Read the Federal Circuit’s decision [PDF 100 KB]
The imported goods are punches used to cut shapes and designs from paper, for hobby projects.
The importer claimed that the appropriate classification was under subheading 8441.10.00 HTSUS which provides duty-free treatment for “cutting machines of all kinds.”
U.S. Customs and Border Protection (CBP), however, liquidated the punches under subheading 8203.40.60 which has a duty rate of 3.3%.
Before the U.S. Court of International Trade, the parties entered into a stipulation agreement to classify 23 of the 39 models at issue under subheading 8441.10.00 because they were too large to use in the hand. CBP, however, maintained that subheading 8203.40.60 was the proper classification for the remaining 16 models because they were “intended for use when held in the hand.”
Both parties moved for summary judgment, with the trade court granting the government’s cross-motion for summary judgment. The trade court analyzed each party’s proposed tariff headings pursuant to Rule 1 of the General Rules of Interpretation (GRIs) by reviewing the terms of the headings and the legal notes and by consulting dictionaries to determine the common meaning of the relevant terms.
Today, the Federal Circuit affirmed that the proper classification was under subheading 8203.40 HTSUS.
For more information, contact a professional with KPMG’s Trade & Customs practice:
John L. McLoughlin
Todd R. Smith
Luis A. Abad
Or your local KPMG Trade & Customs professional.