Fed Circuit Court: GRK Canada LTD. Screw Classification Decision
August 5, 2014
On August 4th, the Federal Circuit Court decided in a 2-1 decision that the U.S. Court of International Trade (CIT) must reevaluate the duties on Canadian screws made by GRK Canada Ltd.
In 2009, GRK Canada claimed that Customs and Border Protection misclassified their product as “other wood screws,” which have a duty of 12.5% instead of “self-tapping screws,” which have a tax rate of 6.2%. The CIT had declared that the screws could have fallen under either category. However, the government contended that the “screws were intended for use in wood,” which would designate them as “other wood screws.” They claimed the “self-tapping screws” are used primarily for “steel, concrete and marble.”
To decide which category the screws should fall under, the CIT used a provision, which chose the classification based eo nomine (categorization of the product by name) and selected the tax rate by the subheading “which occurs last in numerical order”, self-tapping screws. However, the Federal Circuit Court decided that the CIT must reevaluate the classification based on use and not eo nomine (based on the name) alone. The Court declared, “the use may be considered as part of the definition of eo nomine provisions, where, even if the eo nomine provision describes goods with respect to their names, the name itself may 'inherently suggest a type of use."
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