The Explanatory Notes ~ A Good Read!

by Catherine J. Petersen           2/14/2016

The short cold days of winter are when I pick up the Explanatory Notes (EN), get a cup of hot cocoa, snuggle in my favorite chair, and reread certain sections. Today, I am focused on the notes associated with "Parts."

Why review "Parts?" If you are responsible for classifying the items known as parts in your item master, you know that classifying those items can take more time than classifying a finished product. The EN advises that parts are suitable for use solely or principally with particular machines or apparatus. That was the argument that the Container Store put forth to U.S. Customs and Border Protection (CBP), and subsequently the Court of International Trade (CIT). Neither CBP nor CIT agreed with the Container Store, see http://www.cit.uscourts.gov/SlipOpinions/Slip_op16/16-6.pdf as well as the analysis information provided by DrinkerBiddle at http://www.drinkerbiddle.com/resources/publications/2016/cit-contains-parts-of-provisions?Section=Publication.

 In this case, the CIT was to determine whether the classification of Container Store's elfa® top tracks and hanging standards properly fall within the scope of HTSUS headings 9403 or 8302.

In this case, the Container Store urged that the correct classification for its product be in heading 9403, HTSUS, as "[o]ther furniture and parts thereof," based on the plain language of the heading, the relevant section, chapter, and explanatory notes, and the construction of the heading that the Federal Circuit adopted in another case, which was storeWALL.

The United States conceded that elfa® top tracks and hanging standards are prima facie classifiable under heading 9403. The United States contended that they are also prima facie classifiable under heading 8302, HTSUS, as "base metal mountings, fittings and similar articles suitable for furniture." The United States argued that the Court must classify the goods under the more specific of the alternative headings, then asserted that heading 8302 is more specific than heading 9403.

The CIT followed the General Rules of Interpretation (GRI); the CIT used GRI 3(a), which is known as the rule of specificity. It dictates that an article prima facie classifiable in two or more headings should be classified under the heading that provides "the most specific description of the goods." The CIT concluded that heading 8302 was more specific, and the proper classification was 8302.42.30. The duty rate for this classification is 3.9% while for the product in 9403.90.80 it is duty free.

Product classification is a core competency for exporters and importers. For exporters, it is required in order to file the Electronic Export Information and free trade agreement certificates of origin. For importers, it determines the amount of duty to be paid at time of entry.

Do I yearn for cold, blustery winter days? The answer is a resounding NO! Yet, it is a reason to stay indoors and catch up on the always informative Explanatory Notes!