Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog
Learn the Basics of Customs and International Trade Policy and Procedure
Archive for the "International Trade Attorney" Category
The question of whether one is permitted to export a vehicle from the United States to a foreign buyer (in China, Dubai, etc) is a tricky one. Over the last few years there have been cases of federal officials seizing vehicles and cash associated with the business of exporting vehicles. News articles and government press releases of such scenarios have been reported on:
U.S. Targets Buyers of China-Bound Luxury Cars (February 11, 2014)
Man accused of identity theft, fraud in car scheme arrested (March 18, 2015)
Exporting luxury cars is lucrative, legally questionable (August 6, 2014)
U.S. authorities are cracking down on oversea auto exporters (October 2, 2014)
Investigators pursue luxury car exporters (January 17, 2015)
Inside Stories From the War Between Automakers And Dealers Over Exports (February 12, 2016).
In United States v. Content of Wells Fargo Bank, et al, the court ordered the federal government to return money and vehicles it seized from an automotive export business that sold luxury vehicles to the overseas market. The government argued that there were federal wire fraud laws violated by using foreign money to defraud American car dealers into selling them vehicles that were intended to stay in the United States. Specifically, luxury vehicle dealers are prohibited by their manufacturers from selling cars for export. Dealers have the purchaser sign a contractual agreement stating that the cars are not to be exported. In order the facilitate the purchase of luxury vehicles the automotive export company used “straw buyers” to purchase said vehicles (if the same purchaser walked into the same dealership multiple times to purchase luxury vehicles the dealership may get suspicious and prohibit the sale) and thereafter shipped them overseas. The court held that the government could not establish probable cause to believe that the funds seized are the “proceeds” of wire or mail fraud. The court reasoned that the misrepresentation was only a civil matter (not criminal) because the party deceived by a material misrepresentation (dealer) is NOT the same party injured (manufacturer). Therefore, the court ordered the immediate release of seized funds and vehicles.
While this decision may protect one from criminal liability there is still the question of civil liability. In an article written by Automotive News entitled Dealer scores in suit against illegal exporters over 100 vehicles were purchased and exported overseas without the dealer’s knowledge. As a result, the dealer violated its franchise agreement (which prohibited the sale of vehicles for export) and was liable to reimburse the manufacturer for incentive money it did not qualify for. Thereafter, the dealer filed suit against the purchasers and a jury found in favor of the dealer under claims of fraud, breach of contract, and intentional misrepresentation or concealment and violation of the RICO act.
Based on these cases, one must be careful in conducting an auto export business.
In addition, U.S. Customs and Border Protection (“Customs”) provides a list of regulations on its website regarding the export of vehicles here. One important point is the definition of “used” vehicles for purposes of filings in the Automated Export System (“AES”). For example, you go into a dealership and purchase a vehicle. You drive it off the lot, is it now considered a “used” vehicle? Further, the distinction between a “new” versus “used” and “titled” versus “untitled” vehicle correlates to the type of documentation needed to be provided to Customs.
With respect to the definition of “used”:
- Used. “Used” refers to any self-propelled vehicle the equitable or legal title to which has been transferred by a manufacturer, distributor, or dealer to an ultimate purchaser.
- Ultimate Purchaser. “Ultimate Purchaser” means the first person, other than a dealer purchasing in his capacity as a dealer, who in good faith purchases a self-propelled vehicle for purposes other than resale.
A mistake in the designation of a vehicle as “new” versus “used” in the AES can result in the seizure of said vehicles. Thus, it is vital that one carefully reviews the Customs regulations prior to export.
For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs lawyer at (800) 549-5099. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into Exporting Vehicles — about your company’s export situation and to schedule a consultation. To chat with us, click the bottom right corner tab of our homepage.
This past holiday season hoverboards have been one of the most popular items this past holiday season. As a result, we have received numerous phone calls regarding U.S. Customs and Border Protection (“CBP” or “Customs”) intense examinations of these products. The reason being is that there have been cases where these hoverboards burst into flames due to counterfeit batteries being used to power them. See here http://nypost.com/2015/12/30/hoverboard-bursts-into-flames-inside-a-brooklyn-apartment/. This led to intervention by the Consumer Product Safety Commission (“CPSC”), the federal agency regulating the safety of consumer products nationwide.
