Results for Classification

Lamenting Litigation

October 15, 2018
Sometimes, a seemingly simple proposition is not easy to prove in federal court. Such is the case with the tariff classification of Ziploc bags.

First, a note to intellectual property lawyers. Ziploc is a registered trademark of SC Johnson & Sons. I am not using it as a generic description. Rather, it is the actual product at issue in the Court of International decision SC Johnson & Sons v. United States. I am not going to say "brand" or insert a registered trademark symbol ® throughout my text. Let's just all agree that when I say "Ziploc" I mean plastic bags that are products of SC Johnson & Sons.

On its face, one would expect that the classification of these common items under the Harmonized Tariff Schedule of the United States would be a relatively straight-forward proposition. In fact, I am surprised there is a controversy at all.

There are two potential HTSUS heading. Heading 3923 covers: "Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics." Ziploc bags are arguably articles for packing goods such as sandwiches, potato chips, and other items tucked into a sack lunch. The also have many other hand uses. Personally, I put my phone, drivers license, and a $20 bill in a Ziploc or similar bag and stick it in my jersey pocket every time I go for a bike ride. Ziploc and similar bags are also handy for non-TSA Pre-Check packing of 3-ounce liquids. In all cases, I am packing some item or items and conveying them from one place to another. Even if I just us a Ziploc bag to collect loose change (as I do), I am arguably packing those things away for later use.

Heading 3924 covers: "Tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics." Ziploc bags reside in the same drawer of my kitchen where you would find aluminum foil and plastic wrap. These bags find many uses in the kitchen including storage of otherwise loose items in the refrigerator, freezer, and pantry. 

Based on my experience and understanding of the English language, both of these headings describe the article. The question is which is the legally correct classification.

Usually, when there are two headings that both prima facie describe an article, the resolution is fairly easy. In that circumstance, General Rule of Interpretation 3(a) tells us that the most specific description is the one that prevails. The more specific description is generally understood to be the one that has conditions that are harder to satisfy or that covers the fewer number of items. 

This case, however, has an added complexity. While Heading 3924 is a list of items described by name (e.g., tableware and kitchenware), Heading 3923 is a description of items by use (e.g., articles for the conveyance or packing of goods). Thus, to decide whether there really are two headings applicable, the Court of International Trade had to determine whether Ziploc bags are used is a manner consistent with the articles of Heading 3923. If the bags are not of the class or kind of articles that are most commonly used in a manner consistent with the heading description, then they are not classifiable in both headings and the rule of relative specificity is inapplicable.

Classifying a product on the basis of use is, unfortunately, no simple task. The law is such that the Court of International Trade is to review seven factors that indicate use:

[1] use in the same manner as merchandise which defines the class; [2] the general physical characteristics of the merchandise; [3] the economic practicality of so using the import; [4] the expectation of the ultimate purchasers; [5] the channels of trade in which the merchandise moves; [6] the environment of the sale, such as accompanying accessories and the manner in which the merchandise is advertised and displayed; and [7] the recognition in the trade of this use.
Doing that, requires evidence, not just legal arguments about the scope and meaning of the headings. In this case, the Court concluded that it did not have enough evidence to perform a use analysis and, therefore, ordered that the case be tried.

So, we have no conclusion on the classification of Ziploc bags.

Is this the right or a good result? Honestly, I am concerned that setting this case down for a trial is going to make what is likely already an expensive case even more expensive and time consuming. Is there another way to get to the right result, whatever that may be?

There is a legal "rule of thumb" that a classification based on use is more specific than an eo nomine classification naming the item. If that rule is followed, then the goods should be classified in 3923, the use provision. See, e.g., Totes, Inc. v. United States. The problem with that is that GRI 3(a) says there is only a question of relative specificity if the two headings are equally applicable. It seems that can only be the case after we know that the item is classifiable in the use provision. So that does not really help at this stage. This may explain why the Court did not reach a conclusion.

Rather than a trial, the Court could also have held open the motions for summary judgment and asked for additional briefing on the open questions of fact. The Court acknowledged that it has information concerning the physical characteristics of the bags, actual consumer use of the bags, and consumer expectation of the bags. What is missing? Is there, for instance, deposition testimony on channels of trade or acceptance in the trade of this use? If not, perhaps a short period of limited discovery on the specific open questions followed by new briefs would help resolve the matter. There is nothing wrong with a trial, but the actual recitation of testimony in front of a judge in open court may be more than is needed to get this one done and in the books.

This is something I think about a lot. Customs classification cases are too expensive and often too complicated to be economically justifiable. A lot of this has to do with discovery and trial preparation that is rarely dispositive of the case. More often than not, the case turns on the interpretation and scope of the headings rather than the nature of the imported item. In those cases, no amount of deposition testimony, marketing literature, or internal Customs memoranda will change how the judge reads the statute.

This is not one of those cases that turns on a question of law. The Court is saying that it lacks evidence for facts specifically necessary to perform the required analysis. I get that. Still, how hard should it be to classify a Ziploc bag? Essentially every American knows what they are and how they are used. Is it going to be necessary for SC Johnson to hire a pollster to design a rigorous poll to determine consumer expectations regarding Ziploc bag usage? It seems to me, and this is just me opining rather than a statement of law, that the rules and procedure are making this more complicated and expensive than is should be. Maybe not every classification brought to the Court needs to be a full-blown federal case.

Years ago, the practice at the Customs Court was to place every denied protest on the Court's docket. Judges would periodically show up at ports and, when requested, review the protest decisions in open court. It is my understanding that there was no discovery and little to prepare. I imagine the practice was much like traffic court is today. I think I am feeling nostalgic for a practice I never actually knew.


Lamenting Litigation Lamenting Litigation Reviewed by Unknown on October 15, 2018 Rating: 5

CIT: Trolls are Not Human

September 14, 2018
We live in an age in which we recognize and respect the great diversity of humanity. No matter your shape, color, or gender; your physical abilities or challenges; or your religious affiliation or lack thereof, you are a human being entitled to all of the rights and privileges of all other human beings.

Of course, that does not apply to Trolls. Trolls are gross little beings with wide noses between their big eyes and jug handle ears. Plus, their heads are disproportionately large and they have hair that stands tall like wheat in a Nebraska field. Sometimes, they have unnaturally green skin.

Don't get me wrong, some of my best friends are trolls. I wish them all the best. I just know to a legal certainty that they are not human and I don't want my kid marrying one.

I know this because the Court of International Trade told me so in Russ Berrie & Co., Inc. v. United States.

This is one of those cases that is a grind to get through and must have been so for the judge. There are many categories of items to be classified. In most cases, Plaintiff argued that the item should be classified in Heading 9505 as a festive, carnival, or entertainment articles. Customs and Border Protection wanted them classified as toys.

I am going to focus on the trolls here. If you want to know about the classification of practical jokes, candle holders, baby booties and other articles best categorized as "impulse buys," read the full opinion.

Chapter 95 covers toys. Heading 9502 covers dolls "representing only human beings." This is in contrast to Heading 9503, which covers "other toys." This puts the humanity of Trolls front and center before the Court of International Trade. The Court quickly eliminated 9502 by finding that "even if the Trolls are considered to be 'dolls,' they are not 'dolls representing only human beings.'" According to the Court, Trolls are "mythical, non-human creatures."

We have been over this ground before. See the discussion of whether Luke Skywalker is human.

The new question was whether a Troll dressed in a way that obviously relates to a holiday is a festive article. Our friend the Monster Troll up above is a case in point. [Update: I removed this image. It was a green-skinned troll dressed like Frankenstein's monster.] In short, the Court held that "however dressed, these goods are still toys, i.e., they are designed to provide amusement." Apparently a Monster Troll is not "traditionally used at Christmas," or by implication at other holidays including Halloween. Moreover, the Troll is not a decorative item for display at a holiday.

Plaintiff valiantly argued that the Toll was nevertheless an article  for "entertainment." This did not fly. The examples in the Explanatory Notes associated with entertainment are things like magic tricks and practical jokes. There is, apparently, a difference between the "amusement" provided by a toy and the "entertainment" provided by a squirting boutonniere.


