United States Court of International Trade

19-158

Before the Court in S.C. Johnson & Son, Inc. v. United States, Slip Op. 19-158, Court No. 14-00184 (December 16, 2019) was the Court’s decision pursuant to a bench trial regarding the classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of “Ziploc®” brand reclosable plastic bags. “The court denied summary judgment previously based on the existence of genuine issues of material fact. The parties requested that the court hold a bench trial on the papers after mutually agreeing to admit all documents, deposition transcripts, and reports into evidence.” Id. at 1-2.  The Government argued the product was classifiable under Heading 3923 as “articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics” Id. at 9. Johnson argued the product was properly classified under Heading 3924 as “tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics” Id. For the following reasons the Court concluded that the subject merchandise are properly classified under HTSUS Heading 3923.  

“The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation (“GRI”).” Id. at 8.  “Under GRI 1, classification shall be determined according to the terms of the headings and any relative section or chapter notes.” Id. “Absent contrary legislative intent, HTSUS terms are to be construed according to their common and popular meaning.” Id. “When goods are, prima facie, classifiable under two or more headings . . . the heading which provides the most specific description shall be preferred to headings providing a more general description.” Id. at 23.  Using the Carborundum factors, use in the same manner as merchandise which defines the class; the general physical characteristics of the merchandise;  the economic practicality of so using the import;  the expectation of the ultimate purchasers;  the channels of trade in which the merchandise moves;  the environment of the sale, such as accompanying accessories and the manner in which the merchandise is advertised and displayed; and the recognition in the trade of this use, the Court found the product was prima facie classifiable under Heading 3923. The Court also found that the goods were prima facie classifiable under Heading 3924 because the product could be found commonly in households. Because the goods were prima facie classifiable under two different headings the Court turned to GRI 3 to determine classification. Under GRI 3a, the Court determined the proper classification was under Heading 3923 because the heading “has requirements that are more difficult to satisfy and describe the article with a greater degree of accuracy and certainty.” Id. at 24.

19-161

Before the Court in Trimil S.A. v. United States, Slip Op. 19-161, Court No. 16-00025 (December 17, 2019) were cross motions for summary judgement in a case challenging U.S. Customs and Border Protection’s (“Customs”) denial of protest regarding twelve entries of clothing imported from Italy and Hong Kong. Specifically, plaintiff challenged Customs’ inclusion, in transaction value (“TV”), advertising fees and trademark royalty fees that Trimil paid to third parties. The addition of these fees to the clothing’s transaction value increased the amount of Trimil’s duties. For the following reasons the Court granted plaintiff’s motion and denied the defendant’s.

TV “is the price actually paid or payable for the merchandise when sold for exportation to the US, plus a limited number of fact-dependent additions.” Id. at 7. TV may also include, “any royalty or license fee related to the imported merchandise that the buyer is required to pay, directly or indirectly, as a condition of the sale of the imported merchandise for exportation to the United States.” Id. at 9.  The Court said the advertising fees were paid as part of a “larger enterprise, but were aimed at resale of the clothing in the U.S. market.” The connection to the sale for export and any benefits were “so tangential to the fees paid,  … for advertising as to be unquantifiable.” Id. at 14.  The Court also concluded the trademark fees were not part of a sale for export to the US because under the governing contract the trademark holder could terminate the agreement at any time “if Trimil violates any of the obligations provided for in any of the following Clauses, including payment of fees.” Id. at 19.