CAFC Divided on Consideration of Use in Eo Nomine Tariff Provisions
In a split decision, the Court of Appeals for the Federal Circuit has remanded to the Court of International Trade a case concerning the proper classification of certain screws. Two judges said the use of the screws should be considered in determining their classification even though the two subheadings at issue are both eo nomine provisions, while a third judge issued a strong dissent.
The screws at issue are made with corrosion-resistant case-hardened steel and are marketed for use in carpentry as building material fasteners. One model has a flat self-countersinking head designed to cut away at the top layer of the material as the screw is driven into place. Two others, which are recommended for fine carpentry and trim applications, have much smaller heads that are designed to prevent the screws from cracking and splitting the target material. Each model is available in a variety of lengths, diameters and thread designs. U.S. Customs and Border Protection classified the screws as other wood screws under HTSUS subheading 7318.12.00 (12.5 percent duty), whereas the plaintiff claimed classification as self-tapping screws under HTSUS 7318.14.10 (6.2 percent duty).
Noting that the HTSUS does not specifically define either subheading, the CIT stated that both are eo nomine provisions and as such describe an article by a specific name, not by use. The court concluded that CBP’s argument depended heavily on the use of the screws and was thus an attempt to convert an eo nomine provision into a use provision, “a weakness that ultimately undermines [its] proposed classification.” Instead, the CIT focused on the physical characteristics of the screws in determining the scope of the subheadings and subsequently determining that the screws are both self-tapping and wood screws. The court ultimately used General Rule of Interpretation 3(c) to classify the screws under HTSUS 7318.14.10, the subheading that occurs last in numerical order of those under consideration.
Two of the three CAFC judges hearing the case, however, cited judicial precedent has having established that the use of articles may, under certain circumstances, be considered in tariff classification according to eo nomine provisions. This may occur at the stage of establishing the proper meaning of a designation when a provision’s name “inherently suggests a type of use,” or once tariff terms have been defined it may be the case that the use of subject articles defines their identity when determining whether they fit within the classification’s scope. A judicial inquiry involving an eo nomine provision may thus include the article’s physical characteristics as well as what features it has for typical users, how it is designed and for what objectives, and how it is marketed.
On the other hand, the dissenting judge stated that the majority opinion “ignores a fundamental rule of interpretation” of the HTSUS; namely, that eo nomine provisions are distinct from use provisions and do not depend on the principal or actual use of the imported merchandise in the U.S. It is improper to import a use limitation into an eo nomine provision unless the name of the good inherently suggests a type of use, this judge said, a criterion that the CIT determined was not met in this case. Instead, the judge added, “the majority’s articulation of when use should be considered in an eo nomine analysis,” which relies on decades-old cases interpreting a prior classification scheme, “effectively converts eo nomine provisions into use provisions.” The judge concludes that the majority’s decision “blurs the boundaries between eo nomine and principal use provisions in ways that will promote confusion and error in future classification cases.”