Customs Overviews

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP 

In This Memo:

  • Recent Decisions
  • HTS - Potential Changes
  • Completing Lab Test Results
  • CPSC Developments

RECENT DECISIONS.  

The following is a brief description of decisions recently published by CBP.  

The following appear in the Customs Bulletin for October 30, 2019.

The first ruling is HQ H261881 (September 30, 2019) which revokes a NY ruling holding that a “Mickey” mitt is classified in subheading 9505.90.60 (Free) as festive articles. The mitt consists of acrylic pile worn on the hand to create the appearance of the three digit hand of the cartoon character "Mickey Mouse". It allows for the insertion of the thumb and separate insertion of the fingers.

The Chapter 95 Notes provide that it does not cover gloves, mittens and mitts.  In CBP’s view, because the article has separate sheaths for the thumb and fingers, it is a mitt. Accordingly, classification was found to fall in subheading 6116.93.88 (18.6%).

Origin is the issue in HQ H304541 (Proposed).  The subject merchandise consists of stuffed mattress covers. The zippered mattress covers are made with multiple fabrics from a variety of countries. In all cases, the cutting, sewing and assembly operations are performed in El Salvador.  

In the first scenario all of the fabric is formed in the United States. In the second scenario the fabric comes from United States and China. In the third and fourth scenarios all of the fabric originates in China or one of the three fabrics originates in Mexico.

When all of the fabric has a single origin, that country is the country of origin. This includes the mattress covers made in El Salvador entirely of US produced fabric.  Where the fabric is produced in multiple countries, El Salvador is the country of origin as the last country in which an important manufacturing or assembly operation took place.  


HTS – POTENTIAL CHANGES.  

The International Trade Commission has announced an investigation into changes in the HTS recommended by the World Customs Organization. 84 Federal Register 53748 (October 8, 2019).  The recommendations include the following changes in Section XI.

1.  New Section Note 15.

15.    Subject to Note 1 to Section XI, textiles, garments or other textile articles, incorporating chemical, mechanical or electronic components for additional functionality, whether incorporated as built-in components or within the fibre or fabric, are classified in their respective headings in Section XI provided that they retain the essential character of the goods of this Section. 

2. New Chapter 59 Note 3.

3.    For the purpose of heading 59.03 “textile fabrics laminated with plastics” means products made by the assembly of one or more layers of fabrics with one or more sheets or film of plastics which are combined by any process that bonds the layers together, whether or not the sheets or film of plastics are visible to the naked eye in the cross-section.”.

3. Revised Chapter 61 Note 4.

4.    Headings 61.05 and 61.06 do not cover garments with pockets below the waist, with a ribbed waistband or other means of tightening at the bottom of the garment, or garments having an average of less than 10 stitches per linear centimeter in each direction counted on an area measuring at least 10 cm x 10 cm.  Heading 61.05 does not cover sleeveless garments.

“Shirts” and “shirt-blouses” are garments designed to cover the upper part of the body, having long or short sleeves and a full or partial opening starting at the neckline.  “Blouses” are loose fitting garments also designed to cover the upper part of the body but may be sleeveless and with or without an opening at the neckline.  “Shirts”, “shirt-blouses” and “blouses may also have a collar.

4.  New Chapter 62 Note 4, which, but for the Headings, mirrors revised Chapter 61 Note 4. 

5.  The term “wind-cheaters” is added to Headings 6201 and 6202.


COMPETING LAB TEST RESULTS.  

From time to time an importer will challenge a CBP decision, arguing private laboratory test results should be used in lieu of the CBP Lab results.  Usually, CBP will ignore the private laboratory results where there is a competing CBP Lab test. This is illustrated in HQ H303472 (July 26, 2019).

The issue is whether a particular garment qualified for a CAFTA short supply provision.  Three separate styles each made with the same fabric were at issue. The CBP Lab found that two of the three satisfied the specific content requirement; the third did not. The particular short supply specification is for a spandex content of at least 3%. CBP determined that the spandex content for the third style was only 2.3%.

The importer provided a private lab test that concluded that the spandex content was 3.1% and a certification by the fabric producer that the spandex content was 4%.  The importer advanced various arguments in an attempt to persuade CBP that the private test results were more likely to be accurate than the CBP test results; all to no avail.  Indeed, the fact that the private lab and CBP lab results were similar is recited in the ruling as support for the CBP results.

Basically, CBP lab test results are presumed to be correct and in the absence of very compelling evidence to the contrary, invariably will be followed.


