The United States Court of Appeals for the Federal Circuit (CAFC) has ruled that "flimsy" costumes, such as those worn by children at Halloween, are properly classified as duty-free "festive" goods of Harmonized Tariff Schedule (HTS) subheading 9505.90, rather than as "wearing apparel" of HTS Chapters 61 and 62, subject to high rates of duty, and, potentially, to textile quotas.

     In Rubie's Costume Co. v. United States, No. 02-1373 (August 1, 2003), the Federal Circuit ruled that Customs Headquarters Ruling 961447, which classified "flimsy" costumes as festive articles of HTS Heading 9505.90.60, had the "power to persuade", and should have been accorded deference under the doctrine set out in Skidmore v. Swift & Co., 323 U.S. 134 (1944). Because the CIT had failed to give this ruling appropriate deference, its decision classifying costumes as "wearing apparel" was erroneous.

     Judge William Bryson dissented, holding that Customs' classification of textile costumes as wearing apparel should have been sustained.

     Although the plaintiff in Rubie's Costume Company has the option to seek en banc review of the Federal Circuit's decision, or review by the United States Supreme Court, the likelihood that the decision will be reconsidered is remote.

     While Customs could immediately begin granting protests against the assessment of duties on costumes, the agency will probably wait for up to 60 days before issuing instructions to this effect. However, since the decision favors Customs' position, we expect that they will be eager to grant duty refunds to importers who have deposited duties on costumes and filed timely protests.

     In order for importers to ensure that they receive refunds of duties deposited on entries of costumes, it is essential that the importers file a protest within 90 days from the date each entry liquidated, or file Supplemental Information Letters in respect of entries not yet liquidated. A copy of the decision is available for a limited time (in Microsoft Word format) on the Federal Circuit's website at http://www.fedcir.gov/opinions/02-1373.doc.

     For assistance in obtaining duty refunds on imported costumes, please feel free to contact a Neville Peterson LLP attorney at (212) 635-2730 or (202) 861-2959.

     

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