Importer Says CBP Unlawfully Excluded Golf Cart Entries for Safety Standards, Duty Evasion
Importer Transvolt took to the Court of International Trade to argue that CBP unlawfully excluded its golf carts from entry based either on the notion that the golf carts fail to meet Federal Motor Vehicle Safety Standards or that the carts were transshipped through Vietnam. Transvolt filed a complaint on Dec. 22 in one of multiple cases the importer brought to contest the exclusion of multiple of its entries (Transvolt v. United States, CIT # 25-00582).
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The importer said the golf carts it entered are incomplete "rolling chassis," which lack "tires, a roof and a battery," which are added to the carts after importation. At various times, CBP issued notices of detention to Transvolt, declaring that the entries were being detained on suspicion of violating National Highway Traffic Safety Administration (NHTSA) standards.
Specifically at issue is NHTSA regulation CFR 571.500, which implements the safety standards for low-speed vehicles. Transvolt said the regulation defines a low-speed vehicle as a motor vehicle that is four-wheeled, whose speed attainable in one mile is over 20 miles per hour but not more than 25 miles per hour on a paved level surface.
The importer argued that its golf carts don't meet the regulatory definition of low-speed vehicles, since they aren't "designed to attain the speeds identified in the standard."
In addition, Federal Motor Vehicle Safety Standard 50 says the purpose of the regulation is to "ensure that low-speed vehicles operated on the public streets, roads, and highways are equipped with the minimum motor vehicle equipment appropriate for motor vehicle safety." Transvolt said its carts aren't meant to be "operated on the public streets and highways," and instead are only meant for "off-road use on golf courses, parks, estates, resorts and similar off-road environments."
Lastly, Transvolt noted that the Vehicle Identification Number requirement in NHTSA's regulations applies to "passenger cars, multifunction passenger vehicles, trucks, buses, trailers (including trailer kits), incomplete vehicles, low speed vehicles, and motorcycles" and "emphatically" doesn't cover off-road vehicles. As a result of the regulatory regime at play, Transvolt said, CBP erred by excluding the golf carts "based on a failure to conform to" Federal Motor Vehicle Safety Standards.
After Transvolt filed a protest of the exclusion of its entries, CBP officials "indicated to plaintiff's representatives that the true reasons for the detentions" of the carts was an "investigation of possible transshipment from Vietnam of golf carts, for the purpose of evading duties which had been imposed on Chinese-origin golf carts and electrical vehicles" under sections 301 and 232, the International Emergency Economic Powers Act and antidumping duty and countervailing duty orders against Chinese-origin golf carts. After this claim was made, the importer said it submitted evidence showing that its goods are of Vietnamese origin and aren't Chinese.
Transvolt said that to determine a product's country of origin, CBP should have used the "substantial transformation" test, which looks to whether the good undergoes a substantial transformation in a third country, thus changing its country of origin. The importer said that CBP recently issued a customs ruling finding that golf carts, "assembled in Vietnam by processes substantially identical to those used by plaintiff, are products of Vietnam for tariff purposes."
Looking at the requirements of the substantial transformation test, it's clear the operations performed in Vietnam effected a substantial transformation, the complaint said. The good underwent a change in name, character and use in Vietnam, the importer said.