CPSC DEVELOPMENTS.  

There was a single recall of textile articles in October. Infant Bibs were recalled as the snap on the bibs can detach, posing a choking hazard to young children.

The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties.  Matters reported on or summarized herein may not be construed as legal advice on specific situations. 

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP 

In This Memo:

  • 301 Duties
  • Classification Decisions
  • Drawback
  • CPSC Developments

301 DUTIES.   

A few parallel issues have surfaced connection with the additional 301 duties. The first deals with bond amounts.

As noted in the December Overview, the 301 duties prompted CBP to remind importers that it conducts continuous bond sufficiency reviews on a monthly basis. CSMS #18-000664 (November 8, 2018). The basic requirement is that the continuous bond amount equal 10 percent of annual estimated duties. In the event that the Revenue Division determines that the bond amount is insufficient, it could restrict release. In addition, it could deactivate the bond, requiring that the importer use single entry bonds, which are substantially more expensive than continuous bonds.  

Although, members have not indicated experiencing either action, press reports may suggest otherwise. This may be simply a matter of timing.  301 duties on most textile and apparel imports are relatively recent. 

If CBP requires that an importer's bond be increased, sureties can be expected to review the importer's creditworthiness and in extreme cases require that the importer post collateral, often in the form of a stand-by letter of credit.

The second issue involves the treatment of tariff sets such as suits or ensembles. 

Note that under HTS Section XI Note 14, unless the context requires otherwise, garments classified in headings 6101 to 6114 and 6201 to 6211 are classified separately even if put up in sets for retail sale. Also, the origin of the textile and apparel component of sets is determined separately. 19 CFR 102.21 (d).

There are specific rules dealing with situations when certain tariff sets are included in either Tranche 3 or 4.  The intent is to impose 301 duties only once on products of a tariff set.  CBP’s instructions on this issue are found in CSMS #39977745 (September 28, 2019).

Sets Included in Tranche 3

  • If the component HTS# is covered under Tranche 1 (9903.88.01), then transmit 9903.88.21.  (Only the Tranche 1 duty rate will apply to the component and the set will not be charged the Tranche 3 duty rate.)
  • If the component HTS# is covered under Tranche 2 (9903.88.02), then transmit 9903.88.22.  (Only the Tranche 2 duty rate will apply to the component and the set will not be charged the Tranche 3 duty rate.)
  • If the component HTS# is covered under Tranche 3 (9903.88.03 or 9903.88.09), then transmit 9903.88.23.  (Only the Tranche 3 duty rate will apply to the component and the set will not be charged the Tranche 3 duty rate.)
  • If the component HTS# is covered under Tranche 4 (9903.88.04), then transmit 9903.88.24.  (Only the Tranche 4 duty rate will apply to the component and the set will not be charged the Tranche 3 duty rate.)

Sets Included in Tranche 4 (Annex A)

  • If the component HTS# is covered under Tranche 1 (9903.88.01), then transmit 9903.88.25.  (Only the Tranche 1 duty rate will apply to the component and the set will not be charged the Tranche 4 duty rate.)
  • If the component HTS# is covered under Tranche 2 (9903.88.02), then transmit 9903.88.26.  (Only the Tranche 2 duty rate will apply to the component and the set will not be charged the Tranche 4 duty rate.)
  • If the component HTS# is covered under Tranche 3 (9903.88.03 or 9903.88.09), then transmit 9903.88.27.  (Only the Tranche 3 duty rate will apply to the component and the set will not be charged the Tranche 4 duty rate.)
  • If the component HTS# is covered under Tranche 4 (9903.88.04), then transmit 9903.88.28.  (Only the Tranche 4 duty rate will apply to the component and the set will not be charged the Tranche 4 duty rate.)

These rules have a very narrow scope.  In the case of apparel we believe they are limited to ensembles.  Duty is not assessed on the ensemble.  Rather, each of the components is assessed duty at the rate applicable if the component is imported separately. 

USFIA understands that some importers believe that CBP has assessed double duties in these circumstances.  Members who run into this issue are encouraged to contact the association.

We have seen nothing on the treatment of suits, which are subject to a single rate of duty.  In theory, an issue could arise if a suit component originates outside China.  However, this seems so highly unlikely that it is best ignored.

