Tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS) can be difficult and U.S. Customs and Border Protection (CBP) doesn’t always get it right. Consider, for example, the recent U.S. Court of International Trade (CIT) decision in Moen Inc.v. United States (Court No. 15-00145).
On March 7, 2018, the CIT issued an opinion finding that certain toilet paper holders are properly classified as base metal “hat-racks, hat-pegs, brackets and similar fixtures” under HTSUS subheading 8302.50.00. In this case, Moen challenged CBP’s long-held belief that wall-mounted toilet paper holders are “sanitary ware” that should be classified based on their constituent material. CBP had issued numerous Customs Rulings affirming this position.
There was no dispute that Moen’s other wall-mounted bathroom accessories (e.g., towel bars, robe hooks and towel rings) were properly classified as “similar fixtures” under HTSUS subheading 8302.50.00 (duty free). Moen asserted that its toilet paper holders should also be classified under this tariff provision because, like other bathroom accessories, they are wall-mounted base metal racks. In contrast, CBP argued that Moen’s zinc toilet paper holders were properly classified under HTSUS subheading 7907.00.10 as “toilet and sanitary wares” of zinc (subject to 3 percent duty) and Moen’s steel toilet paper holders were properly classified under HTSUS subheading 7324.90.00 as “sanitary ware” of steel (duty free).
Since the heading 8302 language at issue contained the phrase “similar fixtures,” the CIT applied the principal of ejusdem generis to determine what merchandise is encompassed in this tariff provision. To conduct its analysis, the CIT looked at the common characteristics and features that unify the goods enumerated in HTSUS subheading 8302.50.00. Relying on dictionary definitions and exemplars in the Explanatory Notes (ENs) for heading 8302, the CIT interpreted the phrase “similar fixtures” to include all types of “racks” that are: 1) made of base metal; 2) affixed to a wall; and 3) used to hang, hold or support other items.
Ultimately, the CIT concluded that the toilet paper holders at issue were made of base metal, were designed to be mounted to a wall, and were designed to hold, hang or support toilet paper. Since Moen’s toilet paper holders met all three requirements for classification under HTSUS subheading 8302.50.00, the CIT determined that these goods are properly classified in this tariff provision.
CBP raised various arguments in an attempt to distinguish the toilet paper holders from the other items encompassed by HTSUS subheading 8302.50.00 (e.g., the toilet paper holders do not support goods in the same manner as other products enumerated in HTSUS subheading 8302.50.00; the toilet paper holders have a moveable piece; toilet paper is removed differently than articles held by other wall-mounted racks; the toilet paper holders are used for sanitary purposes). CBP also argued that the toilet paper holders should be classified as “sanitary ware” because the ENs for heading 7324 (which covers sanitary ware of iron or steel) state that this heading covers “toilet paper holders.”
The CIT dismissed CBP’s arguments and found that Moen’s toilet paper holders could not be classified under the tariff provisions asserted by CBP because they were more specifically provided for elsewhere in the HTSUS. Further, the CIT found that since the toilet paper holders are classified in HTSUS subheading 8302.50.00, they are excluded from CBP’s asserted tariff provisions by Section XV, Note 2.
This case highlights how tariff classification under the HTSUS can be a challenging endeavor, where the application of one tariff provision compared to another can mean a significant difference in duties owed by the importer. In all tariff classification reviews, it is important to properly interpret the relevant tariff terms and understand the interaction between the HTSUS heading language, the HTSUS Section/Chapter Notes, and the ENs to reach the correct result.
Drinker Biddle’s customs and trade lawyers can assist with the most complex tariff classification issues to ensure that the correct tariff provision and duty rate are applied to imported goods. When duties have been overpaid, we can also assist with the recovery of refunds.
For more information on how this recent court case may impact the tariff classification of your company’s imported goods, or how your company may benefit from a tariff classification challenge, please contact the author below or any other member of Drinker Biddle’s Customs and International Trade Team.