Summary of a Recent
Judicial
Development in
International Trade
No Preliminary Injunction for Importer of White
Sauce Subject to Higher Duty
Emilie H. LeibovitchNational AgLaw Center Graduate Assistant
In International Custom Products, Inc. v. United States, No. 05-00615, 2006 Ct. Intl. Trade LEXIS 8 (Ct. Int'l Trade, Jan. 11, 2006), the United States Court of International Trade held that International Custom Products, Inc. (ICP) was not entitled to a preliminary injunction to prevent the United States Customs Service (USCS) from reclassifying ICP's white sauce in such a way as to increase the duty assessed on it.
ICP was "an importer and supplier of a milk-fat based white sauce product used . . . in sauces, salad dressings and other food products." Int'l Custom Prods., Inc., 2006 Ct. Intl. Trade LEXIS 8 at *2. In 1999, the USCS issued a letter classifying the white sauce under the Harmonized Tariff Schedule of the United States (HTSUS) as "sauces and preparations thereof." In 2005, however, the USCS revoked the letter and reclassified the white sauce as "dairy spread," thereby increasing the duty on the merchandise. See id. at *2-4. Before the revocation, the USCS provided notice and an opportunity to comment to ICP. See id. at *2-3. ICP provided comment and also filed a complaint to have the revocation declared unlawful and to enjoin the revocation from taking effect during the pendency of the action. See id. at *4-5. To obtain an injunction before trial, ICP had to prove four elements: "(1) it will suffer irreparable harm if preliminary relief is not granted; (2) the public interest would be better served by the relief requested; (3) the balance of the hardships tips in the favor of the movant; and (4) the movant is likely to succeed on the merits at trial." Id. at *7 (citation omitted).
Even though ICP argued it could not afford to stay in business with such high tariffs, it would lose the goodwill of its suppliers, and it would face substantial business uncertainty, the court decided ICP had not met the heavy burden required to prove irreparable harm because it did not produce evidence to substantiate its claims. See id. at *9-18. The court also decided ICP had not shown a preliminary injunction would serve the public interest. See id. at *23-24. Instead the court agreed with defendant's argument that if an injunction were issued and defendant succeeded on the merits at trial, ICP's imported products during the pendency of the action would have to be assessed the new tariffs, and ICP's inability to pay them would end up being a cost to the Treasury. See id. The court also found that both parties faced significant hardships since if the injunction were to be granted and defendants prevailed at trial, the Treasury would end up bearing the cost of the tariffs that plaintiff could not pay, and if the injunction were to be denied, plaintiffs would not be able to pay the higher tariffs. See id. at *26. Finally, because both sides had a strong case, the court could not reach the conclusion that ICP was likely to succeed on the merits at trial. See id. at *28-29. The court concluded that plaintiff did not satisfy any of the four elements and denied the preliminary injunction. See id. at *32.
The case was decided on January 11, 2006; this summary was posted Feb. 7, 2006.