How long does the rule apply for? If someone removes seats from their van, is that tax evasion? What if it's temporary? If an individual can do it, why not Ford?
The problem I have here is how easy it is to avoid the tax. CBP shouldn't have any jurisdiction over car modifications and repairs; that responsibility falls to different agencies.
It seems that the issue was that Ford, the importer, changed the class of vehicle between import and being sold inside the US. Presumably if you aren't the importer you can go wild (IANAL).
Yeah, so they're really just getting punished for not dotting their is and crossing their ts. They could create a subsidiary with the same board of directors as Ford that they sell the cars to, and then the subsidiary does the dirty work of repurposing the cars from passenger vehicles to cargo vehicles. They skipped paying the $100 corporate registration fee, so now they're on the hook for a billion dollar fine that would have been legal if they added another company to the mix? Give me a break.
Except that now those vehicles are used and may be more difficult to sell again. If you don't go through the trouble of retitling them, then clearly they were never really sold and the courts will see right through this scheme.
If they "escaped on a technicality" then they weren't breaking the law. That "technicality" is part of the law.
The indefensible part is tying a large difference in import tariffs to how many seats are installed. Absurd outcomes such as this one highlight systematic flaws in the rules. If the basis for the tariffs were logically sound you wouldn't be able to work around them without addressing the reason the tariffs were imposed in the first place.
No- the norm is for things to be imported, then combined or modified and sold as a new product, without paying the import tax based on the new product.
If import tax on a cpu is x, and motherboard is y, should you have to pay computer import tax z if you build and sell PCs? After all, what imported cpus and motherboards aren't destined to be assembled computers?
I was more talking about this particular case, where it seems it was judged that Ford didn't make a new product out of imported parts, but importing a finished vehicle as one thing, and selling it as another after minor modification.
It is a more normal way around these sorts of tariffs to import a vehicle as a kit of parts (CKD / "Complete knocked down"), and perform some level of final assembly in the end country. The sort of rules you talk about apply then, you pay the car parts import rate on the kit, not the (presumably higher) rate for a complete car[1].
[1] Or otherwise avoid whatever other protectionist measures mean you can't just import a fully built car.
If the difference in definition between two categories is minor, then a minor modification is all that should be required.
Either it meets the definition of the lower taxed category or it doesn't, at time of import.
Any other way of interpreting it gets into intent and degrees modification, or worse, applying import taxes after the fact for domestic modifications.
Reverse the scenario: is an imported pc taxed at z need to be taxed at x and y if the only purpose was to get the parts and sell the cpus and graphics cards a la carte? If x and y were cheaper than z, do you think the govt would refund the difference?
The courts tend to take a dim view of "clever hacks" to get around the law, where the intent is clearly to circumvent the law and the action has no other purpose. They don't always rule that way. But if you pull this kind of stunt, you risk the court saying, "Very clever. No."
The rule applies to the entity responsible for importing the item. Since Ford was importing the vehicle and then altering it immediately afterwards to escape the tax, they are in the wrong. If they instead sold it as-is to a customer, and the customer then made the modification themselves, it wouldn't be a problem.
The problem I have here is how easy it is to avoid the tax. CBP shouldn't have any jurisdiction over car modifications and repairs; that responsibility falls to different agencies.