CIT Finds Used Clothing Need Not Have Deteriorated Fabric, Ruling Against Decades of CBP Precedent
Used clothing need not have fabric that is stressed or deteriorated from continued use to be classified as worn clothing in the tariff schedule, the Court of International Trade said in a May 6 decision that runs counter to more than two decades of CBP rulings and guidance on the subject.
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Since a CBP ruling issued in 1998 that says used clothing must have “fabric which is greatly stressed or fabric which reflects physical deterioration resulting from continued use,” CBP has put out a series of similar rulings, plus a guidance document issued in 2014 that says used clothing must be in poor condition and “likely used as rags non-apparel purpose” to qualify for duty-free treatment under subheading 6309.00.0010.
CIT found that CBP’s interpretation goes above and beyond the requirements of U.S. Note 3 to Chapter 63, which only says used clothing must “show signs of appreciable wear.” Relying on dictionary definitions, the court said that the term “appreciable wear” means “noticeable damage or impairment caused by use.” That use need not be “continued use” for classification as used clothing, and the damage or impairment may be to a portion of the used clothing other than the fabric, CIT said.
“In short, Customs has been erroneously applying Heading 6309 for at least 22 years,” CIT said. “In fact, Customs’ guidance meets the definition of an entirely different provision,” heading 6310, which covers rags, it said.
The case involves bales of used clothing imported by Dis Vintage from France. CBP had found some of the clothing met its definition for used clothing, but other garments in the bales did not. Applying General Note 3(f), CBP treated the clothing as “commingled goods” and applied the highest duty rate applicable to a sample from the entry: 28.6%, for women’s trousers and breeches found in the bales that were classifiable in subheading 6204.63.3510.
Given that CBP had been applying the wrong definition for used clothing, CIT remanded the agency’s determination on classification and dutiability to the agency for reconsideration. Only after CBP corrects its error can the court consider whether the entries should be considered commingled goods, the trade court said.
(Dis Vintage LLC vs. U.S., Slip Op. 20-60, CIT # 16-00013, dated 05/06/20, Judge Reif)
(Attorneys: Peter Herrick for plaintiff DIS Vintage LLC; Monica Triana for defendant U.S. government)