Recent CIT Rulings on Classification of Certain Tabletop Fountains and Incorrect Duty Rate in Ruling
Classification of certain tabletop fountains as pumps. In Conair Corporation v. U.S., the Court of International Trade (CIT) agreed with the importer and ruled that certain tabletop fountains known as "Serenity Ponds" are classifiable under HTS 8413.70.2004 as "submersible pumps," which are duty-free.
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U.S. Customs and Border Protection (CBP) had ruled that the tabletop fountains were classifiable, pursuant to General Rule of Interpretation 3(b), under HTS 3926.40.00 as "statuettes and other ornamental articles," which are subject to a 5.3% duty. GRI 3(b) provides that an article is to be classified under the heading of the component that gives it the essential character. In the case of the fountains, CBP believed the plastic sculptures decorating the fountains were the component that imparted the essential character. CBP reasoned that a consumer would buy the fountain because of its visually and aesthetically appealing nature.
The CIT found that classification under GRI 3(b) is correct; however, it disagreed with CBP's decision that the item's essential character is imparted by plastic sculptures. The CIT states that although the fountain's submersible pump is not visible, its function is indispensable to the fountain. The CIT ruled that a consumer would buy the fountain because of the visual and auditory appeal of water flowing over the sculptured plastic rocks. Therefore, the CIT agrees with Conair's proposed classification of HTS 8413.70.2004. The CIT did note that while Conair's classification is correct, the company's assertion that the fountain is classifiable under HTS 8413.70.2004 pursuant to GRI 1 (face value) is incorrect. (Slip Op. 05-95, dated 08/12/05, available at http://www.cit.uscourts.gov/slip_op/Slip_op05/05-95.pdf)
1625(c) does not apply if ruling incorrectly states duty rate. In Forest Laboratories, Inc. v. U.S., the CIT agreed with CBP and ruled that Forest Laboratories' imports of hydrated hydroxypropyl methylcellulose (HPMC) were correctly classified under HTS 3912.39.00 as other cellulose ethers at a duty rate of 4.2% (1999), despite the fact that CBP had issued a ruling which incorrectly stated a zero duty rate was available to HPMC under that tariff number.
Specifically, the CIT states that CBP incorrectly stated in NY D88210 that HPMC was listed in the pharmaceutical appendix and its duty rate was free as a result, when in fact HPMC is not listed therein.
Forest Laboratories contended that CBP is bound by its duty-free statement in the ruling, unless CBP modifies or revokes it pursuant to the procedures set forth in 19 USC 1625(c). However, the CIT concludes that as CBP does not have the authority to either intentionally or accidentally impose a duty rate that differs from that which has been authorized by Congress through the Harmonized Tariff Schedule (HTS), notice was not required. Therefore, the CIT rules that CBP correctly liquidated the entries of HPMC under HTS 3912.39.00 at a rate of 4.2%. (Slip Op. 05-154, dated 12/06/05, available at http://www.cit.uscourts.gov/slip_op/Slip_op05/05-154.pdf)