Because the Trolls are amusing rather than holiday-themed decorations, the Court classified them as toys.

I very much wonder about whether the fact that these items are called "Trolls" impacted the decision. Separate and apart from the Russ Berrie product, trolls are a traditional character of Norse mythology. So says Wikipedia. That is perfectly aligned with the determination that these toys represent non-human mythical figures. If the evidence before the court was the same toy but called "Little Buddies," "Annoying Children," or "Big Haired Humans," would the result be the same? The toys have hands, feet, bodies, faces, and ample hair. Are they much different from any other cartoonish doll? Personally, I don't think so. On the other hand, they are called Trolls, which has some meaning.

Now that we have resolved that trolls are not human, I am rethinking my analysis of this and this.


CIT: Trolls are Not Human CIT: Trolls are Not Human Reviewed by Unknown on September 14, 2018 Rating: 5

Tapenade Redeption

August 19, 2018
In 2016, I had fun participating in a mock oral argument on the classification of a loose mixture of chopped olives. The facts of that case were modeled on a ruling concerning the classification of olive tapenade and artichoke tapenade. See my discussion of that here. In the High Court of ICPA, I lost to a jury of my peers, which remains to this day a shocking stain on my record. I suspect the entirely fake judge was terribly biased.

Today, I have renewed confidence thanks to a decision of the U.S. Court of International Trade in Mondiv v. United States, in which the CIT found for the plaintiff that the merchandise is, in fact, sauce or a sauce preparation.

Despite my joy, I feel terrible physically and will make this quick.

Both products are prima facie classifiable in HTSUS Heading 2005, where CBP classified them as "Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006."

But, it also turns out that both products are prima facie classifiable in Heading 2103 as "Sauces and preparations therefore; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard."

Because the merchandise is prima facie classifiable in two headings, the question under GRI 3(a) becomes which of the two is a more specific description. To make that determination, the CIT asks which of the two headings is more difficult to satisfy. Here, the Court held that to me "sauces" because preparing a sauce requires additional ingredients intended to enhance the flavor of food.

Also, the goods, when properly classified, qualify for NAFTA.

Thus, I clearly should have appealed the travesty of the ICPA mock trial.

If anyone needs me, I will be napping.
Tapenade Redeption Tapenade Redeption Reviewed by Unknown on August 19, 2018 Rating: 5

Sigvaris Affirmed

August 18, 2018
This is far less interesting than the life and death fight over the vaquita, but nevertheless an interesting illustration of how tariff language is to be interpreted.

You may recall Sigvaris, the classification case involving graduated compression hosiery. These items exert 15 to 20 mmHg of compression on the wearer to force pooled blood to circulate out of the leg and throughout the body. Customs and Border Protection classified these products as graduated compression hosiery in Heading 6115, subject to a 14.6%rate of duty. Plaintiff protested, claiming that they should qualify for duty-free treatment as articles specially designed or adapted for the use or benefit of the physically handicapped in Heading 9817. These articles are duty-free. Customs denied the protests and the U.S. Court of International Trade agreed with Customs. The basic rationale for that decision was that these products are designed to help patients with early stage conditions that do not yet interfere with getting around and basic daily tasks.

The Court of Appeals for the Federal Circuit has affirmed that decision.

Although reaching the same result, the Federal Circuit took a different approach in the analysis. It found that the relevant inquiry is not, as the CIT had done, about the condition for which the merchandise is allegedly designed. Rather, it is about the persons for whom the merchandise may have been designed. According to the Court, merchandise entitled to duty-free entry must be "specially designed" for "persons" with a given limitation, not specially designed to address the symptoms of a specific disorder that may afflict a person.

Looking at it from this angle, the Federal Circuit held that to qualify for duty-free entry, the merchandise must be designed for the use or benefit of a class of person who has a physical limitation to an extent greater than it is designed for other persons. Evidence of this would include the physical properties of the merchandise, whether the merchandise is solely used by the handicapped, the specific design of the merchandise, the likelihood it is useful to the general public, and whether the merchandise is sold in specialty stores.

Given the facts found by the CIT, the Federal Circuit was able to conclude that the merchandise was not specially designed for the use or benefit of a specific class of persons at all. Consequently, it did  not need to reach the question of whether that class of persons also happens to be handicapped.
Sigvaris Affirmed Sigvaris Affirmed Reviewed by Unknown on August 18, 2018 Rating: 5

Lamps, Lanterns, and Justice

August 07, 2018
The Court of Appeals for the Federal Circuit has affirmed the Court of International Trade decision in The Gerson Company v.United States. This is the case you may remember from here, in which we discussed the difference between a lamp and a bulb.

As is the case in most classification cases, the issue on appeal was the same as it was below. Here, that means whether artificial tea light candles and similar devices are "lamps" of Heading 9405 or "electrical machines and apparatus . . . not specified or included elsewhere" of Heading 8543. It is relevant for purposes of discussion that Heading 8543 includes the subheading "electric luminescent lamps," at 8543.70.70 (now .71)

The Court of Appeals agreed that in a "hyper technical" sense, the artificial candles are electrical machines or apparatus. But, they are also lamps. What to do?

The Court noted that the apparent conflict (or ambiguity) can be resolved by reading the statute as a whole. Context matters. Looking at it in that light the Court found that 8543 must be more limited in scope than was proposed by plaintiff. If lamps are electrical machines and apparatus of 8543, and consequently excluded from 9405, what remains of 9405? Only non-electric lamps. That seems incongruous in that 9405 expressly covers searchlights and spotlights, which are presumably electrical. Furthermore, the Explanatory Notes describe lamps of 9405 as including lamps of any material that use any source of light, including electricity.

That would include lanterns. This one, for example, is perpetually powerful and able to recharge all your devices, including any extraterrestrial power rings you may have received from dying pink aliens. It would not be very useful in brightest day, but would be welcome in blackest night. [Yes, it has been a while since I did that kind of aside. It feels good.]



The description of electric lamps as complete items squares with the Explanatory Notes to Chapter 85, which describes that chapter as covering electrical goods not generally used independently. Rather, goods of Chapter 85 tend to play a particular role as a component in electrical equipment. To me, that sounds like a "bulb."

Gerson made several valiant arguments to overcome this analysis. It argued against using the Explanatory Notes to add limitations to the plain meaning of a Heading. It also argued that the Court of International Trade improperly treated these competing headings as controlled by use. Neither argument gained any traction.

There are a couple important analytical points to take from this case. First, the HTSUS is a statute that will be read as a whole to avoid conflicts. Any classification analysis that eliminates a potential heading must do so producing a consistent and logical reading of both headings. You can't leave one heading so limited in scope as to be effectively meaningless.

Second, always compare headings at the heading level. The fact that "electric luminescent lamps" appears in a subheading of 8543 does not dictate the scope of the heading.

One last point I think is worthy of note. The Court of International Trade almost always starts a classification analysis noting its obligation to reach the correct result. This comes from a 1984 Court of Appeals decision called Jarvis Clark Co. v. United States. The opinion was written by visiting Senior Circuit Judge John Minor Wisdom. Initially, it is important to linger at the beauty of being a judge named "Wisdom," (ignore the "Minor" part). That is like being a doctor named "Jane Curesall" or a super-villain named "Ed Nigma."

