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Administrative Law

: Customs Law

Is the Court of International Trade in a Bind(er)?

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Sorry, I feel like I am on a stupid-title roll.

Here is another classification decision form the CIT. It's one of those cases where there is a lot of history that makes the decision more complicated than it really should have been. The case is Global Sourcing Group v. United States and it involves the classification of ring binders. These were somewhat unusual binders in that they had six or seven rings, pen loops, slots for business card, and pockets. They composed of stiff paperbaord covered with either plastic or textile. Customs classified the binders based on their outer material as either articles of plastic or of textile. Showing a complete lack of creativity, the importer argued that the binder should be classified in heading 4820 as "binders."

The plaintiff had an initial problem with the jurisdiction of the Court to decide the issue on certain entries. The bottom line is that importers wishing to take a classification up to the Court of International Trade have to protest the classification decision and the denied protest must be included on the summons either by entry number or by protest number (but both is better). Some day I am going to write a law review article about the concept of notice pleading in federal courts and how it applies to cases brought to challenge a denied protest. For now, I'll just say that is the state of the law and the plaintiff here lost the opportunity to recover on a few protests.

On the classification issue, the Cour concluded that a "binder" is, among other things, "a

notebook cover with rings or clamps for holding paper." That describes the merchandise here. Customs, on the other hand, properly noted that Heading 4820 is limited to articles of paper or paperboard. Based on that, Customs has long considered binders to composite goods and looked to the outer material as the material imparting the essential character. Unfortunately, the Federal Circuit previously looked at similar binders, which also had paperboard stiffeners and concluded that 4820 was the applicable heading. So, the Court of International Trade followed suit and found for the importer.

This case is interesting on a number of levels. First, it is a good example of how the General Rules of Interpretation work in numerical order. If GRI 1 resolves the issue, as the Court of International Trade decided it did here, there is no reason to get to GRI 3 and due and essential character analysis as the Justice Department wanted.

Second, the Court seems to have basically decided the issue and then turned to the Explanatory Notes for confirmation. I understand that approach and see the analytical value. But, it does raise the prospect of cases where the issue is decided on the face of the HTS and the ENs prove to be contradictory. We no from Airflow and Archer Daniels Midland that the EN gets no weight in those cases. But, I wonder whether the better approach is, when the statute is clear, to keep the Explanatory Notes on the shelf. I don't see any harm from that.

Full post as published by Customs Law on May 04, 2009 (boomark / email).