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Appeals Court Decision May Signal Significant Shift in Classification Rules

Friday, October 17, 2014
Sandler, Travis & Rosenberg Trade Report

By a 2-1 majority, the Court of Appeals for the Federal Circuit ruled Oct. 16 that certain women’s garments are not classifiable under a specific heading of the Harmonized Tariff Schedule of the U.S. because they are not similar to the exemplars listed in that heading. However, the dissenting justice warned that this decision “will create unnecessary confusion in future classification cases and a high degree of unpredictability in the marketplace.”

The bra top and bodyshaper at issue were both designed to be a combination of two garments: a camisole, which is similar to a tank top in covering the body from the waist to above the bust, but generally with narrower shoulder straps and a lower neckline; and a brassiere. Both contain a shelf bra, an interior layer of fabric whose upper edge is attached to the camisole and whose lower edge is an elastic band not attached to the camisole that provides bust support, though to a lesser degree than many (though not all) brassieres. This combination is designed to allow wear in ordinary public settings without a layering garment on top or a separate brassiere underneath.

U.S. Customs and Border Protection classified the bra tops as knitted cotton tank tops and similar garments under HTSUS 6109.10.00 (16.5 percent duty) and classified the bodyshaper as a manmade fiber knit top under HTSUS 6114.30.10 (28.2 percent duty). The plaintiffs argued that their garments should be classified as brassieres and similar articles under HTSUS 6212.90.00 (6.6 percent duty) or, alternatively, under heading 6114. The CIT reclassified the bra tops as other cotton knit garments under HTSUS 6114.20.00 (10.8 percent duty), because they are a blend of 95 percent cotton and 5 percent spandex, and upheld CBP’s classification of the bodyshapers, which are a blend of nylon and spandex.

The CAFC states that its determination of whether the garments at issue are similar to those listed under HTSUS heading 6212 (i.e., brassieres, girdles, corsets, braces, suspenders and garters) requires it to evaluate what unifies those items, which may consist of both the presence of certain properties and the absence of others, and then determine whether the garments share those characteristics. The court bases this approach on the “lesson” of previous cases that an analysis of what is similar under a heading depends on what is listed in that particular heading and that the court’s task is language interpretation in context, not judicial imposition by doctrine.

The CAFC concludes that the unifying characteristic of the exemplars in heading 6212 is that their paramount function is support for the body or some other garment. The bra top and bodyshaper do not share this characteristic, the court asserts, because they are designed for coverage as well as support and neither function is the garment’s essential characteristic or purpose. The court cites its 1999 Avenues in Leather decision as holding that if even if an item contains certain features shared by those listed in a heading, the presence of other features in the item “as a whole” may negate similarity. In this case, the use of the term “similar articles” in heading 6212 indicates the need to compare the entire bra top or bodyshaper to the exemplars to determine if the garment as a whole, considering all of its features and functions, shares the unifying characteristic of support.

However, one of the three CAFC judges hearing the case dissented, stating that the majority’s reasoning represents a significant change in tariff classification rules. According to the dissent, the majority decision deviates from the General Rules of Interpretation included within the HTSUS “by rewriting the canon of statutory construction known as ejusdem generis.”In the tariff classification context, the dissent states, application of this principle means that an imported article falls within the scope of a general term or phrase if it possesses the same essential characteristics that unite the listed exemplars. In this case, the garments at issue share the same essential characteristic as the exemplars in heading 6212 (providing support) and are therefore classifiable as similar articles. The presence of an additional function, the dissent states, does not by itself prevent an imported article from being classified ejusdem generis unless it comprises an inconsistent specific primary purpose.

By allowing additional but not inconsistent features to trump similarity, the dissenting justice continues, the majority “implicitly revives” the so-called “more than” doctrine, which held than an imported article that shares features of a listed exemplar is not classifiable under that heading if the article contains additional “nonsubordinate or coequal” functions or characteristics. The CAFC itself has held that this doctrine has been supplanted by the HTSUS, the dissent states, and was explicitly overruled in the portion of Avenues in Leather cited by the majority. Moreover, by focusing its analysis on “paramount functions” instead of “essential characteristics,” the majority “is in effect rewriting the ejusdem generis principle” by rejecting the possibility that an article may have more than one essential characteristic. The dissent concludes that this analysis “invokes a ‘sounds right to me’ approach that is decidedly at odds with established rules of tariff classification interpretation established by law and followed by this court.”

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