The rules for retail sets are somewhat different and clearer.  They are set forth at “CBP Section 301 Trade Remedies Frequently Asked Questions” . There it states:

When importing goods put up in sets for retail sale (in accordance with General Rule of Interpretation 3) that contain articles subject to the Section 301 remedy, if the product that imparts the essential character to the set (i.e. the HTSUS provision under which the entire set is classified) is covered by the Section 301 remedy, then the entire set will be subject to the additional 25% duties. If the HTSUS provision under which the entire set is classified is not covered by the Section 301 remedies, but the set contains components that are classified in a subheading covered by the 301 list, the 301 duties will not be assessed on the individual components


CLASSIFICATION DECISIONS.  

The following is a brief description of classification decisions recently published by CBP.  

In HQ H302971 (June 20, 2019) the Headquarters Office addresses the classification of denim motorcycle pants.  The pants are a 98/2, cotton/elastane blend.  The pants have a visible liner that offers reinforcements at all impact zones.  The importer argued that the pants are classified in heading 6211 because there are strictly for protection while riding a motorcycle. It asserts that the lining offers protection for up to 42 seconds of road drag.

The ruling notes that the pants have protective features that make them particularly suited for motorcycle riding. For conventional garments, these features add unnecessary layers and weight. Thus, while the pants are not incapable of being worn for conventional use, CBP finds it unlikely that they would be used for occasions other than motorcycling.  The ruling also points to marketing of the pants as a motorcycle apparel.

Given these considerations, CBP finds classification in subheading 6211.32.90 (8.1%), as other garments


DRAWBACK. 

In HQ H292472 (August 12, 2019) CBP addresses unused and same condition NAFTA drawback. The merchandise at issue consisted of various promotional items, which after importation are decorated with names, trademarks and company logos. The issue is whether this "labeling" is permissible in claiming same condition, unused merchandise drawback.  Labeling was accomplished by various processes including screen printing, heat transfer and embroidery.

CBP concluded and that these operations did not constitute use.  This conclusion is based on the fact that the imported merchandise, although finished, is not used for its intended purpose while in the US.  The operations performed in the US do not amount to use.

NAFTA drawback is subject to a lesser of the two rule unless the merchandise is exported in the same condition.  Generally, a good is considered to be in "same condition" when the operations performed in the US do not materially alter the characteristics of the good.  CBP held that labeling does not change the characteristics of a good.  Goods exported to a NAFTA country in the same condition are eligible for full drawback, however, we understand that CBP takes the position that this requires direct identification.  Full drawback includes any 301 duties paid at entry.


CPSC DEVELOPMENTS. 

There was a single recall of textile articles in September.  Children’s loungewear was recalled because it failed to meet the flammability standards for children’s sleepwear, posing a risk of burn injuries to children.


The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties.  Matters reported on or summarized herein may not be construed as legal advice on specific situations. 

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP 

In This Memo: 

  • Hangers
  • De Minimis Test
  • 301 Exclusions
  • Clerical Error
  • CPSC Developments

HANGERS.  

The Customs Bulletin for July 24, 2019 publishes HQ H300587 (July 9, 2019).  The ruling responds to a request submitted on behalf of a hanger supplier seeking treatment of the hangers as instruments of international traffic (“IIT’s”) and therefore not subject to entry requirements and free of duty. HQ H300587 takes the position that the hangers, which are not used to hang garments during transport, are not IIT’s. The ruling describes the hangers as being re-usable and substantial.  During transit, the garments are on the hangers but are not suspended from the hangers. Rather, they are folded and packed in boxes for transit. Given this consideration, the hangers are not classified as IIT’s as they do not hold garments in transit. 

HQ H300587 also revokes HQ H058876 (May 14, 2009) and HQ H079697 (October 26, 2009).

The ruling does not address or affect the potential classification of these hangers as separate from the garments with which they are imported.

As a general rule, "substantial" hangers that are capable of reuse, where there is a demonstrated commercial viability for reuse may be entered separate from the garments. E.g., HQ H258772 (June 22, 2016).  When entered separately, plastic hangers are classified in subheading 3923.90.00 (3%), but subject to 301 tariffs if made in China. There is no requirement to enter hangers separate from the garments with which they are imported.


DE MINIMIS TEST.  

CBP has announced a voluntary test to collect advance data related to de minimis shipments. 84 Federal Register 35405 (July 23, 2019).  The test is expected to begin August 22, 2019 and to run for approximately a year.

