Federal Circuit - Intended use of imports can be considered for HTSUS classification purposes 

August 4: The U.S. Court of Appeals for the Federal Circuit today vacated and remanded a decision of the trade court concerning the HTSUS classification of certain screws. The Federal Circuit majority concluded that the trade court erred in not considering the intended and principal use of the screws under its review of the possible HTSUS classifications. GRK Canada, Ltd. v. United States, 2013-1255 (Fed. Cir. August 4, 2014)

Read the Federal Circuit’s decision [PDF 171 KB] that also includes a dissenting opinion.

Summary

At issue was the Harmonized Tariff Schedule of the United States (HTSUS) classification of screws marketed for use in carpentry as building material fasteners. The screws had a flat countersinking head, and were recommended for fine carpentry and trim applications.


With respect to imports during 2008, U.S. Customs and Border Protection (CBP) classified the screws under HTSUS 7318.12.00 “other wood screws” with a 12.5% ad valorem duty. The importer filed a protest, asserting the proper classification was under HTSUS 7318.14.10 “self-tapping screws” with a 6.2% duty.


The U.S. Court of International Trade focused on the physical characteristics in determining the classification of the imported screws, and found that the imported screws had features of both self-tapping and wood screws. The trade court then applied a rule that goods are classified under the subheading that occurs last in numerical order—here, self-tapping screws. Thus, the trade court found in favor of the importer.


The government appealed.


Today, the majority of the Federal Circuit held that the trade court erred in not considering the use of the subject screws—i.e., to fasten wood—and vacated that decision.


As the Federal Circuit explained, an eo nomine classification within HTSUS must capture all forms of the goods, including improvements that do not change the essential characteristic of the articles (eo nomine describes an article by a specific name, not by use, and includes all forms of the named article). The use of goods also may be an important aspect of the distinction in certain eo nomine provisions—such as in this case, where the name of the provisions refers directly to the use of the articles.


The dissenting opinion countered that the principal use is not to be considered in an eo nomine analysis.



For more information, contact a professional with KPMG’s Trade & Customs practice:


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