Fleece Blanket Kits Classifiable as Toys, Not Fabric, CIT Says
The Court of International Trade ruled Aug. 16 that Springs Creative Product Group’s (SCPG) “Make-it-Yourself No-Sew Fleece Throw Kits” are properly classified as toys in the Harmonized Tariff Schedule, and not as its constituent fabric as CBP had argued. The throw kits are mainly intended for fun, and their eventual use as blankets is secondary, the court said. Significantly, the throw kits sell for a substantial price premium over finished throws.
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SCPG imported the throw kits into the Port of Charlotte in 2009. Except for a pair of scissors, each throw kit comes with all of the materials needed to make a finished fleece throw blanket -- two polyester fleece panels, each 48” by 60”. One panel is a solid color, while the other depicts a character from a cartoon, comic book, children’s book, or children’s movie, including Curious George, Spider-Man, Winnie the Pooh, and “John Deere Tractors in Pink Paisley.” The kits are packaged together at importation, and sell for $16.44 to $27.99 at stores like Wal-Mart and Jo-Ann Fabrics. Comparable finished throws sell for $8 to $15. The user of the throw kit creates a fringe along printed lines on the outside of each layer, and knots the fringes together to join the two layers into a finished throw.
On liquidation, CBP classified the throw kits under HTS subheading 6001.22.00 (“Pile fabrics, including ‘long pile’ fabrics and terry fabrics, knitted or crocheted: Looped pile fabrics: Of man-made fibers”), which is dutiable at 17.2%. SCPG protested, arguing the throw kits should instead be classified under subheading 9503.00.00 (“Tricycles, scooters, pedal cars and similar wheeled toys; dolls’ carriages; dolls, other toys; reduced-scale (‘scale’) models and similar recreational models, working or not; puzzles of all kinds; parts and accessories thereof”), which enters duty free. CBP denied the protest.
On appeal, CIT said a note to Section XI, which includes chapter 60, excludes toys classifiable under chapter 95. So the fleece throw kits aren’t classifiable under both. Meanwhile, the Explanatory Notes say heading 9503 broadly includes toys, even if they are kits made from items classifiable elsewhere. Needing a definition for toys, CIT said “an object is a toy only if it is designed and used for diversion, amusement, or play, rather than for practical purposes.” And because heading 9503 is a principal use provision, items are only classifiable there if they are of the “same class or kind” as toys.
After a trial, the court said SCPG’s meets that definition. First, the kits are intended for enjoyment. One mother testified at trial that after putting together one of the kits, her daughter liked it so much that she “made them for her whole kindergarten class that year for Christmas, eighteen of them,” and went on to more complicated crafts as she grew to be a teenager. And the fleece throw kits sell at a premium because of their entertainment value, the court said, which indicates the consumer’s expectation is for the fleece throw kit to be a toy. CBP argued that the principal use of the throw kits can’t be as a toy, because SCPG isn’t a toy company, but CIT rejected that argument. “There is no requirement that the importer or manufacturer be considered a ‘toy’ company for its product to be classified under heading 9503,” it said. The throw kits are of the same class or kind as toys, and so are classifiable under subheading 9503.00.00, and should enter duty fee, CIT said. The court ordered CBP to reliquidate the entries at duties, and refund all duties paid by SCPG with interest.
(Springs Creative Prods. Grp. v. U.S., Slip Op. 13-107, dated 08/16/13, Judge Goldberg)
(Attorneys: Robert Leo of Sheppard, Leo & Pillsbury for plaintiff Springs Creative Products Group; Amy Rubin for defendant U.S. government)