July 2, 2004

Customs goes back to pro-rata assessment of duties on repairs

A Maritime Developments Update from law firm Blank Rome notes that the United States Court of Appeals for the Federal Circuit recently overturned a ruling by the Court of International Trade (CIT) that found the pro-rata apportionment used by the United States Customs Service (now the Bureau of Customs and Border Protection or CBP) to be arbitrary and capricious.

The ruling clears the way for CBP to continue assessing duties on drydocking expenses using a pro-rata formula when the drydocking is performed for both dutiable repairs and non-dutiable inspections or modifications.

Download the Blank Rome Update for a discussion of the background to this case.

Blank rome's conclusion is that "by reversing the decision of the CIT, the Court of Appeals has revived the apportionment formula used by CBP in mixed-purpose drydocking cases. While the dissenting opinion appears to suggest that there is much room for appeal to the United States Supreme Court, the Vessel Repair Unit of the New Orleans, Louisiana Customs branch office has confirmed to us that CBP will resume use of the apportionment formula."

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