Category Archives: Textile/Apparel

‘Sports wares’ vs Sportswear

For textile and apparel fans who aren’t registered for our ST&R-TAP™ Advisor service, here is an interesting tidbit from its October 6, 2011 edition:

In an October 3 decision in LeMans Corporation v. U.S., the Court of Appeals for the Federal Circuit (CAFC) upheld a lower court decision that motocross jerseys, motocross pants and motorcycle jackets are classified as apparel under HTSUS chapters 61 and 62. Specifically, the ruling affirmed U.S. Customs and Border Protection’s classification of the jerseys as other manmade fiber pullovers and similar articles in HTSUS 6110.30.30 (32 percent duty rate), the pants as other manmade fiber garments in HTSUS 6210.40.50 (7.1 percent duty rate) and the jackets in HTSUS 6201.93.30 (7.1 percent duty), 6201.93.35 (27.7 percent duty) or 6201.92.15 (6.2 percent duty).

LeMans argued that these items should be classified as sports equipment under HTSUS Chapter 95 because they are so highly specialized for use during motocross or motorcycle riding that any apparel-like features are incidental to the primary purpose. LeMans cited the CAFC’s 2003 decision in Rubie’s Costume Co. v. U.S., which held that Customs appropriately classified certain costumes as festive articles under HTSUS Chapter 95 rather than as wearing apparel under Chapter 61 because the costumes were worn only on rare occasions, included “one-size-fits-all” varieties, and were “flimsy” and “lacking in durability.” However, the CAFC states, unlike those costumes the subject merchandise in this case shares more characteristics with ordinary apparel, coming in different sizes and having the durability to be worn repeatedly. In addition, whereas the comfort features of the costumes were secondary, all of the articles at issue here are designed to provide optimal fit and comfort while participating in the sport.

In addition, the CAFC states, the subject items are not classifiable as sports equipment. The vast majority of the examples of sports equipment listed in the Explanatory Notes to Section 9506 are not items worn on the body but instead are articles that are entirely separate from the user (e.g., tennis nets, playground equipment), held in the hand (e.g., golf clubs, tennis rackets) or fastened to a user (e.g., skis, ice skates). The few examples that a user actually would wear are almost exclusively used for protection and would complement, or be worn in addition to, apparel worn for a particular sport.

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Filed under Classification, Textile/Apparel

FESTIVE ARTICLES GET BAH HUMBUGGED

In an unprecedented move, the International Trade Commission (ITC) recently recommended against implementing new Chapter 98 tariff provisions proposed by CBP to grant duty-free status to certain utilitarian articles with festive designs or motifs.  Never in recent history has a proposal for an HTSUS change supported by CBP, and also the Committee for the Implementation of Textile Agreements, been shot down by the ITC.   The proposal was made under the procedures for modifications to the HTSUS by Presidential Proclamation, which require the ITC to investigate the proposed action and issue a report and recommendations.  You may recall this process is the same that was recently carried out for footwear having textile outer soles (see our April 18th posting).  The President is not bound by the recommendation, but strong action by the trade community is needed to urge him to adopt these new provisions notwithstanding the ITC.

The application of duty-free treatment for certain festive-themed goods was determined by the courts in cases like Midwest of Cannon Falls. Later court cases such as Park B. Smith and Michael Simon Design, Inc. expanded the scope of what can be classified as “festive articles.”  These court cases applied to goods entered before 2007.  Subsequently, a legal note implemented in 2007, pursuant to the WCO’s 2007 HS Amendments, excluded utilitarian articles from classification as duty-free festive articles in heading 9505.   In order to ensure duty neutrality for goods affected entered after the 2007 amendments (see our April 18th posting for more on this), new duty free provisions would need to be added in areas of the HTSUS outside of heading 9505.  Two new Chapter 98 provisions were immediately adopted (9817.95.01 and 9807.95.05), but their scope was limited. 

While awaiting a determination on how to address the remainder of the goods, CBP issued instructions in 2008 and 2009 to the trade to file extensions of liquidations or protests on entries of merchandise importers believed would qualify for duty-free festive treatment in the absence of the new legal note.   Last summer, CBP finally proposed additional provisions that would cover all plastic, ceramic and glass kitchenware, tableware and toilet articles (except baking pans, cookie cutters, cookie stamps and presses), textile carpets and floor coverings, table linens, and apparel and made-up textile articles with festive designs or motifs, so long as  they are (a) closely associated with a festive occasion and (b) used or displayed principally during that festive occasion and not typically at any other time.

As part of its investigation of the proposal, the ITC considered public comments both in favor and against the new duty-free provisions.  Ultimately, ITC’s recommendation, dated in April but published just last week, advised against any new provisions because it believes that  (1) the proposed modifications are not necessary or appropriate to meet any of the objectives of such changes as provided in governing statute and (2) even if they were, they would not ensure the required substantial duty neutrality.  ITC reasons that most utilitarian articles with festive designs and/or motifs that would be covered by the proposal are dutiable under the current tariff, have been since the implementation of the new legal note in 2007, and had been for some time under CBP’s prior interpretations.  It then dismissed the court’s position as irrelevant under today’s HTSUS. 

While there is some truth to the fact that the goods had been subject to duty for some time, the argument disregards the fact that CBP’s proposal was intended to address the impact going back to the 2007 amendment and it disregards how the court decisions impact CBP’s prior practice.  Nevertheless, its disdain for the proposal is evident. 

The President can still implement the new tariff provisions contrary to the ITC’s recommendation and must be encouraged to do so. If not, new legislation may be required to implement the courts’ decisions. 

For further information and guidance on the impact of the ITC’s determination on past entries and options to oppose the proposed action, please contact us at dstern@strtrade.com or lordet@strtrade.com  or leave a comment on our blog.

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Filed under Classification, Duty Neutrality, Festive Articles, HS 2007, Textile/Apparel, WCO