Appeals Court Reviews Festive Apparel Case
A case before a federal appeals court could decide whether holiday apparel imported into the United States in 2006 could retroactively qualify for duty-free status.
The U.S. Court of Appeals for the Federal Circuit heard oral arguments on July 11 in a case that could affect manufacturers who paid customs duties on imported goods such as Christmas sweaters and Halloween shirts last year. A final decision will be made later this year.
The case being heard is Michael Simon Design Inc. v. the United States. In 2003, Michael Simon Design, based in Connecticut, imported Christmas and Halloween items that ended up not qualifying for duty-free status when U.S. Customs and Border Protection decided it didn’t fall under the “festive” articles classification. Customs believed the apparel could be worn beyond the holiday season.
Consequently, Michael Simon Design paid tariffs ranging from 6 percent to 15.5 percent on garments such as sweaters, blouses and shirts and then challenged the decision in court.
Last year, the U.S. Court of International Trade ruled that most of the Michael Simon Design items were “festive” because they are closely associated with a holiday.
Consequently, clothing identified as “Oh Xmas Tree,” “Silent Night Cardigan,” “Silent Night Shell,” “Angel,” “Halloween Party Sweater,” “Girls’ Trick or Treat Cardigan,” “Black Widow Spider,” “Elvira” and “Casper” were classified as duty-free goods. Two garments depicting black cats did not qualify.
Customs turned around and appealed the decision.
If the court upholds the duty-free status for the Michael Simon Design garments, other manufacturers that imported “festive” apparel last year could apply for a rebate on duties paid. Importers have 180 days after customs liquidated their goods last year to file a claim.
“Barring any extraordinary circumstances, there is a window from late February to early March [2006] until the end of 2006 when shipments brought in could qualify [for rebates],” said customs attorney Arthur Bodek, a partner at Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt in New York. “What we are doing is filing protests in regards to pre-2007 shipments where there are large amounts of refunds that could be forthcoming.”
Currently, customs has decided to no longer give “festive” apparel duty-free status. —Deborah Belgum
