New Guidance on Entries of Festive-Ware Requires Action by Importers to Preserve Right to Duty-Refunds

August 24, 2009

On August 18, 2009, U.S. Customs and Border Protection (CBP) issued revised guidance on the classification of utilitarian or functional articles with festive designs and/or motifs in light of the Michael Simon Design, Inc. V U.S. decision. In the August 18 guidance, CBP is confirming its December 2008 guidelines, stating that it will classify holiday-themed utilitarian articles entered on or after February 3, 2007 according to their constituent materials and not their characterization as festive articles

Prior to February 3, 2007, the utilitarian articles with festive designs (including apparel and textile goods), were classified as duty-free under heading 9505 of the Harmonized Tariff Schedule of the U.S. (HTSUS). However, to ensure that these articles are afforded duty-free treatment, CBP has indicated that it will work with the U.S. International Trade Commission to create a provision in chapter 98 of the HTSUS, similar to subheading 9817.95.01 which provides duty-free treatment for articles used for specific religious occasions.

As previously reported, importers who have imported the subject merchandise since February 3, 2007 may be eligible for a duty-refund equivalent to the additional duties paid plus interest since the time of entry. The current guidance provides additional details on the following actions importers should take to preserve their right to a refund in the event of a successful court appeal or the creation of a special tariff provision:

• File a written request to extend liquidation of all entries of potentially covered articles at each relevant port. (Note: the August 18 guidance provides importers the opportunity to suspend liquidation for an additional year). If a request for extension is not filed, the entry shall be liquidated with the articles classified as other than festive articles.
• Suspensions of liquidation made pursuant to the December 8, 2008 version of this guidance should be converted to extensions of liquidation pursuant to the current guidance.
• For entries already liquidated, timely file administrative protests.

Importers that pay duty on utilitarian holiday products should continue to pursue duty refund claims on such articles, and should contact a Barnes/Richardson attorney immediately in order to determine the appropriate method to capture full potential refunds for duties paid on entries since the 2007 effective date.