Customs and CPSC work closely to ensure the safety of products that are imported in the U.S. Customs is the “enforcer at the border” and enforces not only their own regulations but the regulations of all third party federal agencies. Here, importers must ensure the quality of these hoverboards before importation. Make sure the factory you purchase from has a licensing agreement with the trademark holder of the battery inside. If you are dealing with an agent in a foreign country make sure you get a paper trail leading to the trademark holder. Once these goods arrive at the port of entry there is generally no turning back. The trademark holder is unlikely to offer any assistance if the batteries are counterfeit and Customs will detain, seize, forfeit and destroy these goods. Meaning the importer is out the money spent to their supplier for the purchase of the goods and Customs may come after the importer for penalties (if you receive a penalty contact a Customs and International Trade expert immediately).
How can this mistake be avoided? Make sure you get a full understanding of what you are buying, the components (and packaging) comprising a product are just as important as the product as a whole. A minor mistake will cost you, and seizure will not be remitted because of ignorance. Further, Customs will have you flagged as a potential violator and you may see an increase is examinations (and delays) at ports of entry. Thus, if there are any trademarks on the goods, seek documentation supporting their legitimacy. If you need help with identifying issues or verifying documentation contact an attorney experienced in Customs and International Trade law.
For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs attorney at (800) 549-5099. Also visit www.customsesq.com to chat with a customs and international trade attorney — about your company’s import/export situation and to schedule a consultation. To chat with us, click the bottom right corner tab of our homepage.
We are seeing many Automated Export System (“AES”) violations as of late, especially with FedEx, DHL, and UPS shipments. As a result, please find information below regarding the export regulations and enforcement by U.S. Customs and Border Protection (“CBP”).
What is the Automated Export System?
CBP published the Trade Act regulations in the Federal Register on December 5, 2003. The rule requires advance transmission of electronic cargo information to CBP for both arriving and departing cargo. In the Federal Register notice, CBP identified the AES as the system for transmission of advance electronic export data for all modes of transportation.
On June 2, 2008, the U.S. Census Bureau published amendments to Title 15, Code of Federal Regulations, Part 30, Foreign Trade Regulations, mandating the filing of export information by the U.S. Principal Party in Interest (“USPPI”) or its authorized agent through the AES or AESDirect for all shipments where a Shipper’s Export Declaration (“SED”) was previously required. SED information filed to AES became known as Electronic Export Information (“EEI”).
When do you need to prepare the EEI formerly SED to be filed with CBP?
- Shipment of merchandise under the same Schedule B commodity number is valued at more than US$2,500 and is sent from the same exporter to the same recipient on the same day. (Note: Shipments to Canada from the U.S. are exempt from this requirement.)
- The shipment contains merchandise, regardless of value, that requires an export license or permit.
- The merchandise is subject to the International Traffic in Arms Regulations, regardless of value.
- The shipment, regardless of value, is being sent to Cuba, Iran, North Korea, Sudan or Syria.
- The shipment contains rough diamonds, regardless of value (HTS 7102.10, 7102.21 and 7102.31)
What happens if you fail to file the EEI or file the EEI late?
The absence or late filing of the Electronic Export Information in the Automated Export System (AES) or late filing of AES commodity data subjects the shipment to seizure.
If my goods get seized by U.S. Customs for an AES violation what do I do?
Read the following blog post for details about the U.S. Customs seizure process here and contact a professional experienced in such matters.
Additionally, look for the following language in your Notice of Seizure and Information to Claimants Non-CAFRA Form that would indicate an alleged AES violation:
For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs lawyer at (800) 549-5099. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into the Notice of Seizure — about your company’s export situation and to schedule a consultation. To chat with us, click the bottom right corner tab of our homepage.
Lately it has come to our attention that kratom (MITRAGYNA SPECIOSA) is being targeted more frequently in the past couple of months. Specifically, U.S. Customs and Border Protection (“Customs” or “CBP”) and the U.S. Food and Drug Administration (“FDA”) have been examining and detaining kratom shipments from overseas. Additionally, express consignment operators such as FedEx, UPS, and DHL, are cautious to ship the product because of the potential problems associated with this botanical.