Under the test, participants will transmit certain data pertaining to the shipments to CBP in advance of arrival. The purpose of the test is to determine the feasibility of requiring elements generally not required under current regulations for de minimis shipments to effectively target hi-risk shipments in the E-commerce environment.  Participants are expected to include carriers, brokers, freight forwarders as well as online marketplaces.  

The additional data elements will include the shipment initiator, final deliver-to party, and an enhanced product description.  In addition, online marketplaces will have to provide a product picture as presented on an online marketplace as well as the listed price on the marketplace.


301 EXCLUSIONS.  

In the event an exclusion is granted on a product on List 3, it may be retroactive.  List 1 and 2 exclusions have been.  

This possibility means that importers who have paid 301 duties on List 3 products may wish to begin to take a careful look at the status of the relevant entries.

Once an exclusion is granted, importers can seek refunds using PSC's as long as the entries have not been liquidated. If, however, the entries have been liquidated the only recourse is to file a protest.  Keep in mind that a protest must be filed within 180 days of liquidation. While in the past, it was reasonable to anticipate that liquidation would not take place for approximately 314 days, more recently, CBP has been liquidating on a more expedited basis. Therefore, you must monitor liquidations. 

CBP has indicated that if a protest is filed on a product for which an exclusion request has been submitted but not yet granted, it will suspend action on the protest until the exclusion is granted or denied.  You may also request that CBP extend liquidation.

CBP’s most recent publication on these issues is CSMS# 19-000260 (May 22, 2019).


CLERICAL ERROR.  

The question of whether clerical errors made in presenting a first sale claim may be corrected through the protest process is addressed in HQ H300260 (February 19, 2019).  The importer purchased apparel from various producers on cut and make terms. The importer supplies the fabric and other materials. The errors in the calculations included using the wrong fabric and material invoices, leading to an overstatement of the entered values. As part of the protest, the importer presented a great deal of information including bills of material, fabric invoices, proof of payment for fabric as well as payment to the garment assemblers.

CBP noting the extensive nature of the back-up information granted the protest. The decision acknowledges that documentation had not been submitted for every imported garment.  Nevertheless a sufficiently large sample had been presented leading CBP to believe that the importer would be able to present supporting documentation for the remaining garments.


CPSC DEVELOPMENTS.  

There were six recalls of textile articles in July.  The recalls cover: 1) children’s pajama pants that fail to meet the flammability standard for children’s sleepwear, posing a risk of burn injuries to children; 2) & 3) children’s pajamas that do not meet flammability standards; 4) children’s security blankets - the blanket’s snaps can detach, posing a choking hazard; 5) infant head and neck support which can be overstuffed and cause the infant’s head to be tilted too far forward, posing a suffocation hazard; and 6) infant sock and wrist rattle sets - rattles sewn inside the socks and wristbands can detach, posing a choking hazard to young children.


The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties.  Matters reported on or summarized herein may not be construed as legal advice on specific situations. 

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP 

In This Memo: 

  • Discounts
  • Classification Decisions
  • Adaptive Clothing
  • Importer's Identity
  • CPSC Developments 

DISCOUNTS.  

The recent imposition of 301 tariffs on apparel items has led to efforts by retailers and importers to minimize their impact by negotiating discounts with vendors.  There is nothing inherently wrong with negotiating discounts. However, discounts do not necessarily decrease the entered value.

Generally, CBP takes position that discounts affect value when; 1) the discount or price adjustment is agreed to prior to importation, 2) the agreement is documented; and, 3) the discount is unconditional, or if conditional, the condition is satisfied prior to importation.

Assuming the discount does not affect the entered value, is there an obligation to advise CBP? The answer likely is no in many cases but importers who confront the situation are advised to consult counsel.  


CLASSIFICATION DECISIONS.  

The following is a brief description of classification decisions recently published by CBP.  

The following proposed rulings appear in the Customs Bulletin for August 21, 2019.

The first is HQ H262218, which addresses the classification of arm sleeves. The proposed ruling is a response to a request for reconsideration filed in January 2015.

The arm sleeves are composed of an 85/15 polyester/spandex knit fabric. The sleeves bear the logo or the mascot of a sports team. The sleeves are used to provide compression support during training, fitness, exercise and other sports-related activities.  NY N258826 (November 24, 2014) classified the sleeves in subheading 6117.80.95 (14.6%), as clothing accessories.  The importer argued for classification as festive articles in Chapter 95.

The Headquarters Office disposed of the festive articles claim by pointing out that the sleeves are not associated with any particular holiday and is neither symbolic of any annual celebration nor associated with any particular festive event.  

