CIT Rules Container Store Hanging System is Duty-Free Unit Furniture

October 31, 2011 by Elizabeth Parker|Penalties and Courts

The Court of International Trade has ruled in The Container Store v. U.S., that the elfa® system of top tracks and hanging standards is classifiable as duty-free unit furniture under heading 9403, and not as other mountings for furniture in heading 8302. Using reasoning from a recent Appeals Court decision, the CIT explained that because the elfa® is designed to be hung, it falls within an exception that includes it in the heading 9403 definition of furniture, and because of its versatility, it is qualified to be considered 9403 unit furniture.

CBP Said Wall Hanging Systems Are “Mountings,” Store Said “Furniture”

The Container Store imported top tracks and hanging standards as components of its elfa® modular organization and storage system. Top tracks and hanging standards alone do not constitute a complete elfa® system, and unless accessorized with other elfa® components, cannot be used to organize or store anything. However, depending on the needs of the individual consumer, elfa® components such as drawers, baskets, and shelves can be attached to hanging standards in customized configurations.

U.S. Customs and Border Protection liquidated the elfa® top tracks and hanging standards under subheading 8302.41.60 (3.9%) and 8302.42.30 (3.9%) as base metal mountings, fittings, and similar articles suitable for buildings or furniture, respectively; and under subheading 7326.90.85 (2.9%) as other articles of iron or steel. The Container Store protested, arguing that they are properly classifiable as other furniture and parts thereof under subheading 9403.90.80 (duty-free). CBP denied the protests.

2011 CAFC Ruling Found Similar Hanging Systems Are HTS 9403 Furniture

The CIT cited the Court of Appeals for the Federal Circuit’s (CAFC) decision in StoreWALL, LLC v. U.S. (2011), that merchandise similar to the elfa® system of top tracks and hanging standards is considered heading 9403 furniture, as:

System designed to be hung falls in 9403 furniture exception. Merchandise is classifiable under heading 9403 only if it is "designed for placing on the floor or ground" or if the merchandise falls within certain exceptions. One of those specified exceptions covers -- and thus includes within the definition of furniture -- "cupboards, bookcases, other shelved furniture and unit furniture," even if such merchandise is not designed for placing on the floor or ground and is instead "designed to be hung, to be fixed to the wall, or to stand one on the other."

System versatility has the essence of 9403 unit furniture. Although the Explanatory Notes to Chapter 94 expressly exclude from coverage under heading 9403 other fixtures such as coat, hat, and similar racks, etc., the CAFC held that a completed system using only hooks is not a rack excluded from the definition of furniture. The fact that the end-user has the option with such a system to add or subtract accessories makes it unit furniture as it retains the essential versatility and adaptability that is the very essence of unit furniture.

CIT Used CAFC’s Prior Analysis & Found Store’s System is 9403 Furniture

The CIT stated that the CAFC’s analysis in StoreWALL applied with equal force in this case. As such, the elfa® system of top tracks and hanging standards is properly classified as other furniture and parts thereof under subheading 9403.90.80 for the following reasons:

Complete system is unit furniture. A completed system of elfa® components such as a top track and hanging standards -- fitted with accessory components like drawers, baskets, and/or shelves -- constitutes "unit furniture" because (1) it consists of components that are fitted together with other pieces to form a larger system, (2) it is designed to be hung on or fixed to a wall, and (3) it is assembled together so as to suit specific individual consumers’ particular needs to organize and store various objects or articles.

Versatility distinguishes system from excluded racks. The CIT noted that even if accessorized solely with hooks, it is the "versatility and adaptability" of the elfa® system that renders it "unit furniture" and distinguishes it from coats, hats and similar racks that are specifically excluded from classification as furniture.

Components are “parts” of unit furniture. Additionally, the top tracks and hanging standards at issue are classifiable as "parts" of unit furniture because they have no general or generic applications and are dedicated solely for use with a completed elfa® system."

Accordingly, the CIT granted the Container Store’s motion for summary judgment and denied CBP’s cross-motion for summary judgment.

(See ITT's Online Archives 11040426 for summary of the CAFC’s 2011 ruling in StoreWALL, LLC v. U.S.)

(Slip Op. 11-135, dated 10/26/11)