Regarding the Court's obligation to find the correct result, the Court of Appeals instructed:
The clear intent of Congress was to change the operation of the dual burden by requiring the Court of International Trade to reach a correct result. This requirement is not inconsistent with the presumption of correctness embodied in § 2639(a)(1). The importer still has the burden of establishing that the government's classification is wrong. Ordinarily it will be difficult to meet this burden of proof without proposing a better classification. But the trial court cannot determine the correct result simply by dismissing the importer's alternative as incorrect. It must consider whether the government's classification is correct, both independently and in comparison with the importer's alternative. In some cases, the government's classification may be so patently incorrect that the importer can overcome the presumption of correctness without producing a more satisfactory alternative. In other cases, the importer's alternative may have faults and yet still be a better classification than the government's. In either case, the court's duty is to find the correct result, by whatever procedure is best suited to the case at hand.
Apparently, this obligation does not attach to the Court of Appeals.  I gather that because in footnote 3 of this decision, the Court points to two alternative classifications, neither of which Gerson presented as alternative classifications. Because they were not argued, the Federal Circuit did not consider them. Had the CIT been aware of these alternatives, under Jarvis Clark, I think it would have been obligated to consider and, as appropriate, reject them. There may be no practical consequence to this difference in process. But, someday, there will be an odd case in which the best classification occurs to neither of the parties and not to the CIT. In that case, I guess the Federal Circuit would remand for further consideration.
Lamps, Lanterns, and Justice Lamps, Lanterns, and Justice Reviewed by Unknown on August 07, 2018 Rating: 5

Swimways Floaties Classification

July 29, 2018

I often say that tariff classification cases rarely depend on disputed facts and, in my view, generally do not turn on facts not clear from an examination of the imported product. In other words, I often think these cases present fewer issues and can be more easily resolved than is the common view. 
That said, there are obvious examples of where this is not the case. One example is Swimways Corp. v. United States, in which the Court of International had to undertake a fairly detailed factual analysis to determine the essential character of recreational floatation devices made of plastic inflatable floatation bladders, textiles mesh, and a metal spring that permits the deflated device to be compacted and then snap back to shape for use. The case involves two groups of floaties, the first are designed for adults. The second are designed for young children to help acclimate them to water as the first part of a learn to swim program.

U.S. Customs and Border Protection classified these floaties (which is my word, not the parties’) as other textile articles in Heading 6307. The importer protested and asserted that the correct classification for the adult floaties is in 3926 as other articles of plastics. For the child floaties, the plaintiff claimed that the proper classification is in Heading 9506 as an article for general physical exercise.

Let’s deal with that last part first. “General physical exercise” is not defined in the tariff schedule, nor in the Explanatory Notes. The Court looked to the Oxford English Dictionary for the meaning of “exercise” and found it to be training for the purpose of improving the body, mind, or spirit. Physical exercise is more specifically “excursion undertaken with a view with a view to the maintenance or improvement of health.

The packaging for the baby floatie, on the other hand, explained that it was useful for introducing infants to the water. It also helps them stay comfortable and happy in the water. Even though this may be an important first step in learning to swim, it is not physical exercise. Thus, the Court rejected this proposed classification.

As a result, the floaties are all going to be classified in the same heading.

Analytically, this is a useful decision to read. It very methodically goes through the legal and factual issues and illustrates how a classification should be determined. The first important decision the Court made is that neither Heading 3926 nor Heading 6307 fully describes these articles.

Heading 3926 covers “Other articles of plastics and articles of other materials of headings 3901 to 3914.” Heading 6307 covers “Other made up articles, including dress patterns.” Note 1 to Chapter 63 specifies that the goods of that Chapter must be “of textile.” Neither heading fully describes the floaties. For example, neither describes the metal spring. Further, 3926 does not include the textiles and 6307 does not include the plastics.

Because of that, the headings and the relevant legal notes do not resolve the classification. As a result, the Court moved on the determining classification on the basis of the material that imparts the essential character to the floaties. I am not going to through all of it. Here are the highlights: 

The Court differentiated between materials and components for purposes of identifying essential character. With respect to materials, the Court held that by weight, bulk and value no material predominates. Consequently, the Court moved on to components.

Looking at each, the Court found that the inflatable plastic bladders provide the floatation to the floaties. This is, obviously, pretty key. In addition, the bladders are the most complex parts to produce. They are also the most expensive components. Those factors convinced the Court to classify the floaties in Heading 3926.

There was a bonus issue in this case. I suspect, but do not know, that this bonus issue came as a surprise to the parties. That can happen, in part, because the Court of International Trade has a mandate to find the correct classification, whether or not the correct classification was argued by either party.

The additional issue relates to an accessory to the baby floatie, which is a combination toy with four inflatable arms. On three of the four arms is an infant toy: a stacker, a squeaker, and a soft star. On the fourth arm is a teether. What to do with this accessory, which comes with the floatie?

One might expect that the toys would be included in the classification of the floatie as part of a retail set. The Court did not take that approach. Rather, pointing out that the “octopus” of toys and teether are not used in conjunction with the floatie for the purpose of floatation. They also do not rely on the floatation device for their use or value. Consequently, the Court classified the toy array separate from the floatation devices. That resulted in the floatation devices, which are not retail sets, being classified in 3926 along with a separate retail set of toys of Heading 9503.
Swimways Floaties Classification Swimways Floaties Classification Reviewed by Unknown on July 29, 2018 Rating: 5

Archaeological Pieces Under 9705 HTSUS

July 05, 2018
As of July 1, 2018, importers of archaeological pieces have to report their merchandise to U.S. Customs and Border Protection with new detail. That is because the U.S. has added a new statistical breakout for these items and two related statistical notes.

Prior to January of 2018, Heading 9705 provided, in its entirety:

Click Image for Better View


For people who trade in these items, those who study the legal and illegal trade in antiquities, and (presumably) enforcement agencies, lumping archaeological, historical, and ethnographic pieces together did not provide adequate detail about what is entering the country. As previously drafted, 9705.00.0070 covered items as diverse as a 1936 Bugatti race car and an Egyptian Stone Ushabti  from the 18th Dynasty.

Working on behalf of the U.S. Committee of the Blue Shield and with the support of several interested not-for-profit entities, we asked the 484(f) Committee to further divide this provision to separately identify, in particular, archaeological items.  The result is a new level of detail on the treatment of the items in Heading 9705 and new statistical notes to add clarity to the language. As a side benefit, there is now also a recognition that coins can, depending on age and how they were collected, constitute archeological pieces.

The new 9705 reads as follows:

Click Image for Better View


Note that the subheading for coins now includes the limitation "other than archaeological pieces." Beyond that, there are new breakouts at .75 for archaeological pieces and .80 for ethnographical pieces. Both breakouts reference statistical note 1, which reads:

For the purposes of statistical reporting number 9705.00.0075, "Archaeological pieces" are objects of cultural significance that are at least 250 years old and are of a kind normally discovered as a result of scientific excavation, clandestine or accidental digging or exploration on land or under water. For the purposes of statistical reporting number 9705.00.0080, "Ethnographic pieces", which may also be called "ethnological pieces" are objects that are the product of a tribal or nonindustrial society and are important to the cultural heritage of a people because of their distinctive characteristics, comparative rarity or their contribution to the knowledge of the origins, development or history of that people. See Customs and Border Protection (CBP) Informed Compliance Publication on "Works of Art, Collector's Pieces, Antiques, and Other Cultural Property".

To ensure that the reporting of archaeological pieces is not obscured in sets or collections imported as a whole, the tariff includes new statistical note 2, which reads:

For statistical reporting of merchandise provided for in subheading 9705.00.00, collections made up of articles of more than one type of cultural property, i.e., zoological, biological, paleontological, archaeological, anatomical, etc., shall be reported by their separate components in the appropriate statistical reference numbers, as if separately entered.
These new data present some important opportunities. To the extent importers are properly reporting the full tariff item and statistical suffix at the time of entry, Customs and Border Protection will have better data to focus on imports that might be subject to restrictions under the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export, and Transfer of Ownership of Cultural Property. That Convention is implemented in the U.S. as the Convention on Cultural Property Implementation Act ("CCPIA"), 19 USC 2601-2613 and in customs regulations at 19 CFR 12.104-12.109. Under these laws and regulations, the U.S. can extend protection to archaeological and ethnological materials from States that have ratified the Convention and for which the United States has entered into a bilateral agreement.  There is also a mechanism to unilaterally extend emergency protection. Covered items cannot be imported to the United States without documentation showing that their exportation was not in violation of the laws of the originating State or that their importation was otherwise permitted under the CCPIA.

For products not properly declared as archaeological or ethnographic pieces using the correct statistical suffix, the failure to do so might expose the importer to penalties under the customs laws. This is not new, but by separating archaeological and ethnographic pieces from historical pieces, an importer will not be able to assert that it item is a historical piece to disguise its true nature while reporting the correct statistical suffix covering historical pieces as well as archaeological and ethnographic pieces. The importer will now have to pick one and get it right.

