CBP Revises Guidance on Classification of Festive Articles (New Action for Importers to Take)

In Michael Simon, the Court of Appeals for the Federal Circuit agreed with the importer that certain festive cardigans, blouses, and ladies shirts were eligible for duty-free entry under Harmonized Tariff Schedule Chapter 95 as "festive articles" based on court precedent¹ despite the amendment to Explanatory Note (EN) 95.05.

(The amended EN and "new" Note 1(v) to Chapter 95 exclude from classification in Chapter 95 certain 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.)

Highlights of this superceding guidance include:

New Guidance Issued Due to July 2009 Court Decision, Etc.

The guidance is now being modified due in part to the Court of International Trade's July 2009 decision in Michael Simon Design, Inc. and Target Stores, et. al. v. U.S., where the CIT dismissed the importers' challenge to the July 3, 2007 implementation of Note 1(v) to HTS Chapter 95.

Guidance Does Not Apply to Costumes, Imitation Jewelry, Preparatory Articles

CBP states that this guidance does not include costumes or imitation jewelry, as their classification continues to be controlled by Rubie's Costume Company v. U.S. (2003) and Russ Berrie & Company, Inc. v. U.S. (2004).

In addition, this guidance does not apply to baking pans, cookie cutters, cookie stamps and presses, and other articles with festive designs and/or motifs that are used in preparation for a festive occasion and not used or displayed during a festive occasion, due to pending litigation in the CIT involving Wilton Industries, Inc.²

New Instructions for Entries on/after February 3, 2007

For entries of Note 1(v) articles that have a utilitarian function and incorporate festive designs and/or motifs, that are made on or after February 3, 2007, and that are unliquidated or the liquidation is not yet final:

CBP continues to state that importers are required to make entry pursuant to Note 1(v), and classification shall be determined according to the articles constituent material. However, CBP is revising its subsequent instructions to state that such classification may be affected if the July 20, 2009 CIT decision is appealed. Accordingly:

New opportunity for extending liqs. Upon request by the importer, CBP shall extend the liquidation of entries of this merchandise an additional year. A request may cover more than one entry, but each entry must be identified by number.

Before an extension expires, importers may request another extension, up to the three year statutory limit for extensions of liquidation. If a request for extension is not filed, or the matter has not been resolved at the end of the 4-year period from the date of entry, the entry will be liquidated, with the articles classified pursuant to Note 1(v).

New requirement to convert suspended liqs. CBP also newly states that suspensions of liquidation made pursuant to the December 8, 2008 version of this guidance should be converted, at the importer's request, to extensions of liquidations.

If a request for extension has not been filed, the entry shall be liquidated with the articles classified pursuant to Note 1(v).

Protests. In addition, CBP newly states that any protests that have been made or are filed, which include any entries made on or after February 3, 2007, should be suspended until any upcoming appeal to the July 2009 decision has been finally decided.

New Instructions for Entries Subject to Pending Court Cases

For entries involving merchandise which is the subject of pending court cases, CBP newly states that upon request by the importer, CBP shall extend the liquidation of entries of this merchandise an additional year.

Before an extension expires, importers may request another extension, up to the three year statutory limit for extensions of liquidation. If a request for extension has not been filed, the entry shall be liquidated, with the articles classified as other than festive articles.

In addition, no protest of an importer should be acted upon at this time involving merchandise of the same category as is the subject of any action pending in the CIT involving the same importer. A protest may be suspended under an applicable court case.

Introduction and Other Instructions Reflect Additional Details, Etc.

CBP's instructions regarding entries made prior to February 3, 2007 of certain articles having a utilitarian function, which are unliquidated or the liquidation is not yet final are similar to the December 2008 version of this guidance; however, additional details have been added. CBP's guidance on the classification of purely decorative articles in HTS heading 9505 has also been edited to list additional court factors to consider.

CBP also made a number of edits to the guidance's introduction. Most seem to provide additional information.

However, one section, regarding CBP's request for an International Trade Commission investigation on the addition of a new duty-free Chapter 98 provision for affected articles, and for the ITC to subsequently recommend that the U.S. Trade Representative add such a provision to the tariff schedule, has been removed.

(Trade sources have indicated that once the 2009 case is final, CBP and the ITC may take action to add this new Chapter 98 tariff number.)

¹The CAFC followed the decisions in Park B. Smith (two-pronged test, 2003) and Midwest of Cannon Falls (1997)

²CBP continues to state that it will not issue any classification rulings on such items.

(See ITT's Online Archives or 07/24/09 news, 09072410, for BP summary of July 2009 court case.

See ITT's Online Archives or 12/12/08 news, 08121205, for BP summary of December 8, 2008 guidance ( dated 10/30/08 but posted by CBP on 12/09/08).

See ITT's Online Archives or 09/18/07 news, 07091825, for BP summary of the CAFC decision, with links to other BP summaries on festive articles.)

CBP contacts -

Festive article guidance (dated 08/18/09) available at http://www.cbp.gov/linkhandler/cgov/trade/trade_programs/entry_summary/festive_articles.ctt/festive_articles.pdf