CIT Upholds CBP Weighing Method for Tobacco Excise Taxes
The Court of International Trade on July 22 denied a challenge from a tobacco product importer of CBP’s procedure for weighing its tobacco products, finding the agency’s “indirect method” that included the weight of additives to be legally and scientifically valid.
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New Image Global had filed the underlying lawsuit. It had originally declared that its tobacco “wraps,” classified by the government as roll-your-own tobacco, weighed 0.75 grams for excise tax purposes. CBP had initially confirmed that weight using a “direct method” whereby the wraps were allowed to dry for 24 hours before weighing.
But at the behest of a CBP import specialist, the agency laboratory conducted a second test using an “indirect method” that entailed weighing the entire packaged product, then subtracting the weight of the packaging. As the wraps weren’t allowed to dry, volatile flavor additives that were not counted under the direct method caused the weights of the wraps to increase to an average of 0.915 grams per wrap. CBP subsequently liquidated New Image’s entries with an increased excise tax as a result of the higher weight.
The government argued CIT should not even consider New Image’s challenge because the importer’s arguments were raised in its motion for judgment, but not in the original complaint. The trade court, however, citing CIT Rule 15(b)(2), found the government had ample opportunity to respond and had implied its consent to raising the new issues when it failed to move to strike the arguments when they were first raised post-complaint.
But CIT was not convinced by the arguments themselves. First, CBP was correct to consider the weight of the additives in the wraps. Tobacco products are to be weighed in their entirety, not just the part made of tobacco. For example, the weight of cigarettes includes the filter, CIT said. CBP also generally considers products in their state at the time of importation, and not, as in the case of New Image’s wraps, after being dried for 24 hours.
CIT also confirmed the scientific validity of CBP’s indirect method. The indirect procedure was set by U.S. Pharmacopeia (USP), as was the direct method initially used by CBP in the first test. The test method was verified, and “does not result in an inconsistent or unrepeatable result, but achieves a steady weight,” CIT said. “New Image’s challenges to the reliability of Customs’ weighing methodology are without merit.”
(New Image Global, Inc., v. U.S., Slip Op. 19-90, CIT # 15-00175, dated 07/23/19, Judge Restani)
(Attorneys: Elon Pollack of Stein Shostak for plaintiff New Image Global, Inc.; Justin Miller for defendant U.S. government)