While it is true that errors in statistical reporting do not usually result in a customs penalty, this circumstance is different in that the correct reporting goes to admissibility of the merchandise. For items subject to protection under the CCPIA--including those from Iraq and Syria that are protected under special legislation--admissibility depends on the documentation showing legal exportation. The new reporting requirements should help to flag those items and give Customs an additional point of enforcement action.

Why does this matter? Mainly because regardless of the source or nature of the item, the United States, as a party to the Convention has made a policy decision that it wants to help countries preserve their cultural heritage by working to reduce illicit trade in these items. On top of that, there is strong evidence indicating that the illegal sale of looted artifacts has been a source of operating income for terrorist organizations and that this has resulted in significant destruction to priceless sites. See, for example here and here. We are hopeful that these and possibly future changes to the HTSUS will provide Customs, researchers, and traders with better data from which to monitor legal and prevent illegal trade in cultural property.
Archaeological Pieces Under 9705 HTSUS Archaeological Pieces Under 9705 HTSUS Reviewed by Unknown on July 05, 2018 Rating: 5

Game of Thrones, the HTSUS Edition

July 01, 2018
Heading 9817 of the Harmonized Tariff Schedule of the United States includes a subheading covering the following:

Articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons; parts and accessories (except parts and accessories of braces and artificial limb prosthetics) that are specially designed or adapted for use in the foregoing articles: 

The question presented to the U.S. Court of International Trade in Danze, Inc. v. United States is whether certain toilets and toilet tanks fall within this subheading and are, therefore, entitled to duty-free entry to the United States.

The basis for the plaintiff's argument is that the merchandise complies with the Americans With Disabilities Act. The toilets include the Orrington High-Efficiency One-Piece model shown here and the Cirtangular Two-Piece. The tank involved is the Orrington tank. Note that none of these products have any obvious adaptations for the disabled such as grab bars. Nevertheless, the toilets meet the ADA requirements for accessibility. According to Danze literature, the ergonomics of the toilets make sitting and standing more comfortable for users.

Tariff item 9817.00.96 implements the Nairobi Protocol to the Florence Agreement on the Importation of Educational, Scientific and Cultural Materials. Part of the intent of the protocol is to provide “duty free treatment to articles for the use or benefit of the physically or mentally handicapped persons, in addition to articles for the blind."

There are two question that relate to the application of this provision to imported goods. First, is the item specially designed in some way to accommodate the user? Second, is that accommodation related to a physical or mental handicap? According to the legal notes to Chapter 98, "'physically or mentally handicapped persons’ includes any person suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities, such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working.”  U.S. Note 4(a), Subchapter XVII, Chapter 98, HTSUS. 

"Specially designed" is not defined in the HTSUS. However, Courts have previously construed this term and the legislative history provides guidance. In the end, the Court held that  “articles specially designed for handicapped persons must be made with the specific purpose and intent to be used by or benefit handicapped persons rather than the general public.” Moreover, "[a]ny adaptation or modification to an article to render it for use or benefit by handicapped persons must be significant."

There is no debate that these products comply with the ADA and associated federal guidelines. The question is whether that is enough to meet the classification requirement. According to the Government in this case, mere compliance with the ADA is not sufficient to show a significant adaption.

According to the Court, the ergonomic design of these toilets (and the associated tank) is primarily the seat height, which makes them comfortable. This toilet height has become a popular option for general consumers, not just (or predominantly) the disabled. This is also true of the flush controls and the elongated bowl design.

Without more evidence of specific and significant adaptation to disabled users, Danze was unable to show that these toilets were specially designed or adapted for the use or benefit of the disabled. Rather, it appears that they are consumer-oriented products that also satisfy the requirements of the ADA. Accordingly, the Court of International granted summary judgment in favor of the United States.
Game of Thrones, the HTSUS Edition Game of Thrones, the HTSUS Edition Reviewed by Unknown on July 01, 2018 Rating: 5

Patience You Must Have, Young Lawyer

March 20, 2018
Always two there are, no more, no less. A name for the thing and a use for it. How to classify, you must choose. Choose wrong, and unbalance the tariff law.

Such was GRK Canada. The Court of Appeals chose the use-side, it did. Told the lower court to consider use, even when to the thing a name the tariff gives. Two masters of the tariff struggled for the name-side they did, but the Court went to the use-side.

But a Chosen One there is. Bring balance to the law, the Honorable Circuit Judge Reyna did.

[I'm done, being Yoda is surprisingly exhausting.]

My point is that, in my opinion, the prior decision of the Court of Appeals for the Federal Circuit in GRK Canada, Inc. v. United States, upset the normal course of classification by inserting considerations of use into the analysis of eo nomine tariff provisions.

The case involves the tariff provisions for wood screws (7318.12) and for self-tapping screws (7318.14). Both are eo nomine classifications, though the names suggest a use. In its first ruling on this issue, the Court of International Trade focused on the physical characteristics of the merchandise and of products commonly and commercially known as wood screws and self-tapping screws. The CIT gave no weight to evidence of use in making its determination.

On appeal, the Federal Circuit held that the CIT was incorrect to essentially ignore use. The Court instructed that when an eo nomine tariff classification suggests a particular use, evidence of use consistent with that eo nomine designation is relevant and should be considered. The Federal Circuit sent the case back to the CIT for reconsideration.

On remand, the trade court took note of the evidence of use and reiterated the physical differences between wood screws and self-tapping screws. The Court then held that the proffered evidence of use, while taken into consideration, did not overcome the evidence of physical characteristics consistent with the name of the product.

Now, the Federal Circuit has decided the second appeal in this case. This time, Circuit Judge Reyna, who, along with Judge Wallach, had dissented in the previous decision to deny a rehearing of the case, drafted the opinion for the panel. I do not often name specific judges in these posts. In this case, it is relevant that Judge Reyna had dissented. It is also relevant that both Judge Reyna and Judge Wallach come from a trade background.

This time, the Federal Circuit acknowledged that the CIT had followed its instructions to consider evidence of use. The Court then held:

For the reasons set forth in the Court of International Trade’s opinion, we find these common and commercial meanings of “other wood screws” and “self-tapping screws” to be amply supported by the source material of record without further elaboration.  We thus hold that (1) the common and commercial meaning of “other wood screw” under HTSUS 7318.12 is “a screw that forms its own thread by compressing surrounding material designed to fasten wood to wood or other fibrous material,” and (2) the common and commercial meaning of “self-tapping screw” under HTSUS 7318.14 is a “specially hardened screw, that meets minimum torsional strength requirements, that can cut away material to form a mating thread in non-fibrous material, and is designed to fasten nonfibrous materials, such as metal, to either fibrous or nonfibrous materials.”

Then, the Court performed a Judicial mind trick that can only be accomplished with a lifetime appointment and a high concentration midichlorians: it said, "We decline to accept the Government’s invitation to elevate the role of use in our interpretation of the eo nomine provisions at issue here." I realize the Court means "elevate the role of use above a mere consideration," but it certainly looks to me like that invitation came from the Court. The Government just accepted it.

This is a good decision. While it leaves the original GRK decision in place, it literally restores the balance to the Force, I mean to the law. Use is something the CIT (and presumably Customs and Border Protection) can look at. But, based on this decision, it seems clear that objective physical characteristics will carry the day when interpreting eo nomine tariff language.


Patience You Must Have, Young Lawyer Patience You Must Have, Young Lawyer Reviewed by Unknown on March 20, 2018 Rating: 5

March Madness

March 11, 2018

March is always a busy travel month for me. Despite having just returned from Washington, DC, I am presently on my way to San Diego. The ICPA conference, which starts this evening, also explains why half of the customs lawyers who practice in Chicago are on this flight. If anything bad happens to this plane, there will be a lot of openings for customs lawyers in Chicago.

This flight also gives me a long overdue opportunity to post about a few relevant cases. The first of which is Moen Inc. v. United States, which addresses the seemingly mundane question of the legal and existential nature of the humble toilet paper holder.

As we shall see, this decision is a clean sweep for the plaintiff who should be congratulated for effectively wiping up a victory. I am certain counsel for the plaintiff is flush with pride. The Government, which found no relief, may feel some urgency to an appeal.

