March 19, 2009
We wish to advise you that U.S. Customs and Border Protection (Customs) is investigating importers of artificial flowers and artificial flower products of man-made fibers to determine whether they are properly claiming a duty suspension set forth in HTS 9902.25.6510. This HTS number provides for a duty suspension on artificial flowers of man-made fibers that are classifiable under HTS 6702.90.35. The normal duty rate without the duty suspension is 9% ad valorem. This duty suspension provision went into effect January 1, 2007, and is due to expire December 31, 2009.
HTS 6702.90.35 provides for artificial flowers, foliage and fruit, and parts thereof; articles made of artificial flowers, foliage, or fruit of man-made fibers.
Customs is taking the position that some artificial flower products are not entitled to the Chapter 99 duty suspension because they consist of articles made of artificial flowers, foliage, etc., which are not covered by the duty suspension. However, despite this current approach, some rulings issued by New York Customs have ruled that certain artificial flower arrangements, consisting of flowers, foliage, wire stems and holders, do in fact qualify under Chapter 9902.25.6510.
Customs has been issuing CBP Form 29’s (Notices of Action) to various importers of artificial flowers, requesting information, and in some instances, rate advancing the flowers to 9% percent by disallowing the duty suspension under HTS 9902.25.6510.
We believe that these types of artificial flower arrangements are “composite articles” and that the artificial flowers impart the “essential character” of the product, pursuant to General Rule of Interpretation 3(b) of the U.S. Harmonized Tariff System. Thus, these products should be entitled to a duty suspension under HTS 9902.25.6510. We expect that this classification issue may be decided by Customs Headquarters.
Since Customs states in the Form 29 Notices of Action that they have initiated an investigation of this issue, the ports may seek to assess 9% duties on prior shipments where a duty suspension was claimed as well as penalties on entries that have been liquidated. Importers should carefully evaluate how they should respond to this position of Customs.
Pending the outcome of Customs’ investigation of this issue, importers of artificial flowers and artificial flower products of man-made flowers should take steps to protect their rights to receive refunds in the event that they are rate advanced, and in the event that there is a favorable outcome from Customs Headquarters. Specifically, protests need to be filed on entries as they liquidate, and if the protests are denied, court actions need to be filed to keep the protests alive.
If you have any questions on the issues raised in this newsletter, please contact Stephen Spraitzar at the Law Offices of George R. Tuttle, A P.C. at (415) 288-0427 or at firstname.lastname@example.org.
Stephen Spraitzar is an attorney with the Law Offices of George R. Tuttle in San Francisco.
The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.
Copyright © 2009 by Tuttle Law Offices.
All rights reserved. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.