CBP Seeks HTS Change to Make Certain Festive Apparel, Etc. Duty-Free

On July 1, 2010, U.S. Customs and Border Protection sent a letter to the International Trade Commission requesting that the ITC commence a Section 1205 investigation¹ regarding the possible addition of a new Chapter 98 duty-free provision for certain utilitarian festive articles.

Certain Utilitarian Festive Articles are Excluded from Chapter 95 Duty-Free Treatment

Proclamation 8097 amended the Harmonized Tariff Schedule for a number of World Customs Organization-recommended changes, effective February 3, 2007. One of the amendments added a new Note 1(v) to HTS Chapter 95, to exclude 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, from classification in Chapter 95 as duty-free festive articles.

CBP Seeks New Chapter 98 Provision to Make Certain Utilitarian Festive Items Duty-Free

CBP is requesting that the ITC recommend certain amendments to HTS Chapter 98, Subchapter XVII, in order to ensure substantially rate neutral, duty-free treatment to certain utilitarian articles with festive designs and/or motifs, in accordance with the judicial decisions of Michael Simon Design, Inc. v. United States².

The recommended amendments would:

Add new 9817.95.02. Replace duty-free 9817.95.05 with the following new duty-free subheading:

9817.95.02: Utilitarian articles each incorporating a symbol and/or motif that is closely associated with a festive occasion (for example, Christmas, Easter, Halloween, or Thanksgiving), the foregoing articles used or displayed principally during that festive occasion and not typically at any other time, under the terms of U.S. Note 9 to this subchapter.

Add new U.S. Note. Add the following new U.S. Note 9 to HTS Chapter 98, Subchapter XVII:

Heading 9817.95.02 applies only to tableware, kitchenware (except baking pans, cookie cutters, cookie stamps and presses³) and toilet articles of chapter 39, 69 or 70; carpets and other textile floor coverings of chapter 57; apparel and accessories of chapter 61 or 62; and made-up textile articles of chapter 63.

Consolidate 9817.95.01. Consolidate 9917.95.01’s text to read as follows:

Utilitarian articles (including but not limited to Seder plates, blessing cups, menorahs or kinaras) of a kind used in the home in the performance of specific religious or cultural ritual celebrations for religious or cultural holidays, or religious festive occasions (provided for in subheading 3924.10, 3926.90, 6307.90, 6911.10, 6912.00, 7013.22, 7013.28, 7013.41, 7013.49, 9405.20, 9405.40 or 9405.50).

CBP Says Amendments Would Ensure Such Articles Could Enter Duty-Free

CBP states that these proposed amendments, when properly implemented, would ensure that utilitarian or functional articles (except baking pans, cookie cutters, cookie stamps and presses³) with festive designs and/or motifs entered on or after February 3, 2007, are classified in accordance with HTS Chapter 95, Note 1(v), while also ensuring rate neutral, duty-free treatment for this merchandise in accordance with the decision of the courts.

¹Section 1205(a) of the Omnibus Trade and Competitiveness Act of 1988 provides that the ITC shall keep the HTS under continuous review and periodically recommend to the President such modifications in the HTS as the ITC considers necessary or appropriate to accomplish certain general objectives.

²In Michael Simon Design, Inc. v. United States, the Court of International Trade ruled that certain imports of sweaters, blouses, and shirts decorated with certain Christmas or Halloween motifs were classified as "festive articles" under HTS heading 9505 and the Court of Appeals for the Federal Circuit affirmed that decision. The United States appealed and argued that the new Note 1(v) to Chapter 95 excluded utilitarian articles. CIT rejected the U.S.’ reliance on the addition of the note, as it was inconsistent with its previous interpretation of the scope of HTS heading 9505 in earlier cases. The CAFC later affirmed the CIT’s ruling on determining whether articles are classified as festive articles under HTS heading 9505.

(See ITT’s Online Archives or 09/21/06 news, 06092110, for BP summary of CIT ruling that these articles are to be classified as “festive articles.” See ITT’s Online Archives or 09/18/07 news, 07091825, for BP summary of CAFC affirming CIT’s ruling.

See ITT’s Online Archives or 06/21/10 news, 10062175, for BP summary of the CAFC’s decision affirming CIT’s ruling on HTS heading 9505. See ITT’s Online Archives or 07/24/09 news, 09072410, for BP summary of the CIT’s decision rejecting CBP’s reliance on the addition of the new note.)

³Pending litigation in the CIT. CBP’s position is that the utilitarian or functional articles described as baking pans, cookie cutters, cookie stamps and presses, that are used in preparation for a festive occasion and not used or displayed during a festive occasion, are not festive articles within the scope of heading 9505.

CBP letter to ITC available via email by sending a request to documents@brokerpower.com