CAFC Affirms Sans Opinion High Tariff Rate for Trousers Made From Non-Metallized Yarn With Metal

The U.S. Court of Appeals for the Federal Circuit on June 15 affirmed without opinion a lower court ruling that found women’s trousers made of a yarn extruded from a slurry that contained zinc nanoparticles are not classifiable in the tariff schedule as if they were made from metallized yarn. The appeals court’s Rule 36 judgment follows oral argument held Oct. 10 in the case, appealed by Lockhart Textiles. The decision is non-precedential, and contains no explanation.

CIT had in May 2020 held that the trousers imported by Lockhart were classifiable as trousers of synthetic fibers in subheading 6104.63.20 and dutiable at 28.2%, rather than as trousers of “other textile materials” of subheading 6104.69.80, dutiable at 5.6% (see 2005290055). On reaching its decision, CIT noted that the Explanatory Note to heading 5605 says metalized yarns where metal is subsequently added. The metal in Best Key’s yarn, on the other hand, is incorporated into the slurry before the yarn is produced, so it meets neither of the definitions provided in the explanatory notes, CIT had said.

The case followed an earlier challenge from the maker of the yarn, Best Key, where the Federal Circuit would in 2015 find that the yarn manufacturer had no standing to challenge classification as polyester rather than metallized yarn, because the classification as polyester yarn afforded it a lower duty rate, despite the tariff consequences it would have for finished apparel made from the yarn (see 1502030060). Best Key had alleged improper conduct by CBP in reaching the underlying classification decision (see 13061418).

Under Federal Circuit Rule 36, the appeals court may issue judgment without opinion where the lower court decision is not clearly in error or the record supports a judgment, among other things.

John Peterson of Neville Peterson, who represented Lockhart and previously Best Key, was surprised by the court’s decision to issue a Rule 36 opinion. “The CIT ignored the language of the statute and carved exceptions out of the Explanatory Notes -- something the CAFC said should not be done, in last year's Apple decision. And there were important questions left unresolved, such as the CIT's statement that the ‘essential resemblance’ test does not apply to the [Harmonized Tariff Schedule],” Peterson said by email June 15. “The Circuit's affirmance doesn't necessarily imply complete agreement with the CIT's decision, but I must confess I am mystified that they chose to decide this case without opinion.”