Thursday, July 10, 2014

Dependable Classifications

When we last left Dependable Packaging Solutions, Inc. v. U.S., the Court of International Trade agreed with U.S. Customs and Border Protection that certain inexpensive bud vases were properly classified as "glassware of a kind used for . . . indoor decoration or similar purposes" (Heading 7013) rather than as "carboys, bottles . . . and other containers, of glass, of a kind used for the conveyance or packing of goods" (Heading 7010). Dependable appealed to the Court of Appeals for the Federal Circuit, which has now rendered its judgment.

The interesting issue Dependable raised on appeal has to do with the Explanatory Notes. [Note from Larry: Dear Thomson Reuters and Boskage, you're welcome.] The Explanatory Notes are not binding on Customs or the Court. Nevertheless, because they represent the views of the folks who wrote the Harmonized Tariff, they are deemed to be relevant and persuasive authority on the meaning of a tariff term. In this case, the Explanatory Notes specifically state that vases are examples of products included in Heading 7013. The CIT then determined that the products at issue are "vases" and, therefore, classified in 7013.

But, Dependable points out, the word "vase" does not appear in Heading 7010 and, therefore, the definition of vase is irrelevant to determining the scope of that heading. The issue, according to Dependable, is whether the goods are "containers," which they most certainly are. Nevertheless, based on commercial documents and statements at the hearing, the Court concluded that they are also vases.

That left the Court with having to decide between 7010 and 7013, both of which are use provisions. Thus, the question boils down to finding the principal use of the class or kind of products similar to these vases. If the single most common use in the U.S. is not for the conveyance or packing of the goods, then the vases cannot be classified in 7010.

To determine principal use, the Court applied the so-called Carborundum factors . . . .

Sorry, I nodded off.

At this point, you and I can both lose interest in this case. The remainder is a close approximation of the analysis performed by the Court of International Trade. You should review the prior post for a summary of that analysis.

That said, I think this case and the prior R.T. Foods decision are notable for the clarity and detail of the classification analysis they contain. The common denominator may be that both were authored by Circuit Judge Wallach who came to the Federal Circuit after a stint as a Judge of the Court of International Trade, where he clearly learned a thing or two about classification. This case is a good teaching example of how principal use works and how importers should think about classifications based on use. So, the decision is worth reading despite my giving it short coverage here.

Finally, what the heck is a carboy? According to Bing, its a large bottle for corrosive liquids. Apparently, they are also commonly used in home brewing. Stuff like that is part of why being a customs lawyer is interesting. Who else but dealers in sulfuric acid, hipsters and product classifiers would know that?



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