Update on CBP's Revised Festive Articles Guidance (Immediate Action Needed on Suspended Entries, Etc.)
U.S. Customs and Border Protection recently issued revised, superseding guidance on the classification of utilitarian or functional articles with festive designs and/or motifs in light of the Michael Simon Design, Inc. v. U.S. decision.
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Conversion of Suspended Entries, Possibility of Duty-Free Chapter 98 Number
Additional information has been obtained which elaborates on the guidance's instructions on converting suspended liquidations to extended liquidations and the possibility of a new duty-free Chapter 98 tariff number for entries affected by Michael Simon.
(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 precedent, 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.
The revised guidance supersedes the previous December 2008 guidance on festive articles, and is due in part to a July 2009 Court of International Trade decision which dismissed an importer's challenge to Note 1(v) to HTS Chapter 95.)
Ports Told to Liquidate Suspended Entries, No Timeframe for Conversion Requests
According to government sources, on approximately August 14, 2009, CBP officials at the ports were informed that suspensions of liquidation for entries on or after February 3, 2007, that were suspended due to the December 8, 2008 guidance, are to be liquidated as dutiable unless the importer requests that they be converted to extensions of liquidations.
No time frame for liquidating the entries was specified, so the timing of liquidation will be at the port's discretion. (It is not known if the ports will notify affected importers of the upcoming liquidations through a 'Notice of Action,' by some other means, or not at all.)
Sources add that any importer that needs time to prepare a written request for extension, should informally contact (e.g. by phone or email) the ports immediately, to let officials know that they are preparing a request letter on converting the suspensions to extensions, in order to prevent liquidation from occurring.
Should liquidation happen anyway, importers have 180 days from the date of liquidation to protest the action.
CBP Has Not Yet Requested ITC Investigation That Would Lead to Chapter 98 No.
In CBP's December 2008 guidance on festive articles, CBP stated that it had requested the International Trade Commission to begin a Section 1205 investigation on the impact of Chapter 95 Note 1(v). CBP also requested that the ITC recommend that the U.S. adopt new duty-free provisions in HTS Chapter 98, Subchapter XVII, for certain utilitarian or functional articles with festive designs and/or motifs.
This information is not in CBP's August 2009 guidance, and sources confirm that this request for an investigation has not yet been made.
Sources add that CBP is not yet sure of the timing of their request; perhaps when the July 2009 litigation is over (which would occur if the CIT decision is not appealed, or if appealed, when the CAFC issues its decision).
One source notes that Section 1205 investigations "take about a year;" however, another source stated that the ITC could conclude such an investigation fairly quickly.
(See ITT's Online Archives or 08/24/09 news, 09082405, for detailed BP summary on CBP's August 2009 Festive Articles guidance.)