Moen believes the TP holders are properly classified as base metal mountings of Heading 8302. Customs and Border Protection believes the correct classification to be as other articles of zinc including toilet and sanitary wares in Chapter 79. One item is composed primarily of steel and was classified as such by Customs in Chapter 73.

The Court of International Trade started its analysis by determining the scope of Heading 8302. That heading covers:

Base metal mountings, fittings and similar articles suitable for furniture, doors, staircases, windows, blinds, coachwork, saddlery, trunks, chests, caskets or the like; base metal hat-racks, hat-pegs, brackets and similar fixtures; castors with mountings of base metal; automatic door closers of base metal; and base metal parts thereof:

First, zinc is a base metal as defined by Section XV, Note 3.

The next question the Court considered is the meaning of the phrase “base metal hat-racks, hat-pegs, brackets and similar fixtures . . . .” Because the merchandise at issue is neither a hat-rack, nor a hat-peg, the question seems to have been whether it is “similar” to those items. Or, the merchandise might actually be “brackets.” Defining these terms, the Court found that hat-racks, hat-pegs, and brackets have similar characteristic in that they are affixed to a wall or similar structure and used to hang, hold, or support some other item, which, frankly, sounds a lot like a toilet paper holder.

The Government’s counterargument was based on two propositions. First, that the toilet paper holders differ from hat-racks and pegs in that they include a mechanism to secure the roll that is not found in racks and pegs. The first problem with that argument appears to have been that it was not true for all of the models at issue. Still, if the distinction were meaningful, it might have lead to a different result for some of the items. The Court did not find it meaningful.

The second argument is that hats, coats, towels and similar items are removed from their respective racks as an entirety rather than in segments as is the case with toilet paper. First, had this been my case, I would have asked the Judge to take judicial notice of the fact that the ability to take a reasonable portion of toilet tissue for the job at hand is not universal and is almost entirely absent from humans under the age of 10. But, I digress. More important, the Court finds this distinction lacking in the text and also countered by the example of paper towels which are both towels and doled out in segments.

I do have a slight question about how this part of the analysis was framed. The Court was trying to find the defining common characteristics of racks, pegs, and brackets. That exercise, under the principle ejusdem generis, is not textual. I am not balking at the result here. I just wonder whether the right approach might have been for the plaintiff to point to racks that have a similar function. I am thinking, for example, of the racks that hold rope, wire, and chain in hardware stores and are used to dole out portions for sale. I have no idea where those would be classified, but they same similar in function. Textiles and ribbons are displayed in a similar manner.
Turning to the Government’s proposed classification, the Court noted that Note 2 to Section XV excludes articles of Chapters 82 and 83 from Chapters 72 to 76 and 78 to 81. Given that the Court had just concluded that these products are properly classified in Heading 8302, it follows that they cannot be classified in Chapter 79 as articles of zinc or in Chapter 73 as articles of steel.

Ipso facto, the Government’s argument goes down the drain.
March Madness March Madness Reviewed by Unknown on March 11, 2018 Rating: 5

On 4202: Legal Briefs, Boxer Briefs, and Boxer Dogs

February 24, 2018
Back when I was a young law clerk at the U.S. Court of International Trade, I was occasionally inspired to lobby my judge to insert a clever phrase or literary allusion into an otherwise dry opinion. I specifically recall trying to insert the phrase "second thwack at the piñata" where "second bite at the apple" would have been the more common usage. In a case involving the tariff classification of fruit preserves, I tried to convince the judge to use phrases like "the defendant is in a jam," "Customs squeezed the importer," "the fruits of this effort," etc. None of that made it into the published opinion.

It appears that Judge Katzmann of the U.S. Court of International Trade has a much more liberal view of drafting, or possibly a much more persuasive law clerk. I gather that from reading Quaker Pet Group, LLC v. United States. The decision opens with this scene:

Catching sight of three tiny orphaned kittens wandering in a battlefield tent, President Abraham Lincoln directed Colonel Bowers of General Grant’s staff:  “Colonel, I hope you will see that these poor little motherless waifs are given plenty of milk and treated kindly.” Some eighty years later, President Harry Truman is famously said to have remarked,“[i]f you want a friend in Washington, get a dog.” It would certainly have been beyond the contemplation of the 16th or 33rd Presidents that their animals might be categorized as items or personal effects.  Yet, the determination of that categorization under the domestic tariff scheme is central to the question presented by the case before this court: how should cloth pet carriers be classified for the purposes of determining what tariff rate should apply to their importation?

 The issue in the case is whether cloth pet carriers are classifiable as similar to sport and travel bags in HTSUS Heading 4202 or as other made up articles of textile in Heading 6307. What we are talking about is something like this:

This item clearly shares many characteristics of the basic gym bag, which would be classifiable in Heading 4202, which covers:

Trunks, suitcases, vanity cases, attaché cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper:…
   With outer surface of sheeting of plastic or of textile materials:...
      Other…

But, the item to be contained in this bag is not sweaty socks and wicking t-shirts. It is a living, breathing, and potentially annoying little dog. Does that matter?

It does, because of Additional U.S. Note 1 to Chapter 42, which states (emphasis added), “the expression ‘travel, sports and similar bags’ means goods, other than those falling in subheadings 4202.11 through 4202.39, of a kind designed for carrying clothing and other personal effects during travel, including backpacks and shopping bags of this heading, but does not include binocular cases,
camera cases, musical instrument cases, bottle cases and similar containers.” Because dogs and cats are not clothing, for this bag to be a travel, sports or similar bag, the contained pet must be "personal effects."

The meaning of "personal effects" is not clear except that it applies to inanimate objects generally worn or carried on one's person. Examples include keys, wallets, watches, and similar items. Coco the rambunctious schnauzer and Fluffy the aloof tabby are not similar items. According to Judge Katzmann, "Pets are living beings, and thus not things or items."

Looking at the items specifically mentioned in Heading 4202, one thing is clear: there are no trunks, bags, cases, or other containers in that list that are intended to transport, organize, carry and protect living creatures. Under the legal principle of ejusdem generis,  when a general word or phrase follows a list of specifics, the general word or phrase will be interpreted to include only items of the same class as those listed. The class of goods listed in 4202 is designed to help travelers, commuters, and others in transit tote their personal effects, whether that be legal briefs or boxer briefs, but not boxer dogs.

On this record, the Court was able to conclude as a matter of law that the pet carriers are not similar to the items listed in Heading 4202.

What remains to be done is figure out where these carriers are classified. Heading 4202 is now off the table. At this preliminary stage of the case, there is insufficient evidence before the Court to make a determination as to the correct classification. Consequently, one of two things are going to happen.

[CONFLICT WARNING: This case is being litigated by my law firm. And, I personally did the first successful litigation on this issue in a case called Firstrax, so what follows might be viewed as biased.]

The parties can continue with formal discovery in which the plaintiff will produce facts showing that the carriers are textile items. Then, plaintiff will move for summary judgment, produce that evidence to the Court and hopefully win the case. For the government to win, it will need to show that the carriers are not classifiable in 6307 either because they are not textile products or there is a better alternative classification. That could happen, I just don't happen to see it.

The alternative is that the parties will trade evidence until the government agrees that the carriers are textile products and that 6307 is the best classification other than its preferred 4202. At that point, the parties should be able to enter into an agreement to stipulate these cases in favor of the plaintiff. That might not happen if the government believes the Court of International Trade is wrong in its reading of 4202 and wants to appeal to the Federal Circuit, which I can only hope is packed full of pet lovers.

On 4202: Legal Briefs, Boxer Briefs, and Boxer Dogs On 4202: Legal Briefs, Boxer Briefs, and Boxer Dogs Reviewed by Unknown on February 24, 2018 Rating: 5

The Case of the Substitute Radical

January 10, 2018
While I had big plans for this post, time and work have intervened. I will skip the chemistry lesson and tell you what you need to know. This is the upshot from the CAFC decision in Chemtall.

