CAFC Affirms That Certain 2003 Imports of Christmas and Halloween Sweaters Are Duty and Quota Free As Festive Articles

U.S. Customs and Border Protection contended, once again, that utilitarian articles should not be classified under HTS 9505 ("other festive, carnival or other entertainment articles"). The CAFC, however, ruled that the language in HTS 9505 at time of liquidation did not provide for the exclusion of these sweaters from classification as festive articles solely because of their utilitarian nature.

(In a footnote, the CAFC acknowledged that Chapter 95 was amended in 2007 to expressly exclude certain textile and apparel utilitarian items. However, this case is concerned with the tariff schedule as it existed at time of liquidation - which was prior to the amendment. (See BP Note).)

CBP also contended that the Court had not accorded the appropriate deference to CBP's rulings, which had long held that HTS 9505 excludes items whose primary function is utilitarian.

The CAFC ruled that classification is determined in the HTS according to the tariff language of the headings and any relevant Section or Chapter notes. Such Section and Chapter Notes are statutory law and are not optional, interpretive rules. Based on the HTS 9505 language and notes at the time of liquidation, the CAFC would not defer to CBP's rulings, which it said were contrary to the language in the HTS.

Finally, CBP noted that an amended Explanatory Note (EN 95.05) to the HTS, which became effective in 2003, specifically excluded apparel from being classified as "festive articles." The CAFC noted this amendment to the Explanatory Notes was not in effect at the time that these sweaters were imported. In any case, while Explanatory Notes may be illuminating, they should not be employed to limit or to narrow the language of the tariff heading itself.

Accordingly, the CAFC re-affirmed the CIT's decision that these sweaters were "festive articles" and were correctly classified under HTS 9505.

See ITT's Online Archives or 04/25/06 news, 06042505, for BP summary of CBP's revised guidance on the classification/protest of textile and non-textile festive articles, which listed seven pending court cases involving the classification of various articles as "festive," including this Michael Simon Design case.

See ITT's Online Archives or 04/13/06 news, 06041310, for BP summary of CBP's notice on its limiting the Park decision to the litigated entries only.)

See ITT's Online Archives or 09/21/06 news, 06092110, for BP summary of Michael Simon Design, Inc. v. U.S., CIT Slip Op. 06-128.)

CAFC decision 07-1028 (dated 09/11/07) available at: http://www.fedcir.gov/opinions/07-1028.pdf

BP Notes

A new note 1(v) to Chapter 95, which was added in 2007, excludes the following from Chapter 95: 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 (classified according to their constituent material).

The CAFC adds that CBP contended in Michael Simon Design that this amendment does not fully resolve the issue going forward from 2007.

(The Explanatory Notes were amended in 2003 to add the following exclusion to Chapter 95: "this heading also excludes 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.")

(See ITT's Online Archives or 03/15/07 and 04/15/04 news, 07031505 and 04041540, for BP summaries.)