Ford Files Supreme Court Appeal of Tariff Engineering Case on Ford Transit Vans
Ford Motor Company recently filed a Supreme Court appeal of a case involving tariff engineering of Ford transit vans to obtain a lower rate for passenger vehicles. The automaker’s Feb. 13 petition for certiorari says the Supreme Court’s intervention is necessary to end uncertainty for U.S. importers caused by the U.S. Court of Appeals for the Federal Circuit’s “doctrinally incoherent and erroneous precedent,” and to rectify the CAFC’s errant decision not to address certain arguments made by Ford at a lower court.
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“The petition should be granted because the Federal Circuit’s tariff classification case law has become increasingly unpredictable and opaque, undermining the clarity necessary for international trade and effective business planning,” Ford said.
The Federal Circuit’s June 2019 decision held that Ford vans imported with passenger seats, then stripped down right after importation to turn them into cargo vans, are classifiable as cargo vans because their use after importation is a factor in their tariff classification, even if the relevant subheadings aren’t “use” provisions (see 1906120041). That overturned a Court of International Trade decision that found the vehicles are passenger vans because goods are classifiable in their condition at the time of importation (see 1708170032).
“This ruling is the latest and most deeply problematic of a line of recent Federal Circuit cases permitting consideration of a good’s use after importation whenever a tariff provision ‘inherently suggests use,’ even if it is not ‘controlled by use,’” Ford said. The trend described by Ford dates back to a 2014 Federal Circuit decision finding use a factor in the classification of wood screws (see 14080420).
These rulings, including Ford, are causing a great deal of uncertainty for importers, Ford said. “Every year, companies must make business plans affecting trillions of dollars in imported goods. These importers require -- and U.S. and international trade law is designed to provide -- clear and administrable rules,” Ford said. “But the Federal Circuit’s precedent makes it impossible for importers to predict which tariff provisions ‘inherently suggest use,’ how Customs will determine classification under such provisions, and whether Customs will apply similar standards across the more than 300 ports of entry.”
Supreme Court review is also warranted because the Federal Circuit did not address arguments raised by Ford at CIT that the lower court found moot because it found in Ford’s favor. After overturning CIT’s decision, the Federal Circuit should have sent the case back down so CIT could address those undecided issues, Ford said. But CAFC found Ford had to raise those issues at CAFC, and did not, meaning Ford waived the arguments. “The Federal Circuit’s holding otherwise is highly prejudicial and incompatible with basic principles of appellate procedure,” Ford said. “This Court’s intervention is needed.”