The classification issue boils down to whether acrylamide tertiary butyl sulfonic acid ("ATBS") is an amide or a derivative of an amide. An amide is a class of chemicals that is defined by a carbon atom double bonded to an oxygen atom and to a nitrogen atom. The carbon atom is bonded to a radical designated R1. The nitrogen atom is bonded to two radicals designated R2 and R3. That makes for molecule that looks like this:

The issue here is the composition one of the radicals. Is the product still an amide if one of the radicals is bonded to the sulfur compound SO3H? If so, the product is classifiable in 2924.19.11 as an amide (3.7%). If not, it is classifiable in 2924.19.80 (6.5%).

Here's the answer: most secondary chemistry resources define amides as having only hydrogen or hydrocarbyls bonded to the nitrogen. The sulfur compound is neither. Furthermore, Chemtall's expert testimony that an amide can contain a substituted radical was not, according to the Court, persuasive. The non-binding Explanatory Notes were not clear on this point. Thus, Chemtall failed to convince the Court that the CIT decision was incorrect. The Federal Circuit affirmed, leaving the classification as 2924.19.80.

Two interesting asides appear in the decision, both of which reinforce fundamental points of tariff classification law. The first is that a dictionary definition is most persuasive if it appears close in time to the promulgation of the statutory language. In this case, the 1986 edition of two dictionaries were favored because they were closest in time before the 1989 enactment of the HTSUS. Second, the two-digit statistical suffix forming the 9th and 10th digits of the tariff item (and corresponding language) are not relevant to the interpretation of the tariff. This decision will probably be cited for those two propositions more than anything else.

Yes, the title of this post is intended to sound like a Sherlock Holmes mystery. If I did not have a real job, this post would follow suit.

The Case of the Substitute Radical The Case of the Substitute Radical Reviewed by Unknown on January 10, 2018 Rating: 5

Contain Yourself

January 07, 2018
The Container Store v. United States has an interesting history. It involves the tariff classification of elfa "top tracks" and "hanging standards." Top tracks are the horizontal mounting members that can be affixed to a wall. The hanging standards are vertically connected to the top tracks. The hanging standards have slots that can be used for mounting attachments such as shelves, baskets, and drawers allowing consumers to build customs storage solutions. I am pretty sure this is what we are talking about:


This may ring a bell with you, because we have been down this road before. We discussed the CIT decision in this case here. And, before that, we addressed the same question in a case called storeWALL. 

The reason this issue is back before the Court of Appeals for the Federal Circuit is that in customs law, few things are ever final and beyond subsequent question. Each time an importer has a classification dispute with Customs and files a protest, the denied protest can be the basis of a separate lawsuit. For reasons of history and Supreme Court precedent (that might be worth a second look), a CIT decision stating the classification of the merchandise does not preclude either party from challenging the decision again and re-litigating it. For the lawyers reading this, despite what you may have learned in Civil Procedure, normal rules of res judicata do not apply to customs litigation. 

In the first Container Store case, Judge Ridgway followed the Federal Circuit decision in storeWall and concluded that the merchandise is classifiable in Heading 9403 as parts of unit furniture. Apparently, the United States government was not happy with that result, and re-litigated the issue. This time, the case landed on the desk of Judge Barnett who reached a different conclusion. According to Judge Barnett, the metal components at issue here differ from the plastic storeWall products. He found that Chapter 94 Note 1(d) excludes the merchandise, which he found to be "parts of general use." Accordingly, they should be classified in Heading 8302. 

Heading 8302 covers:

Base metal mountings, fittings and similar articles suitable for furniture, doors, staircases, windows, blinds, coachwork, saddlery, trunks, chests, caskets or the like; base metal hat racks, hat-pegs, brackets and similar fixtures; castors with mountings of base metal; automatic door closers of base metal; and base metal parts thereof:
Heading 9403, on the other hand, covers "Other furniture and parts thereof . . . ."

Note 2 to Section XV states that parts of general use include "[a]rticles of heading  . . . 8302." Container Store does not dispute that parts of general use of Heading 8302 are excluded from Heading 9403. It argued, however, that the merchandise is not parts of general use. Spoiler: The Federal Circuit agreed with The Container Store.

Relevant here are the Explanatory Notes to the Harmonized System. With respect to Heading 8302, the Notes state:

This heading covers general purpose classes of base metal accessory fittings and mountings, such as are used largely on furniture, doors, windows, coachwork, etc. Goods within such general classes remain in this heading even if they are designed for particular uses (e.g., door handles or hinges for automobiles). The heading does not, however, extend to goods forming an essential part of the structure of the article, such as window frames or swivel devices for revolving chairs.
According to the Federal Circuit, the top tracks and hanging standards form the indispensable structural framework of the modular storage unit. Based on the Explanatory Note, these items are excluded from classification in 8302. That means, the goods are not excluded from Heading 9403.

This should not be seen as upending the law on parts of general use. It remains true that parts of general use are to be classified as such even if they are specialized to a specific task. The Federal Circuit addressed this in its discussion of its prior Honda decision. That case involved the classification of an oil bolt, which is a specialized fastener that also includes features allowing it to transfer oil. Honda argued that it was classifiable as a vehicle part, not a bolt. The Federal Circuit disagreed. The difference here is that there was no reason to exclude the oil bolts from the classification for fasteners. Here, the Explanatory Notes indicate that structural components are not included in Heading 8302.

Because the top tracks and hanging standard are not classifiable in 8302, they are not parts of general use. Because they are not parts of general use, they are not excluded from 9403. Having reached that conclusion, and consistent with storeWall, the Federal Circuit concluded that this merchandise is best classified in 9403.90.80 as parts of unit furniture.

Note that this does not follow directly from storeWALL as a matter of stare decisis. This is related to but different than the lack of res judicata mentioned above. Stare decisis is the legal principle that cases should be decided based on precedent. This is a fundamental characteristic of the common law system used in the U.S., Canada, the U.K., and other jurisdictions. But, stare decisis only applies to the legal determinations and not to the questions of fact nor to legal determinations not part of the prior holding. In a classification case, whether the item fits in a particular heading is a question of fact. So stare decisis does not apply to the final classification determination. And, storeWall did not address the question of parts of general use and Heading 8302. So, while the result is the same as storeWALL, that decision did not dictate the outcome.




Contain Yourself Contain Yourself Reviewed by Unknown on January 07, 2018 Rating: 5

Waterproof Footwear

January 04, 2018
A long time ago, I went to a local shoe store in search of a pair of fairly rugged work boots that I could wear in the winter when forced to work outside for some reason. I recall the sales guy telling me that a particular pair was 80% waterproof. Because I can sometimes be a jerk, I asked what that means and he just repeated that they are 80% waterproof. I asked whether that means they leak 20% of the time, or 20% of the water comes in, or that 80% of the surface area was 100% waterproof, which I am certain was the correct answer. He was unable to answer and this became a long-running joke in my house about the misuse of statistics.

I am reminded of that by LF USA, Inc. v. United States, a Court of International Trade Case involving the classification of plastic children's clogs. This is a pretty quick decision that focuses on the meaning of "waterproof." If the clogs are waterproof, they would be classified in Heading 6401, provided they also meet the other requirements. If not, they are classified as Customs determined is 6402. I envision these as Crocs-like products entirely of plastic. Surely, they would suffer no damage by being soaked in water for eternity. In that sense, they are waterproof. But, is that the legal meaning of the term?

There is no dispute about the nature of the merchandise, so this turns entirely on the meaning of the tariff.
Heading 6401 covers:

Waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes . . . .

Note 3 of the Additional U.S. Notes to Chapter 64 defines "waterproof" for purposes of Heading 6401 as "designed to protect against penetration by water or other liquids, whether or not such footwear is primarily designed for such purposes." The parties agree that the clogs at issue do not protect the foot against contact with water or other liquid. Plaintiff argued that the full heading shows that "waterproof" refers to the means of fixing the sole to the upper by some method other than stitching, nailing, plugging, etc. Presumably, those methods leave holes and render the shoe less than waterproof, perhaps only 80% waterproof.

The Court rejected this argument. It applied the legal note and dictionary definitions and found that footwear is waterproof when it is designed to protect against the penetration of water and other liquids. Given that clogs fail that test, the Court found in favor of the government and affirmed CBP's classification. The remaining issues in the case, thereby, fell to the wayside.

