DOJ Seeks $760,000 in Classification Counterclaim Case
Boronized steel tubes made in the U.S. are unfinished steel goods, not repaired articles, DOJ argued in a Jan. 20 counterclaim that is seeking $760,000 in unpaid duties at the Court of International Trade in a denied protest case filed by an importer (Maple Leaf Marketing v. United States, CIT # 20-03839).
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The case concerns boronized steel tubing made in the U.S. and exported to Canada for alteration before being returned. Maple Leaf Marketing filed a complaint Sept. 23 seeking duty-free treatment for its boronized steel tubing. Maple Leaf said that its imports qualify for classification under tariff schedule subheading 9802.00.50 as "articles returned to the U.S. after having been exported ... for repairs or alterations." The company argued that its imports meet the subheading's requirements of being a finished good subject to restoration, addition, renovation, redying or cleaning and that the operations carried out in Canada do not destroy the essential elements of the exported good (see 2209260030).
DOJ disagreed, arguing that the items are actually unfinished oil country tubular goods (OCTG) that have been transformed in Canada into new articles of commerce. The government's counterclaim seeks to reclassify the merchandise under either subheading 7306.29.60 as "Other tubes, pipes and hollow profiles ... of a kind used in drilling for oil or gas..." or 7304.29.50 as "Tubes, pipes and hollow profiles, seamless, of iron ... used for oil or gas pipelines ..." as well as to apply a secondary reclassication under 9903.80.01 at a 25% duty rate.
DOJ argued that the classification for reimported items “shall not apply to goods which, in their condition as exported from the United States to Canada or Mexico, are incomplete for their intended use ...," and said that "prior to its processing in Canada, the merchandise ... is unsuitable for commercial use as what is known as [OCTG] in the United States oil and gas industry." Because the tubing was an unfinished good when it was exported to Canada, it is ineligible for the 9802.00.50 secondary subheading. The government asked the trade court to dismiss Maple Leaf's original reclassification motion and grant the government's counterclaim, including the payment of $760,000 in duties plus interest.