Update on CBP's Proposal to Limit Park Decision on HTS 9505 Duty-Free Entry for "Festive" Table Linen/Rugs to Litigated Entries Only

In CBP's View, Park Litigation Did Not Conclude Until April 2005

In its notice, CBP stated that the Park case lasted four years, and only concluded on April 6, 2005 when a Stipulated Judgment Order was issued in response to a 2003 remand to the Court of International Trade (CIT) to review certain Park articles in light of the more rigorous standards set by the Court of Appeals for the Federal Circuit (CAFC). CBP sources opine that the pending remand should have been taken into account when classifying affected merchandise.

(Trade sources add that CBP's National Import Specialist has been advising importers to enter affected merchandise as dutiable (outside of HTS 9505) and then file a protest upon liquidation.)

Few/No Rulings, as CBP Viewed Park Litigation as Still Pending

CBP sources state that its agency did not issue rulings involving the Park decision, as the litigation was not viewed as conclusive until April 6, 2005. However, CBP sources add that if there are any rulings, they remain in effect until and if modified.

If Park is Limited, Unliquidated Entries May be Affected

According to CBP and trade sources, in addition to new entries being affected, unliquidated entries of utilitarian festive articles entered under HTS 9505 may (or are expected to) be reviewed to determine the proper classification should CBP's proposed Park limitation be implemented.

CBP Could Decide to Follow 2003 Explanatory Note, Etc.

CBP states that although the courts have recognized that the Explanatory Notes are not legally binding on the U.S., the courts have acknowledged the importance of the Explanatory Notes in determining the intended scope of a tariff heading.

If CBP decides to follow the 2003 Explanatory Note, trade sources state that articles that contain a festive design, decoration, emblem or motif and have a utilitarian function, e.g. tableware, kitchenware, toilet articles, carpets and other textile floor coverings, apparel, bed linen, table linen, toilet linen, kitchen linen, would likely be excluded from HTS 9505.

(CBP could also follow its "Midwest of Cannon Falls" view on this issue. See ITT's 11/22/97 issue (Ref:97112121) for BP summary of Customs Informed Compliance Publication (ICP) on Festive Articles (issued due to Midwest of Cannon Falls court decision). Note that this ICP does not appear to be available on CBP's website.)

2003 Explanatory Note on Festive Articles Would Only Go Before Court if Lawsuit

CBP's notice proposing to limit Park stated it would give the court the opportunity to examine the scope of HTS 9505 in concert with the amended Explanatory Note. However, CBP sources state that an opportunity for such an examination would only occur if CBP is sued.

Affected Importers Should Submit Comments

According to one trade attorney, those involved in the importation of affected articles should file comments by the July 29, 2005 deadline in opposition to CBP's proposed limitation, as well as consider suing CBP should it go into effect.

Customs Bulletin, page 33 of 'General notices' (Vol. 39, No. 27, dated 06/29/05) at http://www.cbp.gov/linkhandler/cgov/toolbox/legal/bulletins_decisions/bulletins_2005/vol39_06292005_no27/39genno27.ctt/39genno27.pdf

BP Note

The 2007 U.S. Harmonized Tariff Schedule (HTS) is scheduled to contain a new note 1(v) to Chapter 95 that is very similar to the 2003 Explanatory Note, that would exclude "tableware, kitchenware, toilet articles, carpets and other textile floor coverings, apparel, bed linen, table linen, toilet linen, kitchen linen, and similar articles having a utilitarian function..." (See ITT's Online Archives or 04/25/05 news, 05042505 for BP summary of ITC preliminary report on proposed HTS changes for 2007.)