That should wrap up the CIT cases for 2017 that I will cover, I note that there are a few CAFC decision I missed when my work life got surprising busy in June. I'll catch up on those soon.


Waterproof Footwear Waterproof Footwear Reviewed by Unknown on January 04, 2018 Rating: 5

How the Sausage Casing is Made

December 29, 2017
Continuing my effort to catch up on 2017 customs decision from the Court of International Trade, we come to Kalle USA, Inc. v. United States. For lots of reasons, I am going to treat this carefully. First and foremost, this is a case litigated by my law firm. As far as I know, this is not final, and I will not say anything about the matter that is not consistent with the position we advanced in the CIT. On top of that, I have a case pending before the Court that raises similar issues. Therefore, this post is just the facts and just the conclusions of law.

Kalle imports lay-flat tubes that are layers of plastic and textile materials. The long edge of the tube is sealed with glue. These tubes are used as casings for sausages and sometimes cheese. There are two versions of the casing at issue. For the majority of the merchandise, the textile is about 140 micrometers compared to 20 micrometers for the plastic. The textile value is € 0.96/165 cm compared to € 0.73/165 cm for the plastic. The textile allows the casing to transmit dyes and aromas to the encased food. The textile remains visible in the finished product and provides strength and shape. The plastic prevents moisture loss by filling the spaces between textile fibers.

Kalle believes the merchandise should be classified as a plastic tube of Heading 3917. The United States believes that the correct classification is in Heading 6307 as an other made up article.
According to the Court, this case can be resolved under General Rule of Interpretation 1 by an application of the relative Section and Chapter Notes, without recourse to essential character or relative specificity under GRI 3.

There are a lot of notes in play here. Most important is that Chapter 39, Note 1 states that “plastics” does not apply to textile materials of Section XI. Consistent with that, Chapter 39, Note 2(p) excludes from that chapter, goods of Section XI including textiles and textile articles. So, if the casings are textile articles of Section XI, they are excluded from Chapter 39.

Looking to Section XI, we find Note 1(h), which excludes, among other things, woven, knitted, or crocheted fabrics impregnated, coated, covered, or laminated with plastics, or articles thereof, of Chapter 39. However, because this note only applies to materials “of chapter 39,” the Court looked to the notes applicable to Chapters 56 and 59 for guidance on distinguishing between articles of Chapter 39 and those of Section XI. If, according to the Court, Section Note 1(h) were intended to be all encompassing, the clarifying notes of Chapter 56 and 59 would not be necessary. Given that they exist, they must have some meanings. Further, these notes are referenced in the Explanatory Notes as a means of distinguishing products of Chapter 39. Thus, the Court applied these notes to define products of Chapter 39, which would be excluded from Section XI.

Having determined the analytical approach, the Court turned to the question raised by these notes: is the textile material “completely embedded, impregnated, coated, covered or laminated with plastic?” If so, it is a plastic of Chapter 39 and excluded from Section XI.

On this question, the parties had different interpretations of the legal standard. Kalle argued that the plastic layer on one side of the textile embeds or coats the textile material. The Court, looking to dictionary definitions, disagreed. The Court held that to qualify for this exclusion from Section XI, the plastic must be on both sides of the textile, not just one.

That was pretty much it for Kalle. To clean up the loose ends, the Court also noted that gluing the two sides of the tube constitutes assembly sufficient to qualify the product as a made up article. The Court also found that the textile was present in the plastic as more than merely reinforcing material. The textile added desirable functional characteristics.

Taken all together, this GRI 1 analysis lead the Court of International Trade to conclude that the combined plastic and textile sausage/cheese casing is best classifiable in Heading 6307 as an other made up article.
How the Sausage Casing is Made How the Sausage Casing is Made Reviewed by Unknown on December 29, 2017 Rating: 5

Is a Santa Suit Apparel?

December 24, 2017
It is Christmas Eve as I write this while on my way to warmer climes. This short vacation is a good opportunity to catch up on court decisions and blog posts. The fact that it is Christmas makes a discussion, however brief, of Rubies Costume Co. v. United Statestimely.

This particular Rubies case involves a Santa jacket and pants. Apparently, it is a particularly well-made Santa costume. Among other characteristics, it features a zippered jacket with lining and finished sleeve cuffs. The pant legs are unfinished, but are designed to be tucked into black shoe covers, meaning they do not show. The costume sells for about $100 and includes a fabric-care label specifying that it be dry cleaned. I think this is an image of the item in question:


We have been over some of this ground in previous posts. See here and here for example. The basic question is whether these garments are wearing apparel of Chapter 61 of the HTSUS or whether they are festive articles of Chapter 95. There is also a question of whether Santa’s toy sack is similar to a travel bag of Heading 4202.
I have repeatedly proposed a bright-line for these cases. For some reason, no one listens. I say if we want to know whether something is closely associated with Christmas so as to qualify as a duty-free article of Chapter 95 all we need to do is show it to a rabbi. If the rabbi takes one look at it and says. “I would never have that in my home,” then it is a Christmas (or possibly Easter) festive article. But, I digress.

To take a step back, we need to understand that certain garments are excluded from classification as wearing apparel in Chapter 61. Section XI, Note 1(t) excludes articles of Chapter 95, which includes festive articles. Plaintiff Rubies’ contention is that the Santa costume is a festive article. The problem for Rubies is that Chapter 95, Note1(e) excludes “fancy dress,” of textiles, of chapters 61 or 62. Consequently, if the Santa costume is also “fancy dress” then the Santa costume is not an article of Chapter 95 and is, therefore, not excluded from Chapter 61.
The Court of Appeals for the Federal Circuit has previously addressed the question of whether costumes are “fancy dress.” That case involved what I believe to be the sort of flimsy Halloween costumes I recall from my youth. These were the ones that came in a box from the local pharmacy or convenience store with a clear plastic window allowing the buyer to see the plastic mask of Casper the Ghost or Superman, for example. Inside the box, we would find a flimsy onesie with an opening in the back that tied at the neck. The costume part was adorned with a printed motif matching the mask. Without fail, for me at least, the masks were unwearable either because the elastic strap holding them in place would break almost immediately or it was impossible to see, breathe, or both. These were “flimsy” in all senses of the word. 


On appeal, the Federal Circuit held that “fancy dress” includes “a costume (as for a masquerade or party) departing from conventional style and [usually] representing a fictional or historical character.” However, for fancy dress to be excluded from Chapter 95, it must be “of textiles, of chapters 61 or 62.” Consequently, according to the Court, the fancy dress must also be “wearing apparel.” To be wearing apparel, the garment must be of the kind ordinarily worn as “clothes or coverings for the human body worn for decency or comfort.” From that, the Court determined that a costume is a festive article when it is a flimsy, non-durable item having utility and use associated with the festive occasion. Compared to a standard garment, it will have functional or structural deficiencies. Festive costumes will have a significant element of “make believe” or “festive value” and only incidentally afford coverage for decency and comfort.
Here, the Santa jacket has a zipper closure and long sleeves with a turned edge. The jacket is durable and intended for repeated wearing and cleaning. This is a non-flimsy garment. The pants too, although they have an elastic waist and unfinished leg bottoms. This, according to the Court, makes them durable garments that can be ordinarily worn even if infrequently. That means the Santa suit is fancy dress and that excludes it from classification in Chapter 95 as festive articles.

I can’t pick at the legal analysis. It seems to closely follow the guidance from the Court of Appeals and gives meaning to the entirety of the legal text. I just subjectively hate the outcome.
What is more festive than a Santa suit? I would posit, very few things. What is more closely associated, at least in the U.S., with Christmas than Santa? Probably nothing. How likely are you to see a person in a Santa suit between January 1 and November 1? Not very likely. If you are anything like me, if you happen to see a Santa roaming the mall or streets in July, your initial reaction is to scream internally, “Hey Buster, Christmas is in five months!” Walking around in a Santa suit in the summer is a fugitive use of it. Why? Because a Santa suit is not really apparel. Rather it is a commercial or artistic rendering of a character associated with a specific festive event. For the sake of young readers stumbling on this page, I will not opine on whether the Santa character is fictional or historical or actual. Either way, the clothing turns the wearer into a specific representation of a character who is associated with a specific holiday. To me, that is not wearing clothes in the ordinary sense.
The problem with my own analysis is that half the people in Chicago on any given day are wearing some article of clothing that communicates their affiliation with the Cubs, Sox, Bull, or Bears. In my house, there is even apparel emblazoned with the logo of the Chicago Wildfire, our local professional Ultimate team. Wearing these, even a full-on Bears uniform with pads and helmet, however, does not “depict” a specific character associated with a specific festive occasion any more than wearing a police or firefighter uniform depicts a specific person or character associated with a specific event.