These delays can be attributed to FDA’s import alert 54-15. The alert provides for:
DETENTION WITHOUT PHYSICAL EXAMINATION OF DIETARY SUPPLEMENTS AND BULK DIETARY INGREDIENTS THAT ARE OR CONTAIN MITRAGYNA SPECIOSA OR KRATOM
The language of the import alert focuses on “DIETARY SUPPLEMENTS AND BULK DIETARY INGREDIENTS.” These types of goods implies an end use for human consumption purposes. By classifying the product plainly and vaguely as kratom (MITRAGYNA SPECIOSA) on Customs and shipping documents, you are leaving the examining officers at ports of entry across the U.S. with the ultimate decision as to admissibility. We have also seen declarations such as: incense, soap scrubs, and clothing dye. Accordingly, the intended use of kratom when imported provides an important factor in determining the kratom’s admissibility. Thus, one must articulate to the federal agencies the use of the kratom properly so as to argue that it falls outside the scope of the import alert.
Please be aware that the FDA has brought action against company’s they find are selling for human consumption:
We currently represent numerous kratom importers to establish a plan and dialogue with the federal agencies who regulate kratom so as to avoid unnecessary delays and improve clearance of their shipments. As a result, we have been successful in getting kratom released from detention/seizure by Customs/FDA. Contact us immediately if your shipment is being detained by the federal agencies.
For more information about an importing kratom or for assistance with any of the issues noted above, contact Abady Law Firm, P.C., at 800.549.5099, to speak with a international trade attorney today!
There is a big market for used cell phones around the world. Accordingly, we come into contact with many entrepreneurs who are involved in the secondary cell phone market. As a result, we have handled many cases involving refurbished or remanufactured cell phones.
Your typical fact pattern involves a U.S. company that would export broken cell phones to a refurbishing center in a foreign country. Depending on the nature of repair, the cell phones would undergo a thorough repairing process before they are considered to be back in good working order. Subsequently, the cell phones are shipped back to the United States.
Prior to delivery to the importer, these now remanufactured or refurbished cell phones must clear through customs. U.S. Customs and Border Protection (“CBP” or “Customs”) is the responsible federal agency for determining the admissibility of such products. When it comes to investigation and delays for remanufactured or refurbished cell phones we have seen that questions involving intellectual property rights are most notably at issue. Specifically, Section 526(e) of the Tariff Act of 1930, as amended, provides that merchandise bearing a counterfeit mark within the meaning of Section 1127 of Title 15, that is imported in violation of Section 1124 of Title 15, shall be seized and, absent the consent of the trademark owner, forfeited for violations of the Customs laws. 19 U.S.C. Section 1526(e).
The first prong of section 526(e) requires that the imported merchandise bear a counterfeit mark as defined by section 45 of the Act of July 5, 1946 (the “Lanham Act,” codified as amended at 15 U.S.C. Section 1127. Section 45 of the Lanham Act defines the term counterfeit as “a spurious mark that is identical with or substantially indistinguishable from, a registered mark.” 15 U.S.C. Section 1127.
The second prong requires that the merchandise, in addition to bearing a counterfeit mark, shall have been imported in violation of section 42 of the Lanham Act, which provides:
Except as provided in subsection 1526 (d) of Title 19 . . . no article of imported merchandise . . . which shall copy or simulate a trademark registered in accordance with the provisions of this chapter . . . shall be admitted to entry at any customhouse of the United States . . . .
15 U.S.C. Section 1124. A “copying or simulating” trademark or trade name is one which may so resemble a recorded mark or name as to be likely to cause the public to associate the copying or simulating mark or name with the recorded mark or name. 19 C.F.R. Section 133.22(a).
Questions arise as to whether there is a violation of a trademark when one is selling remanufactured or refurbished goods under the original manufacturer’s U.S. trademark. As a general matter, it is not a violation to sell such goods without deceiving consumers provided that one attempts so far as possible to restore the original condition of the goods and full disclosure is made about the true nature of the goods i.e. that they are remanufactured or refurbished goods. Nitro Leisure Products, L.L.C. v. Achushnet Co., 341 F.3d 1356, 1361 (Fed. Cir. 2003). Accordingly, there is information one can provide to CBP to prove that your goods do not violate any trademark laws. This depends on the nature of remanufacturing or refurbishing done to the product, how it was imported, and the documents one has regarding their purchase.
