Customs as part of the dutiable value of the merchandise.

Purchasing from Asia is a different process. Eel O’Brian has relationships with several plastic manufacturers throughout Asia. When a manufacturer in Asia has excess inventory, it contacts O’Brian and asks him to sell it to customers in the U.S. The supplier dictates the lowest acceptable price and usually refuses to take responsibility for the cost of shipping and transportation insurance, which must be paid by the customer, including Plastico. O’Brian will then contact Dibny and offer the merchandise to Plastico. If Plastico wants to purchase the merchandise on O’Brian’s terms, it agrees to purchase it from O’Brian. At that point, Plastico will create a Purchase Order naming O’Brian as the supplier. O’Brian places the order with the supplier, who ships the merchandise directly to Plastico in the United States according to the terms of Plastico’s P.O. with O’Brian. The supplier invoices O’Brian who then sends Plastico an invoice showing O’Brian as the seller and including a markup to add his profit. Plastico may not know the identity of the supplier until it receives the shipment, if even then. O’Brian has similar arrangements with several U.S. customers. He negotiates prices with the U.S. customer to maximize his income. The O’Brian’s markup is included in the commercial invoice used for entry and, therefore, has been declared to Customs as part of the dutiable value of the merchandise.

Plastico is always the importer of record and is not related to Richards, O’Brian, or to any foreign manufacturer of plastics. Transaction value is the applicable basis of appraisal.

Dibny has asked for your legal advice on whether the fee paid to Richards and O’Brian’s markup are legally part of the dutiable value of the merchandise. Dibny also wants to know whether there are adjustments Plastico can make to ensure that the amounts paid to Richards and O’Brian’s markup are not dutiable.

What Week Is This?

I realize it has been a month since my last Ruling of the Week. I am reasonably certain I will come up for air soon and post some new material. In the meantime, if you are in NYC for the CITBA CLE and Annual Meeting on Thursday, I hope to see you there.

Congrats ICPA

Congratulations to ICPA on another successful (and sold out) conference. I heard lots of good talks and had fun fake-litigating the classification of chopped olives. Sadly, I lost. I also got to do a last-minute recycling of my talk on tariff engineering, which was both fun and efficient (since the work was already done).

Thanks to all the blog readers who introduced themselves. See you next year.

Charge the Weapon and Change the Toner!

I have been sitting on Xerox Corp. v. United States while I try to take care of meaningful client work. Thank you clients for another year of interesting and rewarding work. I am always honored to be given the opportunity to work with some great companies and individuals.

[There may be spoilers in the links below. There are none in the text. Go down those rabbit holes at your peril.]

I am irrationally happy to say that saw Star Wars: The Force Awakens this weekend. It made me very happy to re-live being 14 years old, at least for a while. I am also very pleased to say that the reboot did not screw anything up. It has almost exactly the look and feel of the original trilogy, is a bit funnier, and moves at a great pace. Now, if they don't turn Star Trek into the Fast and the Furious, I will continue to be nerdishly happy. I am, however, starting to lose enthusiasm for Batman vs. Superman, which they better not screw up. [Shaking fist at heaven.]

That said, I am now about to discuss the tariff classification of a "pre-clean dicorotron high voltage power supply," which seems entirely like something Rey might be scavenging on Jakku. In reality, it is part of an iGen3 high-speed multifunction laser printer for high-volume but short run jobs. When I say it is big, I mean it is Hutt sized. It is probably big enough to climb into to for warmth on a cold Hoth night. There are two models of this printer. The smaller is over 7,000 pounds and costs about $405,000. The larger is almost 8,000 pounds and costs $610,000. So you are not going to pick one of these up on a whim at Best Buy. Despite the high price, these are printers; they lack scanners and facsimile functionality.

So what about Rey's power supply? The classification is clearly in Heading 8504 as an electrical transformer, static converter, etc. The question is whether it is a power supply "for automatic data processing machines or units thereof of heading 8471." That means the real question is whether Jabba the Printer is a unit of an automatic data processing machine.

The interesting conundrum here comes from the Note 5 to Chapter 84, which, if I could, I would make scroll up the screen Star Wars style.

(B) Automatic data processing machines may be in the form of systems consisting of a  variable number of separate units.  Subject to paragraph (E) below, a unit is to be regarded as being a part of a complete system if it meets all the following conditions:

(a) It is of a kind solely or principally used in an automatic data processing system;

(b) It is connectable to the central processing unit either directly or through one or more other units; and

(c) It is able to accept or deliver data in a form (codes or signals) which can be used by the system.

(D) Printers, keyboards, X-Y coordinate input devices and disk storage units which satisfy the conditions of paragraphs (B)(b) and (B)(c) above, are in all cases to be classified as units of heading 8471.

(E) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.

There is no question that the printer satisfies the requirements of paragraph (B). Furthermore, paragraph (D) specifically references printers, which this surely is despite being the Death Star of laser printers.

What to make of paragraph (E)? This machine does perform a specific function, it prints. It only prints. And, it prints in a way that is not typical of traditional home or in-office computer use. It can print the entire run of a Lands' End catalog in 12 parsecs. Does that exclude it from being an ADP machine of 8471?

No. According to the Court of International Trade, a big laser printer that converts digital images to images on paper is continuing to perform the same data processing function as a more mundane laser printer. This is clear because paragraph (D) above specifies that printing is a data processing application. Paragraph (E) must, therefore, be referring to machines that perform some specific function other than printing when done in conjunction with an ADP machine. That would include printing presses of the Guttenberg style that use blocks of type, plates, or cylinders, for example. Those are classifiable in Heading 8443.

According to the Galactic Senate Court of International Trade, nothing in the tariff suggests that ADP printers of 8471 are constrained by size or speed (or time and space). Consequently, the iGen3 is classifiable as a unit of an ADP machine and the pre-clean dicorotron high voltage power supply is a part thereof.

One last thing, did anyone watch Jessica Jones? If not, you should. It was as good, possibly better than Daredevil and puts the currently too sunny Arrow to shame.

OK, I think that is out of my system for the moment.

More on Zombies

I got a nice shout out from Law and the Multiverse today. The post is about a law review article on using zombies as teaching tools in law school. Read the post and then read the full article.