To me, the Santa suit is different because it has a distinct purpose of communicating the identity of the depicted individual rather than showing a functional or personal affiliation the way a uniform does. Furthermore, depicting that individual communicates specific connections with a specific festive event. In my mind, a Santa suit, like a devil, ghost, or pirate costume is communicative and linked to a festive occasion. Fancy dress, on the other hand, would be, for example, a historical costume (say a colonial minuteman) that is not associated with any specific festive occasion or specific character.
Unfortunately, I do not get to make the rules. I just help others follow them and report on the results. For now, and probably for the foreseeable future, costumes will only be classified as festive articles when they are flimsy, non-durable items that cannot be ordinarily worn for comfort and decency. I can live with that.
Is a Santa Suit Apparel? Is a Santa Suit Apparel? Reviewed by Unknown on December 24, 2017 Rating: 5

Home Depot and Entry Hardware

October 24, 2017
Home Depot and stores if its ilk are one of the many places I go to find out how little I know about a great many things. Generally, I employ a "three step test" for home improvement projects. Under that test, if the project requires more than three process steps or three steps up a ladder, I outsource the job. That means there are vast arrays of hardware items to which I have had little or no exposure. On the other hand, I have done a lot of tariff classifications of power tools, hand tools, lawn and garden products, and home appliances (and parts thereof). Consequently, when I do wander into a Home Depot I sometimes pick up the odd lock washer or large forged hand tool and ask questions like "Is this in scope?" or "Is this really Made in USA?"

The actual Home Depot company, on the other, recently asked the U.S. Court of International Trade to classify various pieces of door hardware. The merchandise consisted of packaged exterior door knobs and trim, interior knobs and trim, a latch, strike plate, installation hardware, and keys. The exterior knob included a key slot and keyed cylinder (meaning the lock portion). Customs and Border Protection classified the merchandise in 8301.40.60 as locks. Home Depot contended that the merchandise was classifiable in 8302 .41.60 as fittings for doors, etc. suitable for buildings.

So, the sole question appears to be whether the presence of the lock in the exterior knob is sufficient to require classification as a lock in 8301.

The Court of International Trade started by defining "lock" as a device securing a door in a closed position with a bolt propelled by a key or other mechanism. Looking to the merchandise, the Court quickly found that it consisted of key-operated locks intended to secure doors and that the locks were of base metal.

The Court then concluded that the door knobs are parts of the locks. It got there by looking to industry standards. On top of that, the Court found that Home Depot advertises this merchandise as door locks. Consequently, the Court held that the merchandise is classifiable in 8301as locks.

That leaves the question of whether the merchandise is also classifiable in 8302. According to Home Depot, these goods were just knobs improved with locking mechanisms. A such, they are door fittings. This makes some sense because an eo nomine description includes all forms of the article including later developed improvements.

Alas, this clever argument did not prevail. The Court noted that there is nothing inherently wrong with having similar products in two different headings if the language of the headings separates the articles. In this case, 8301 specifically includes locks. Heading 8302, on the other hand, only includes fittings for doors and similar items. Thus, the description in 8302 is incomplete compared to the description in 8301. Thus, the Court found 8301 to apply.

Note that this is not a decision based on General Rule of Interpretation 3 and Relative Specificity. The Court's holding is that the goods are not described by 8302. Thus, there is no reason to compare the specificity of the two headings.


Home Depot and Entry Hardware Home Depot and Entry Hardware Reviewed by Unknown on October 24, 2017 Rating: 5

Ruling of the Week: Shark Tank and Customs

October 15, 2017
I never make an effort to watch Shark Tank. However, for some reason I am always running across it. I always get sucked in. I think the discussions of business valuation and strategy are interesting. I am certain they are very distilled through the editing process, but hearing successful investors critique an entrepreneur's pitch is fascinating to me.

Not long ago, I saw a guy pitch an iPhone case that has a monochrome screen affixed to the back. Using its own battery and Bluetooth connection to the phone, the second screen continuously displays updates, pictures, and other data.

The device is called a popSlate (review)

.

How would you classify that?

It turns out, not as a radio transmitter/receiver of 8517, which is where CBP previously classified smart watches that use Bluetooth to get updates from the phone. In this case, CBP held that the screen provides the essential character. As such, Customs classified it as an other machine or apparatus having individual function in 8543.

I have not spent any time reviewing this classification. It does strike me, though, that this might be described as an indicator panel of 8531. Anyone want to take up the challenge and tell me why that is wrong (or even right)?
Ruling of the Week: Shark Tank and Customs Ruling of the Week: Shark Tank and Customs Reviewed by Unknown on October 15, 2017 Rating: 5

Irwin Tools: Pliers are Still Pliers

October 15, 2017

Remember the Irwin Tools Case? That case considered whether certain locking pliers were properly classified as wrenches or as either pliers or clamps. The Court of International Trade held that the plaintiff had overcome the presumption that Customs correctly classified the pliers as wrenches. But, because Irwin had not moved for summary judgment, the Court could not give a final classification. Subsequently, Irwin moved for summary judgment and the government moved for reconsideration of the original decision. If you have not read my original post on this case, please do so.

The CIT has now handed Irwin a complete victory. The gist of the prior ruling is that a wrench has a head that fits snugly over or around the head of a fastener and a single handle that can be turned to apply torque. Pliers, on the other hand, have two handles and two jaws that pivot and must be squeezed to grasp an object. A clamp has a frame of some kind and two opposing surfaces that can be adjusted by a screw, lever, or similar device to hold an object firmly in place.

A motion to reconsider a prior judgment is directed to the discretion of the Court. The Court will grant a motion to reconsider when it finds that justice requires it to do so. Factors that may indicate justice requires reconsideration include a significant change in the controlling law or reason to believe that the court patently misunderstood the issues presented. A simple disagreement with the outcome will not do it. That was the case here and the judge denied the motion.

So where do we classify locking pliers? No surprisingly, as pliers. All of the locking pliers have two handles and two jaws that pivot relative to one another. This allows the user to squeeze the handles to close the jaws around an object to manipulate it.

The Court also found that the evidence before it did not establish that the locking pliers were classifiable as clamps. Rather than be tightened with a screw, lever or thumb nut, the locking pliers are closed by squeezing the handles. Further, the configuration of the two handles and a pivot is distinct from clamps.

Reading somewhat between the lines and possibly due to my own involvement with this issue, it strikes me that the government’s main argument was that this issue had already been decided. The CIT addressed this issue in 1983 in a case called Associated Consumers v. UnitedStates, 5 CIT 148, 565 F. Supp. 1044. Associated Consumers was affirmed by the Federal Circuit in a non-precedential decision without an opinion. Of course, the 1983 case was under the old Tariff Schedule of the United States. Furthermore, the decision of one CIT judge is not binding on another judge subsequently looking at the issue. The Court, after reviewing the physical nature of the various tools at issue and the standard definitions of pliers determined that these locking pliers are properly classified as pliers.

There is a bit of side issue in this case about use. Does the word “wrench” suggest a particular use, such as turning a nut or bolt? Does the word “clamp” imply a usage? Maybe. But, that was all addressed in the prior Irwin decision and the Court saw no reason to revisit it now.
Anyone curious about all the bankruptcy issues floating around? I'm on it. I'll try to get to that this week.
Irwin Tools: Pliers are Still Pliers Irwin Tools: Pliers are Still Pliers Reviewed by Unknown on October 15, 2017 Rating: 5
Subscribe to: Posts ( Atom )
ads 728x90 B
Powered by Blogger.