Saturday, August 17, 2013

Do I Amuse You?

Remember when I said I was trying to catch up? I know it looks like a lie. It's not. I'm just running around on a real work for real people and on real end-of summer efforts to not waste good weather. That said, I am still reading court cases.

I'm going to make short work of Spring Creative Products Group v. United States, a decision of the U.S. Court of International Trade. The case involved the proper tariff classification of a craft kit for the making of a fleece throw. The kit contained two 48 by 60-inch fabric panels and materials used to knot them together into a single throw. Most of the kits included a panel printed with a character from a popular cartoon, comic book, or children's movie. Customs and Border Protection classified it as pile fabric of man- made fibers in 6001.22.00. The importer challenged that classification and asserted that the correct classification was as a toy in Heading 9503.

The Court of International Trade made a lot of findings of fact and conclusions of law, all of which were helpfully set out in numbered paragraphs. That makes the decision technically precise but, frankly, a little tough to read. But, we can bottom line this easily enough.

Because of Section XI, Note 1(t) of the HTSUS, if the goods are classifiable in Heading 9503, they are excluded from Section XI, including Chapter 62. The relevant part of Heading 9503 is a use provision meaning that the principal use of the merchandise must be as a toy. Customs has long held that the distinguishing characteristic of toys is that they are designed primarily for amusement rather than for some utilitarian purpose. Toys provide a pleasurable diversion.

The Court applied the famous (among a small group of people) Carborundum factors to determine whether these kits are of the class or kind of merchandise that provides amusement and diversion. In a nutshell, the Court found that both the physical characteristics of the merchandise and the expectations of purchasers indicated that the kits were principally used as toys. Contrary to the argument put forward by the Department of Justice, the fact that the importer was not a toy company and the kits are not sold in toy stores did not negate the fact that the goods are toys. As a result, they are properly classifiable in 9503.


Kirsten Herder said...

This is one of those cases where I marvel at the chutzpah of the importer making the argument and am sure they are going to lose badly, then they win! This decision is going to be used by craft supply companies everywhere to classify their products as toys. Scrapbookers rejoice!

Larry said...

Kirsten, thanks for the comment. Sometimes chutzpah is all you have at the start of the case. And sometimes, the results surprise all of us (for good and for bad).