If you find yourself in a position where your remanufactured or refurbished goods are detained or seized by CBP contact an attorney who is familiar with Customs and International Trade laws and regulations as well as the secondary cell phone market business.
For more information about an importing remanufactured or refurbished cell phone products or for assistance with any of the issues noted above, contact Abady Law Firm, P.C., at 800.549.5099, to speak with a international trade attorney today!
U.S. Customs and Border Protection (CBP or Customs) is the federal agency in charge of determining the admissibility of items sold in smoke shops across the country. Presently, we have been asked by importers across the United States for information regarding how to determine whether ones product will meet scrutiny by CBP. Moreover, whether Customs would permit entry of these products into the United States.
For such products like water pipes, grinders, blunt wraps/wrappers, and vaporizers CBP will consider whether the specific product you are attempting to import constitutes “drug paraphernalia.”
The relevant statute, 21 U.S.C. Section 863 provides,
(a) In general It is unlawful for any person—
(1) to sell or offer for sale drug paraphernalia;
(2) to use the mails or any other facility of interstate commerce to transport drug paraphernalia; or
(3) to import or export drug paraphernalia.
Pursuant to 21 U.S.C. Section 863(d), the term “drug paraphernalia” is defined as:
[A]ny equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under this subchapter. It includes items primarily intended or designed for use in ingesting, inhaling, or otherwise introducing marijuana, cocaine, hashish, hashish oil, PCP, methamphetamine, or amphetamines into the human body, such as—
(1) metal, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without screens, permanent screens, hashish heads, or punctured metal bowls;
(2) water pipes;
(3) carburetion tubes and devices;
(4) smoking and carburetion masks;
(5) roach clips: meaning objects used to hold burning material, such as a marihuana cigarette, that has become too small or too short to be held in the hand;
(6) miniature spoons with level capacities of one-tenth cubic centimeter or less;
(7) chamber pipes;
(8) carburetor pipes;
(9) electric pipes;
(10) air-driven pipes;
(13) ice pipes or chillers;
(14) wired cigarette papers; or
(15) cocaine freebase kits. (Emphasis added).
How do you determine whether an item is considered drug paraphernalia?
21 U.S.C. Section 863(e) provides that:
[I]n addition to all other logically relevant factors, the following may be considered:
(1) instructions, oral or written, provided with the item concerning its use;
(2) descriptive materials accompanying the item which explain or depict its use;
(3) national and local advertising concerning its use;
(4) the manner in which the item is displayed for sale;
(5) whether the owner, or anyone in control of the item, is a legitimate supplier of like or related items to the community, such as a licensed distributor or dealer of tobacco products;
(6) direct or circumstantial evidence of the ratio of sales of the item(s) to the total sales of the business enterprise;
(7) the existence and scope of legitimate uses of the item in the community; and
(8) expert testimony concerning its use.
Lastly, 21 U.S.C. Section 863(f) lists exemptions:
(1) any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items; or
(2) any item that, in the normal lawful course of business, is imported, exported, transported, or sold through the mail or by any other means, and traditionally intended for use with tobacco products, including any pipe, paper, or accessory. (Emphasis added).
The U.S. Supreme Court examined the meaning of “drug paraphernalia” pursuant to 21 U.S.C. Section 863 in the matter of Posters ‘N’ Things v. United States, 511 U.S. 513 (1994), and considered the phrases (1) “primarily intended for use” and (2) “designed for use” in such case.
The Court concluded that “primarily intended for use” is to be understood objectively and refers generally to an item’s likely use. Posters ‘N’ Things, 511 U.S. 513, 521 (1994). Moreover, the Court noted that this “is a relatively particularized definition, reaching beyond the category of items that are likely to be used with drugs by virtue of their objective features.” Id. at 521 n.11.
The court stated that “items ‘primarily intended’ for use with drugs constitute drug paraphernalia, indicating that it is the likely use of customers generally, not any particular customer, that can render a multiple-use item drug paraphernalia.” Id. at 521 n.11. Therefore, items having possible multiple uses may constitute drug paraphernalia for purposes of 21 U.S.C. Section 863 if the likely use by customers of the seller of the items is for use with illegal drugs.
