Holiday Apparel & Other Products Eligible for Duty-Free Classification

On September 11, 2007, in Michael Simon Design, Inc. v. United States, the U.S. Court of Appeals for the Federal Circuit affirmed a decision of the U.S. Court of International Trade holding that holiday apparel may be reclassified as duty-free festive articles. Although the government argued that holiday apparel were utilitarian in nature and thus, cannot be classified as festive articles under heading 9505 of the Harmonized Tariff Schedule of the United States (HTSUS), the Court of Appeals rejected that argument and stated, "[B]ecause we conclude that the goods' utilitarian nature does not prohibit classification under chapter 95, and because the relevant chapter and section notes render classification proper under chapter 95, the trial court was correct to reverse Customs' classification ruling." The court also noted that it is not bound by a contradictory Explanatory Note, which expressly excludes articles having a utilitarian function from classification as a festive article.
This decision makes it clear that holiday apparel, and other goods, may be classified as festive articles under HTSUS heading 9505 regardless of their utilitarian value if they meet two criteria: "(1) it must be closely associated with a festive occasion and (2) the article is used or displayed principally during that festive occasion." Although an appeal from the government may follow, the legal reasoning of the court appears sound.

Nevertheless, importers may be entitled to refunds for duties paid on such articles for past entries that are still within the protest time period. (Entries made in 2007 will not be eligible for protests as the 2007 amendments to the HTSUS now specifically exclude apparel and other utilitarian articles from classification as festive articles.) Protests of customs entries must be filed within 180 days of the entry's liquidation and Customs generally liquidates entries within 11 to 12 months. Thus, importers may be able to file protests for products imported within the past 18 months. Global Trade Expertise can assist importers with obtaining such refunds. Just 
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