The sleeves were not considered clothing accessories because they are not associated with any particular article of clothing and do not add to the beauty, convenience or effectiveness of any article of clothing. 

The sleeves were classified in subheading 6307.90.98 (7%) as other made-up articles.

HQ H261881 would revoke NY B87119 (July 8, 1997), which classified a “Mickey” mitt in subheading 9505.90.60 (Free) as festive articles. The mitt consists of acrylic pile worn on the hand to create the appearance of the three digit hand of the cartoon character "Mickey Mouse". It allows for the insertion of the thumb and separate insertion of the fingers.

The notes to Chapter 95 provide that it does not cover gloves, mittens and mitts.  Since the article has separate sheaths for the thumb and fingers, the article was deemed to be a mitt. Accordingly, classification was found to fall in subheading 6116.93.88 (18.6%).


ADAPTIVE CLOTHING. 

CBP has issued a number of rulings which help to clarify the scope of its views on the types of clothing that qualify for classification in subheading 9817.00.60 (Free), as articles designed for use by the handicapped.  

CBP will not classify a garment as adaptive if it believes that the adaptive features of the garment would be useful and/or are found in “mainline” garments. In essence, the features must be extreme.  On one hand, a complete back placket opening qualifies. HQ H303988 (July 26, 2019). On the other hand, larger than usual neck or shoulder openings and subtle adaptations, such as the magnetic zipper that enables an individual who has lost an arm to dress him or herself have not been accepted. HQ H300486 (October 16, 2018). Features that enable easy length changes or leg seam openings to accommodate a brace do not qualify.  According to CBP, leg seam openings are useful for people who want to put on or take off their pants with their shoes on.  

Although CBP has denied it, I believe that garments that are not obviously designed for the differently-abled will not be classified in subheading 9817.00.60.  E.g., HQ H292642 (June 29, 2018) states: “The girl’s dress and jeans look exactly like Hilfiger’s traditional line, and there is nothing about the design that can easily distinguish it from articles useful to the general public.”

To conclude, garments that have features that will benefit the differently-abled and do not have any general utility whatsoever, are likely to be classified in 9817.00.60.


IMPORTER’S IDENTITY.  

CBP has published a notice of proposed rulemaking to amend its regulations to require customs brokers to collect certain information from importers in order to verify the identity of importers, including nonresident importers. 84 Federal Register 40302 (August 14, 2019). 

CBP proposes to add new section, 111.43, designed to create and standardize the process by which customs brokers verify the identity of their importer and non-resident importer clients. The proposed regulations set forth the minimum requirements a customs broker must meet to verify the importer’s identity prior to transacting customs business on behalf of the importer.  The conventional wisdom is that most customs brokers meet or exceed these minimum requirements. 

The proposal formalizes the verification process and requires that a reverification process be carried out by brokers every year. The expectation is that the requirements will increase broker’s knowledge of its importer client, and that this knowledge could enhance commercial fraud prevention and revenue protection and help prevent the use of shell or shelf companies designed to evade the customs laws. CBP states that preventing the use of shell or shelf companies by importers would help reduce misclassification and undervaluation of merchandise, protect against intellectual property rights violations, reduce antidumping/countervailing duty evasion, and reduce the importation of unsafe merchandise.
    
Brokers would be required to collect and verify the following data:

  • the client’s name;
  • for a client who is an individual - his/her date of birth;
  • for a client that is a partnership, corporation or association - the grantor’s date of birth (the grantor is the individual authorized the execute the power of attorney);
  • for a client that is a partnership, corporation or association - any trade or fictitious names;
  • the physical address and phone number (for a partnership, corporation or association, the physical location is the entity’s headquarters);
  • e-mail address and business website;
  • a copy of the grantor’s unexpired government-issued photo identification;
  • Internal Revenue Service, employer identification or importer of record number;
  • any publicly-available business identification number;
  • a recent credit report;
  • business registration and license with the state; and
  • the grantor’s authorization to execute a power of attorney on behalf of the importer.

A broker may not act on behalf an importer until the information is collected and verified. Brokers will be required to maintain records of the information used to substantiate the importer’s identity and must make the records available to CBP upon request.

For existing clients, brokers will have two years to verify this information for partnerships and three years for all other existing clients. Brokers will be required to reverify each client’s identity annually using the procedures outlined above.

Comments must be submitted before October 15, 2019.


CPSC DEVELOPMENTS.  

