CAFC Rules That Certain Holiday-Themed Jewelry is Not Classifiable as "Festive Articles"
On August 27, 2004, the Court of Appeals for the Federal Circuit (CAFC) reversed the September 2003 Court of International Trade (CIT) decision in Russ Berrie & Company, Inc. v. U.S. The CAFC ruledthat certain holiday-themed jewelry is not properly classified under HTS 9505 (duty-free) as "festive articles".
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In its reversal, the CAFC concurred with Customs that these items are properly classified as "imitation jewelry" under HTS 7117, which is subject to an 11% (1998) duty rate.
According to the CAFC, the imported articles are inexpensive lapel pins and earring sets containing Christmas themes and an earring set containing Halloween themes. The articles include motifs such as a Santa Claus; red, green, and gold bells; a ghost, a jack-o-lantern, etc.
CAFC Rules Articles are Prima Facie Classified Under Both 7117 and 9505
In its ruling, the CAFC, like the CIT, finds that the jewelry at issue is prima facie classifiable under both HTS 7117 and HTS 9505.
Unlike the CIT however, the CAFC holds that Note 3(n) to Chapter 71, which excludes from Chapter 71 articles that are covered by Note 2 to Chapter 95, is not applicable to the jewelry at issue as this jewelry does not contain any precious stones or metals.
Note 2 states that Chapter 95 includes articles in which natural or cultured pearls, precious or semiprecious stones (natural, synthetic or reconstructed), precious metal or metal clad with precious metal constitute only minor constituents.
(Russ Berrie had argued that this interpretation of Note 2 produces the anomalous result that items containing only a small amount of precious stones or metals would be duty-free but items containing none of those materials would be subject to the above-described 11% duty. However, the CAFC states that its function is to apply Customs standards they way Congress has written them, not to change their meaning to correct seeming injustice.)
CAFC Rules that 7117 (Imitation Jewelry) is the More Specific Description
With regard to this merchandise, the CAFC applied General Rule 3, which states that when goods are prima facie classifiable in two or more headings, the heading providing the most specific description will be preferred. Moreover, an explanatory note to General Rule 3 states that a description by name is more specific than a description by class. In light of this, the CAFC ruled that the articles are properly classified as "imitation jewelry" in HTS 7117.
(See ITT's Online Archives or 10/24/03 news, 03102405, for BP summary of the CAFC's decision in Park B. Smith v. U.S., another case dealing with the HTS 9505 "festive articles" provision.)
CAFC Decision 04-1084 (dated 08/27/04) available athttp://www.fedcir.gov/opinions/04-1084.doc
CIT Slip Op. 03-122 (dated 09/17/03) available at http://www.cit.uscourts.gov/slip_op/slip_op03/Slip-Op%2003-122.pdf