Nissan Motor Manufacturing Corp v United States Case Study

The jurisdiction of the case covered international trade, trade zones including those set up and controlled by the government as well as those set up and controlled by private companies, and customs duty law. Foreign Trade Zones were first established in 1934 through the Foreign Trade Zone Act of 1934. The trade zones were managed by a foreign trade zone board as provided for it the act that was passed by congress. Through the act, both public and private organizations were extended the privilege of setting up trade zones at or near ports of entry to the U. S. S customs service on the duty the machinery would attract. However, a decision on the duty payable was delayed as Nissan lacked information on the machinery that would be used at the plant.

The company was allowed to import and test the machinery before a customs duty can be attached to the machinery. Once the company received and installed the required machinery a customs duty exceeding $3 million was instituted by the customs service. It is on this basis that Nissan sought legal direction on the customs duty as their plant had received foreign trade subzone status by the time the machinery was imported. The customs department presented a case where they argued that the activities of Nissan went against the activities stipulated in the act. The customs department won the case at the Court of International Trade before Nissan filed an appeal. Section 2 Nissan’s presentation was largely based on a previous case that included custom laws in a foreign trade zone.

The case of Hawaiian Independent Refinery v. United States, 460 F. S. by virtue of the use of the equipment for manufacturing processes within the subzone, they were exempt from customs duty. Nissan’s position and presentation aggravated their legitimacy in court as the defendant sought to argue within the same statutory confines. The customs department acknowledged that the crude oil in the cited case was a form of merchandise and that the activities of the refinery were included in the Foreign Trade Zones Act. According to the defendant, the act clearly stipulated that activities permissible within the foreign trade zones. Any activities that are not part of the list included in the amendment are excluded and can attract a customs duty.

It is on this basis that the defendant argued that Nissan contravened the list by importing machinery and not merchandise. The defendant went on to argue that Nissan intended to install the machinery and use it to manufacture products that would later be sold to the domestic market (Spraul, 1989). This was an activity that was not included in the act, hence, the company was compelled to pay custom duty for their imports. The defendant stated that the act of selling the vehicles within the United States went against the amendment from 1952 that stated that the act does not authorize consumption of the merchandise within a zone without payment of custom duties. The zones were not intended to compete with the domestic market or other domestic industries.

As a result, it was the role of the court to protect the rights of local producers as well as those of organizations competing on an international stage. The courts were propelled to favor the Hawaiian refinery as it worked within the limits of the act and did not pose a huge risk to local producers (Cust. Ct. After the win, the customs department rallied for an amendment that would see companies in any trade zone or subzone prohibited from importing manufacturing equipment without paying tax for the same. Section 4 As every case before it, this case had a profound effect on both local and international law. The case was cited in 6 cases between 1990 and 2009. Each of these cases involved customary obligations and the foreign trade zones in America.