There were two recalls of textile articles in August.  The recalls cover: 1) children’s pajamas that fail to meet the federal flammability standard that requires sleepwear to be either snug-fitting or flame resistant; and, 2) cotton terry bath robes that fail to meet the flammability standards for clothing textiles, posing a risk of burn injuries to consumers.


The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties.  Matters reported on or summarized herein may not be construed as legal advice on specific situations. 

By John Pellegrini, USFIA Customs Counsel, McGuireWoods LLP 

In This Memo: 

  • First Sale Ruling
  • Classification Decisions
  • Customs Fraud
  • CPSC Developments
     

FIRST SALE RULING. 

HQ H303114 (May 23, 2019) responds to an importer’s request for approval of a first sale valuation. The importer issues purchase orders to the middleman who then selects and contacts the manufacturer. The importer never deals with the factory.  There is no written agreement between the importer and the middleman other than the purchase orders. A verbal agreement calls for a fixed mark-up of the factory price.

The terms of sale between the importer and the middleman are FOB port. The factory assumes all risk of loss or damage until the goods are delivered to the container staffing location, which is at the factory if a full container load is used or otherwise at a stuffing facility at the at or near the port.  There is nothing in writing that discloses where title/risk of loss transfers from the factory to the middleman. 

CBP had no problem concluding that there was a sale for exportation to the United States. Also, the factory and the middleman were not related.  

Nevertheless, CBP denied first sale treatment.  The sole grounds for the denial was that the importer had not sufficiently demonstrated that the middleman and factory functioned as buyer and seller. This conclusion is based solely on the fact that according to CBP it remains unclear whether the middleman assumes the risk of loss and receives title.  The invoice had no sales terms and the importer indicated that there was nothing in writing that specifies when title/risk of lost transfers from the factory to the middleman.

At worst, there was flash title.  Previously, flash title was not disqualifying when there was a clear sale for exportation and there was no relationship between factory and middleman or between middleman and importer.


CLASSIFICATION DECISIONS.  

The classification of a 73.5/26.5 cotton/MMF sock embedded with pressure sensors is the subject of NY N304090 (May 16, 2019).  The sensors are incorporated into the toe, heel and arch along with pressure sensitive fibers and a transmitter affixed to the exterior of the sock. The sock is designed to alert caregivers that a bed-ridden patient is attempting to exit the bed.  The sock is classified in subheading 6115.95.90 (13.5%). The presence of the sensors is irrelevant to classification.

HQ H303987 (June 13, 2019) addresses the classification of a man's cotton pant.  The pant is designed for use by men confined to a wheelchair on a permanent basis.

The pant features a front rise that is lower than the back rise. It has openings that run the entire length of the garment on each side from the waist along the outer legs to the hem and are secured by eight hook-and-loop closures. In addition, small elastic loops with buttons allow adjustment of the length of the pants.

CBP concludes that the pants are classified in HTS subheading 6203.42.45. More importantly, classification as goods specially designed for the use or benefit of physically and mentally handicapped persons, subheading 9817.00.96 (Free) was allowed.

The fact the pant obviously is designed for that purpose was sufficient to overcome the fact that the importer does not specialize in this type of clothing. However, it is important to note that CBP was able to find similar garments advertised by specialized retailers.

Only time will tell whether this ruling signals a departure from what has appeared to be a policy of interpreting the scope of subheading 9817.00.96 very narrowly.


CUSTOMS FRAUD. 

The US Attorney’s office in Manhattan has announced criminal and civil charges against executives of a children's apparel importer.  The allegations are that the importer was involved in garden-variety double invoicing.

In one approach, there were simply two invoices, one for the importer and a second for CBP. The second approach was only slightly more sophisticated and involved an invoice for CBP and separate invoices for "samples".   The "sample" invoices were for highly inflated prices and quantities much larger than the typical sample shipment.

The fraud was brought to the attention of the US attorney by a private party who filed a false claims case against the importer and its executives. There have been many false claims cases in the customs area; very few have a led to criminal prosecutions.


CPSC DEVELOPMENTS.  

There was one recall of a textile article in June.  The recall covers a women’s beach cover-up that fails to meet the flammability standards for clothing textiles, posing a risk of burn injuries to consumers.


The Customs Overview is a newsletter of Customs legal, administrative and other developments affecting importers of textiles and wearing apparel prepared as a service for United States Fashion Industry Association members and other interested parties. Matters reported on or summarized herein may not be construed as legal advice on specific situations.