Crikey and Zut Alors, What is a Diary?

For more than 20 years, I have had the privilege of organizing the Dominick L. DiCarlo – US Court of International Trade Lecture at the University of Illinois – Chicago Law School (FKA the John Marshall Law School). One of the great pleasures of this experience has been working with Court of International Trade judges who have graciously participated as keynote speakers.

Last week, we presented the 22^nd edition during which I had the opportunity to interview the Honorable Jane A. Restani. In a discussion on the interpretation of the Harmonized Tariff Schedule, Judge Restani mentioned her recent decision in Blue Sky the Color of Imagination, LLC v. United States and asked whether I would post on the decision here. I had recently exchanged emails about the case and mistakenly thought I had already posted this. To ensure that I have not misled a judge or the audience at the event, here is that post.

The question presented in this case was the classification of paper notebooks that contain calendars. The notebooks are “planners” of a sort I did not realize still exist in physical form. They include full-page monthly and weekly calendars with spaces to write notes. The planners have a spiral binding and additional pages to record contact information. Here is an example, although I am not certain it was one of the models at issue.

Customs classified the merchandise in “other paper products” in Heading 4820 as “Registers, account books, notebooks, order books, receipt books, letter pads, memorandum pads, diaries and similar articles, exercise books, blotting pads, binders (looseleaf or other), folders, file covers, manifold business forms, interleaved carbon sets and other articles of stationery, of paper or paperboard . . . .” The importer challenged the liquidation and argued that the merchandise should be classified in Heading 4910 as “Calendars of any kind, printed, including calendar blocks.”

As with most tariff classification cases, there were no questions of fact in dispute. Presumably, the Court had examples of the product and everyone could agree on their physical character and use. The case comes down to whether the planners are articles that are “similar” to diaries of Chapter 48 or are “calendars” of Chapter 49. According to the Explanatory Notes, the difference between goods of Chapter 48 and 49 is the role of any printed material. Chapter 48 articles may contain considerable printed material as provided the printing is subsidiary to the primary use including, for example, “diaries.” Chapter 49 on the other hand, covers “calendars,” provided the printing gives the article its essential character.” One way I might boil this down is that Heading 4820 products are for writing while 4910 products are for reading or reference.

To the extent the planners contain grids that illustrate the days of the year in an orderly manner, they can serve as a reference to determine the day and date. That makes them functionally calendars under the normal dictionary definitions of that term. But, the Court noted, the planners also contain spaces in which to record information about daily activities, contacts, and any other marginalia that strikes the user. Moreover, the EN to 4910 indicate that heading does not cover memo pads and diaries that incorporate calendars. Consistent with the Explanatory Notes, this might have been enough to resolve the matter in favor of the government.

The plaintiff argued that the Court should ignore the EN because the meaning of “calendar” is clear and unambiguous. But the hard question was not what constitutes a “calendar.” The hard bit was whether the planners are “diaries” or articles similar to diaries. This is where things took an unusual turn.

The court is required to determine the meaning of tariff terms based on their common and commercial meanings. To do that, the court can look to dictionaries and other reliable sources and it can rely on its own understanding of the words. The Harmonized System is not written solely for an American audience. In fact, the intention to provide a “harmonized” means by which all parties to the Convention can uniformly classify merchandise to the sixth HS code digit. According to the Court, in the absence of an Additional US Note or similar indication of congressional intent, the Court will presume that HTSUS embodies the international nomenclature. There is no such indication here.

That raises the question of the international meaning of “diary,” which informs the meaning of articles “similar to” diaries. Because the English text of the HS is intended to be implemented in both the US and the UK, the Court considered the British meaning of “diary.” This is not a new or novel approach. In a case involving Victoria’s Secret, the Court noted that Heading 6109 covers “T-shirts, singlets and other vests, knitted or crocheted.” In that context, the Court applied the British meaning of vest and held it was limited to undershirts. In the recent Jing Mei decision, the Court referenced the British meaning of “mounting” as including an embellishment or ornament to classify several auto trim components. Moreover, the HS is also drafted and published in French. The rule on interpreting treaties that are officially in two languages is, when possible, to interpret them to be in concert, not conflict. While the HS is not exactly a treaty, the Court applied these principles to avoid injecting disharmony into the Harmonized System.

Turning to British dictionaries, the Court found that “diary” can mean “a book in which you write things that you must remember to do.” Another meaning is “calendars containing daily memoranda on matters of importance to people generally, or to members of a particular profession . . . .” In French, the HS uses the word “agenda,” the meaning of which includes “a notebook with a calendar” or “appointment book.” In other words, a planner. Consistent with that, the Court concluded that the planners are diaries, which are excluded from 4910.

That analysis makes perfect legal sense and is consistent with the guidance found in the Explanatory Notes. It is also advantageous in the larger context in that it preserves (and encourages) uniformity in the interpretation and application of the Harmonized System.

But this decision also serves as a very practical reminder that tariff classification is sometimes more complicated than compliance professionals anticipate or appreciate. That is, in many ways, an artifact of trying to draft a single document that describes all the possible physical goods in the universe in language that can be understood universally. That system is inherently imperfect. The WCO has undertaken a study of the “health” of the system. The Interim Report, identifies a number of areas of potential improvement including efforts to make the General Rules of Interpretation more prominent and less subjective and to clarify the Chapter and Section Notes. Looking for international ambiguities across local versions of English and French should be on that agenda. At the same time, the International Trade Commission can be on the lookout for variations and add clarifying Additional U.S. Notes. The HTSUS is a complicated legal text. But it is also supposed to be a document the trade community can reference and interpret based on the “common and commercial meaning.” Ideally, that should not require cross referencing British and French dictionaries, let alone Canadian, Australian, and others. Here’s hoping the WCO efforts and the ITC make significant advances in simplifying (or at least clarifying) the HTSUS.