Customs will make the determination on a case-by-case basis about whether your product falls within the context of drug paraphernalia. Accordingly, one should take into account the relevant factors that CBP considers when publishing its rulings on such products. Further, one should speak with an attorney who focuses on Customs law to ensure that the best arguments are presented to CBP for clearance of their smoke shop products into the United States.
For more information about an importing smoke shop and vape products or for assistance with any of the issues noted above, contact Abady Law Firm, P.C., at 800.549.5099, to speak with a customs law attorney.
I have represented many importers looking to import vehicles from around the world into the United States. For those doing so, one must ensure that the vehicle is in compliance with the laws and regulations of the Department of Transportation. Otherwise, entry into the United States will be prevented by U.S. Customs and Border Protection. If a violation is found, the importer will face the possibility of a seizure and severe penalties for failing to comply. If you find yourself in such a situation best to contact an attorney experienced in handling such matters to minimize such consequences and achieve the best possible solution under the circumstances.
You do not want to find your vehicle victim to the following: http://autos.yahoo.com/video/u-customs-crush-land-rover-144127210.html
On May 30, 2013, the U.S. government issued a General License on the export of electronic devices such as, cellphones, laptops, computers, and wireless routers to Iran. This effectively ended a ban that has been in place since 1992. According to the Department of Treasury’s press release “this General License aims to empower the Iranian people as their government intensifies its efforts to stifle their access to information.” Pursuant to 31 C.F.R. Part 560 the General License does not authorize the export of any listed equipment to the Iranian government or to any individual or entity on the Specially Designated Nationals (SDN) list.
If you have any questions about the specifics of this regulation or would like to begin exporting authorized electronic devices or any other types of goods to Iran contact us at 347-512-9007 for legal assistance.
As a Customs attorney I find it surprising that intellectual property holders do not take advantage of Customs and Border Protection’s (“CBP”) ability to protect their intellectual property (“IP”). CBP is authorized to search all imports/exports and exclude, detain, and/or seize products that are counterfeit or otherwise infringing on the intellectual property of the IP holder. The way to gain the assistance of CBP is to utilize their Intellectual Property Rights Recordation System
CBP’s record system is separate and apart from the U.S. Patent and Trademark Office and Copyright office filing. In order to maximize the IP holder’s rights at the border they should record with CBP via the e-Recordation system. CBP has provided some benefits of e-Recording:
- Making intellectual property rights information available at the ports to help CBP personnel with infringement determinations.
- Eliminating paper applications and the need for supporting documents.
- Allowing rights owners to upload images of their protected rights.
Additonally, IP holders can work with Customs in order to help them identify infringers. Businesses and rights owners are encouraged to submit allegations of infringing shipments or conduct to CBP. CBP then uses this information to locate such activity. Further, IP holders can provide CBP with e-guides for detecting infringing goods. Lastly, IP holders can initiate training sessions to actual CBP inspectors at troublesome ports of entry.
To find trademark and copyright records one can access http://iprs.cbp.gov/. I urge IP holders to take advantage of these enforcement opportunities to ensure quality control of their IP rights. One can contact a Customs attorney who can guide an IP holder in maximizing the enforcement of their IP rights with CBP.
You may call us at 347-512-9007 for more information on your international trade and customs issues.
In general, a commercial invoice should provide enough information for a Customs and Border Protection (CBP) Officer to determine if the goods being imported are admissible, and if so, what the correct rate of duty should be applicable based on its Harmonized Tariff Number.
Customs does not provide a specific format for a commercial invoice, however they do provide the elements that should be on an invoice in 19 C.F.R. 141.85.
At a minimum, an invoice should:
1. Describe the item clearly
2. Give the quantity
3. State the value (either price paid, or estimated value based on other considerations.) Give both the value in foreign currency and U.S. dollars
4. Country of Origin (where the item was made)
5. Where it was purchased
6. Name of the business or person selling the merchandise
7. Location of the business or person selling the merchandise
8. Name and address of business or person buying the merchandise, and if different from the importer
9. The U.S. address of the person or business the goods are being shipped to
In addition, Footwear is unique and Customs requires more detail; these additional requirements may be viewed at 19 C.F.R. 141.89. The additional invoice one must include with all their shipments is the “Interim Footwear Invoice.” A sample of a interim footwear invoice can be found here.