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Decorative Paper Punches Not Classified in Duty-Free Subheading, Court Says

Friday, November 08, 2013
Sandler, Travis & Rosenberg Trade Report

The Court of Appeals for the Federal Circuit ruled this week that decorative paper punches are properly classified as perforating punches and similar handtools under HTSUS 8203.40.60 (3.3% duty). These punches, which are imported from Taiwan under the “Stampin’ Up!” brand name, cut shapes or designs out of or in paper and are used in scrapbooking and other craft projects. The die components for each model are made of zinc alloy comprising about 75% of the total product weight, with the housing bottom, handle and springs accounting for the rest.

The CAFC upheld the Court of International Trade’s determination that the punches are described eo nomine under heading 8203 by the qualifiers “perforating” (making a hole through something) and “handtools” (used or worked by hand). All of the punches at issue are operated by hand and can be operated without being set on a surface, the court stated, even if some might best be operated on a surface. Plaintiff Wilton Industries Inc. asserted that perforating punches are used only to make holes in heavy-duty materials such as metal, not paper. However, the court pointed out that the Explanatory Notes for HTSUS Chapter 82 identify that examples of perforating punches covered by heading 8203 include ticket punches for making holes in paper and saddlers’ or mattress punches for making holes in materials such as leather or felt.

Wilton argued that the punches should be classified as cutting machines of all kinds under HTSUS 8441.10.00 (duty-free). However, the court stated that this subheading covers cutting machines “for making up paper pulp, paper or paperboard.” Machinery described in Chapter 84 “is unambiguously directed to the industrial manufacture of paper and paper products,” the court said, and the punches are issue “clearly” do not fall within that description.

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