India says finished items are legal to export; unfinished items are illegal to export.
Back in 1993, some members of the guitar industry wanted the United States International Trade Commission to rule that fretboard blanks were unfinished (HTS 4407) items (split, chipped, or cut unfinished wood) rather than a finished part for a musical instrument (HTS 9902). There was no 5.7% tariff on 4407 items; there was a 5.7% tariff on 9902 items.
They got their wish.
Even earlier, in 1990, Gibson has pushed to have acoustic guitar bodies and necks declared unfinished items. It was having them made in Japan and shipped to its Bozeman, Montana factory to sell in its Blueridge line. There, Gibson was gluing the necks to the bodies, drilling holes for the strings, sanding and finishing the guitars, and attaching the tuners. Gibson was labeling the guitars "Made in the U.S.A." A court told them to label the guitars "Made in Japan." Gibson sought United States International Trade Commission review, wanting the necks and bodies to be declared unfinished items. The customs ruling disagreed with Gibson.
So, let's say that the U.S. says that lumber is lumber and furniture is a finished item. Let's say the Indian government says it's illegal to export lumber, but allows the export of a load of 2'x4' and says its legal because the lumber is furniture. Here, the government said: what you're importing is lumber, because customs rulings have said that 2'x4's are lumber since at least 1993.
That, and LMI changed the import code from 'furniture' to an unfinished material when they imported it for Gibson.
That said, I think this confiscation was more about the mislabeling and the use of a proxy consignee than the HTS coding. And, unless the feds discovering a lot of smoking gun emails in Gibson's computers, as they did with the 2009 raid, it reads as if LMI and Theodor Nagel GmbH are to blame, not Gibson.
I only know what the article said and it said that India said they were finished.
Despite all the arcana to the contrary, and I have no doubt all you said is true, its a pretty sorry intrusion into business that should never be.What I am intuiting is that the guitar industry sought a ruling to avoid a more onerous set of rules.
I just shake my head over stuff like this...too dumb to understand it but it still doesn’t sound right.