New Duty Free Tariff Provisions Being Considered for Utilitarian
Festive Articles
As previously
reported to TIA members, since 2007 the U.S. Customs and Border
Protection (CBP) has been reviewing and modifying its procedures for the
importers of utilitarian articles that would be classified as festive
articles under Chapter 95, Toys, games and sports requisites; parts
and accessories thereof of the Harmonized Tariff Schedule
(HTS).
In April 2008, the U.S. Court of Appeals for the Federal Circuit
(CAFC) held that certain women’s garments decorated with
recognized festive symbols or motifs (e.g., a Santa Claus or Christmas
tree) were properly classifiable as duty free festive articles under
Heading 9505 of the HTS. But during the course of that litigation, the
tariff schedule was amended to include Note 1(v) which effectively
precluded classification of utilitarian articles in Chapter 95. As
a result of this new Note, items that were classified as utilitarian
–whether wearing apparel or certain tableware, housewares and
other articles used during specific holidays – could no longer be
classified as duty free under the provisions of Chapter 95.
Michael Simon Design and several other importers again brought suit,
claiming that the new note violated the law because tariff changes are
supposed to be revenue neutral. Last month, the CAFC held that
such modifications to the tariff schedules were not reviewable by the
courts.
Despite the Courts’ refusal to review the appropriateness of
the new note, CBP has nonetheless requested that the U.S. International
Trade Commission (ITC) consider the insertion of new language in Chapter
98, Special Classification Provisions, to accommodate the duty free
entry of items that would have previously qualified as utilitarian
“festive articles” under Michael Simon Design I and prior
court cases involving similar issues. If approved by ITC, the new
provisions would replace those that had previously been very limited in
scope. The new definitions would be:
| 9817.95.01 |
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) |
| 9817.95.05 |
Utilitarian articles, each incorporating a symbol and/or motif that
is closely associated with a festive occasion (for example, Christmas,
Easter, Halloween, or Thanksgiving), if the foregoing articles are 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 |
For members of the toy industry, it is important to note the
following: In order to qualify for subheading 9817.95.05, the
utilitarian festive articles must contain a design which would only
be worn or used in connection with a particular holiday.
Thus, products reflecting a Santa Claus or Christmas tree would
generally be covered, whereas more generic designs of snowmen or snow
flakes would not.
Note 9 would expand the definition of the festive articles that
qualify for subheading 9817.95.05 to include tableware, kitchenware
(except baking pans, cookie cutters, cookie stamps and presses) 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.
TIA members and other industry stakeholders are encouraged to review
their prior entries of utilitarian articles containing festive motifs or
symbols for possible protest. The protest should contain language
requesting suspension of action pending insertion of the new Chapter 98
provisions.
Questions should be directed to a company’s existing customs
brokers and/or legal counsel.
TIA will continue to monitor the situation and keep members apprised
of further developments.
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