Case Studies

When a garment isn’t a garment…

Client

A sporting goods importer

Year

2015

Service

Customs brokerage

Challenge

Importers can submit samples of merchandise to Customs to request a binding ruling. A binding ruling means that the classification of the merchandise is “locked in,” and regardless of what port of entry is used, local CBP officers cannot express their disagreement that the goods should be classified elsewhere, usually for a higher rate of duty.

Binding rulings are only valid for the importer who requests them. Importers can request consideration of similar merchandise by citing another company’s ruling, but at the end of the day, they don’t enjoy the same privileges and security as the ruling holder.

Riddell, a major sporting equipment importer and manufacturer, wanted to use a binding ruling which was given to Bauer Nike Hockey for protective apparel, specifically, padded hockey pants. Riddell took the case all the way to the United States Court of Appeals for the Federal Circuit where they lost.

In the simplest terms, Riddell lost because they argued that their football jerseys, pants and girdles, which had pockets for inserting protective pads, were classified as duty-free in Chapter 95 as sporting equipment instead of Chapters 61 and 62 as textile articles which were dutiable.

The Court pointed out that the hockey pants for Bauer Nike Hockey at the time of importation already contained the padding sewn into the garment and made up the majority of the weight of the garment; therefore the classification in Chapter 95 as sporting equipment, duty-free, stood.

Our client was importing protective clothing that football players wore next to their skin with the padding already sewn in, more similar to the Bauer Nike protective clothing binding ruling than the Riddell case without padding and only pockets. Based on the Bauer Nike ruling and the Riddell appeal, we decided to seek duty relief on their behalf.

Football

Solution

On behalf of our client, Camelot filed to protest the classification of their merchandise as dutiable because of the construction of the garments. The protest was denied in the port because of the Riddell decision.

They retained counsel and between working with counsel and Camelot, CBP was convinced on appeal of the protest to reverse their decision. Based on the construction and intended use of the garments at the time of entry the goods were more applicable to the Bauer Nike ruling than the failed Riddell case at the appellate level. The goods were entered in chapter 95 as football equipment and parts thereof.

CBP changed the classification upon reliquidation from 32% to duty-free and issued refunds, with interest, totaling more than $150,000.

OLD DUTY RATE:

32%

NEW DUTY RATE:

0%

DUTY RECOVERED

$150,000

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