Classification for Holiday Items – Demystified

There’s only about two months of shopping days before Christmas, but it’s enough time to survey some of the most interesting tariff classification cases with holiday themes. Not just Christmas, but here we also look at Halloween and Thanksgiving. I am nothing if not ecumenical when it comes to tariff classification. What I find strange, beyond the items described in these cases, is the undeniable conclusion that Americans can’t celebrate the holidays without imported merchandise.

Park B. Smith v. US (US Court of Appeals, Federal Circuit 2003) – Importing a festive article that is useful can get an importer into trouble. If your imported merchandise is too useful, if it is utilitarian, you risk losing your special low-duty “festive article” status. You also have to prove that your imported merchandise is specifically associated with a particular holiday (this is where “aberrant” comes in). Here the court easily determined that sweaters with clearly Christmas (angels and “Silent Night”) motifs and Halloween (witch, devil, jack-o-lantern, candy corn, and spider web) motifs qualified as festive articles, but struggled over whether sweaters with a bat, spider, ghost, and black cat designs equally qualified because people might wear these sweaters outside of Halloween. How it reached that distinction and why it didn’t consider sweaters to be utilitarian (you would think that only certain frost bite could force anyone to don a candy cane sweater), the court doesn’t say, but it eventually decided that all of the sweaters were festive articles.

Russ Berrie & Company vs. US – The Court of Appeals for the Federal Circuit is about as high as classification cases go (the next level up is the US Supreme Court). In this opinion, the Federal Circuit Court of Appeals reversed the Court of International Trade and sided with CBP. The controversy revolved around Halloween and Christmas earrings with the following motifs: a Santa Claus; a snowman decorated with holly, wearing a top hat and holding a snowball; a teddy bear dressed in red and white Santa outfit and holding a present; red, green, gold bells with/or without red or green bows; a ghost; a jack-o-lantern; a Frankenstein monster; and a witch. The Court decided that these trinkets were imitation jewelry and not festive articles, a decision that I must question because reading the list of items got me in a festive mood.

Rubie’s Costume Company v. US – While deciding the classification of Halloween merchandise, this case laid down an important rule with a much broader affect. The Court of Appeals for the Federal Circuit again slapped down the Court of International Trade and sided with CBP. The importer claimed that courts should give no deference to tariff classifications from CBP. Not so fast, said the Federal Circuit Court of Appeals. CBP may not be the final word on classification, but courts must pay attention and be guided to a degree by the agency’s expertise — sometimes. The level of deference courts give to CBP’s classification decisions depends on how well CBP did its job, i.e., “The weight of such a judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give power to persuade, if lacking power to control.” In this case, the Court of Appeals for the Federal Circuit found that it should defer substantially to CBP’s classification ruling. Thus, court concluded that children’s costumes of “Witch of the Webs”, “Abdul Sheik of Arabia,” “Pirate Boy,” “Witch,” and “Cute and Cuddly Clown” are properly classified as “festive articles” and not “wearing apparel,” an obvious outcome if you are parent.

Whealon v. US (US Customs Court, 3d Division, 1961) – Does a lecture hall within a Catholic seminary qualify as a house of worship, i.e., a place of thanksgiving? That was the question confronting this court. Items for houses of worship came in duty free and the seminary was importing stained glass windows from France. Some praying was done in the lecture hall, but that was not its main purpose. Employing a surprisingly liberal reasoning, the court concluded that, yes, the lecture hall was a house of worship.

Wilton Industries v. US (Court of International Trade, 2007). This is just one of many tariff classification cases on festive articles. The irony with “festive articles” litigation is that they tend to be acrimonious. Acrimony seems out of place when classifying cute cookie-cutters that are in lovely holiday shapes. Classification litigation is all about convincing the government that your imported product should be classified under a low or no duty classification. The government, of course, prefers higher duty classifications because it’s in the business of collecting revenue. The resulting legal analyses from the courts read more like Monty Python than Oliver Wendell Holmes. For example, this court reasoned:

Patterns used to make Christmas stockings are fundamentally different from festive-themed pans used to make Christmas baked goods, in several respects. Perhaps most significantly, sewing patterns can be used to make Christmas stockings year-round. While it would be aberrant to hang Christmas stockings on the mantle other than at Christmas time, it would not be aberrant to sew such stockings at other times of the year, in anticipation of (and in preparation for) the Christmas season. Thus, it would not be aberrant to use patterns for Christmas stocking year-round.

Outside of tariff classification cases, no one ever wonders whether Christmas stockings are “aberrant” (they wouldn’t be any fun if they were not), but bizarre rules are common in tariff classification. Tariff classification isn’t for the faint of heart or the ignorant of the esoteric classification rules. The decision in the Wilton Industries case can’t be summarized in a few words because the court classified a variety of cute kitchenware from a spectrum of holidays, including a pumpkin pie pan, a jack-o’-lantern nesting cookie cutter pan, a pumpkin cookie stamp, snowman pan, a poinsettia pan, and a cherub place card holders.

Thanhauser v US (US Customs Court 1908) – This case is so old that Mark Twain was still alive when it was written. After reviewing even earlier cases, the Honorable Jasper Yeates Brinton (you won’t find a judge with a name like that nowadays) had to decide whether the imported goods were toys or Christmas tree ornaments. The stakes were high. If toys, the duty rate would be 35%. If tree ornaments, the duty rate would be 60%.

Judge Brinton was palpably annoyed that Christmas tree ornament cases had a long history even in 1908. “As the briefs of the parties show distinctly, there has been more or less uncertainty for a good many years concerning the proper classification of articles that may be described in a general way as Christmas tree ornaments.” The controversy had raged for so long and vexed him to such a degree that he found it necessary to wrestle with the profound issue of what constitutes a Christmas tree ornament. With Solomonic certainty, he pronounced,

In my opinion, the evidence shows that the fragile, flimsy articles in question, mainly composed of tinsel in different shapes- stars and rings and nondescript devices – are not intended, and are not suitable to be played with.

You know you’re in trouble when the judge calls your goods “fragile and flimsy.” As for the argument that a child’s willingness to play with a thing rendered it a toy, Judge Brinton would have none of it.

They amuse or entertain because they are adapted to decorate, and no doubt they entertain children when they are hung on a Christmas tree; but on such an occasion they entertain adults also in the same way, although the entertainment differs in degree. Moreover, it clearly appears that the articles in question are often used by confectioners, stationers, and other merchants to make their wares or their shops more attractive, and this use has little reference to the amusement of children.

And thus the courts have for well over one hundred years tried to figure out what makes a Christmas tree ornament, and there have been revealing milestones.

For example, in Import & Export Service Co. v. US, this court in 1942 was busy determining the proper customs duty of Christmas tree ornaments from Nazi Germany! The case raises a mountain of unanswered questions, including, why were the Nazis sending us Christmas tree ornaments? Why were we allowing it? Did we retaliate by exporting to Germany FDR masks and July 4 flags?

Fortunately, most of the holiday classification cases have a far less sinister context, but they all seem to be trying to determine what may be undeterminable — quantifying the ineffable qualities of holiday cheer