Best Key to Challenge CBP Rulings on Monofilament Yarn
Best Key will file a challenge with the Court of International Trade over a CBP ruling that the textile company says the agency is using to revise its definition of "metalized" yarns, said John Peterson, a lawyer with Neville Peterson that is representing Best Key. CBP published two notices of revocation of rulings and treatment regarding "Johnny Collar" pullovers and polyester monofilament yarn in the Oct. 2 issue of the CustomsBulletin (Vol. 47, No. 41). CBP made the rulings despite claims from Best Key that agency laboratory personnel inappropriately disregarded previous ruling precedent (see 13061418).
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The rulings mark a CBP effort to "block" Best Key's method of making metalized fabric yarns using a spinneret, which the company developed by using nanoparticles, said Peterson by email. "Unlike other metalized yarns, the Best Key yarn feels, looks and handles like ordinary yarn," he said. "Its use in making wearing apparel could reduce the landed cost (and tariff burden) on garments substantially, and deliver tremendous savings to consumers. Customs obviously wants to block that, so they’ve decided to make up a new definition of what is, and what is not, a 'metalized' yarn." CBP didn't immediately comment.
Legal Proceedings Began in August
CBP’s decision to revoke its ruling on Best Key’s yarn had been a long time coming. Best Key filed a complaint at the Court of International Trade Aug. 1 asking the court to force CBP to issue its final decision. Despite the legal direction in 19 USC 1625(c) that CBP publish its final decision to publish a final ruling or decision within 30 days after comments on the ruling are due, over 70 days had passed by the time Best Key filed its court complaint. Best Key said that delay was extending and exacerbating its loss of sales from the proposed revocation. “The delay in Customs’ determination is especially unreasonable in this case, since the agency has had well over a year-and-a-half to consider the merits of the classification issue presented,” the complaint said. Over two more months would pass before CBP finalized its decision to revoke.
Once CBP made its final decision to revoke the Best Key yarn ruling, the federal government shutdown further complicated matters. CBP told Best Key and CIT on Sept. 20 that it had made its final decision. But the agency told Best Key and CIT that they would have to wait until publication in the Customs Bulletin to find out the results. CIT found CBP’s unwillingness to share unacceptable, given that an advance viewing could have ended the case on the spot, and ordered CBP to provide a copy on Oct. 1. On that day the shutdown began, and the court granted the government an extension of all deadlines to the government until it ended. CBP’s Office of Regulations and Rulings closed, Justice Department lawyers were furloughed, and the Government Printing Office, which publishes the Customs Bulletin, was shut down. Then, when the government reopened on Oct. 17, the government provided a copy of the revocation of Best Key’s yarn ruling to CBP and the court, as ordered. The ruling is dated Oct. 2, and says it applies to merchandise entered on or after Dec. 2.
Best Key filed a motion on Oct. 18 to have the court delay the revocation’s effective date. The decision was unavailable until Oct. 17, said Best Key, despite the court’s Oct. 1 order to share its contents and the decision’s nominal cover date of Oct. 2. Given the delays and the unavailability of the ruling, CIT should deem the final notice to have published on Oct. 17, and the ruling should apply to entries made on or after Dec. 16. With its demand for CBP release of the final decision satisfied, Best Key said CIT should otherwise dismiss the case.
The struggle over CBP’s classification of Best Key’s yarn will not end here, however, according to Peterson. “We will be filing a suit later this week to challenge CBP’s final ruling,” he said. “We will also be asking the Court of establish an expedited litigation schedule for that case, in light of its importance to Best Key and the company’s current and prospective customers.”
Email ITTNews@warren-news.com for copies of Best Key's request for the CIT to delay the effective dates of the rulings.
Revocations Are Effective Dec. 2
CBP is revoking these rulings, as well as any treatment CBP previously accorded to substantially identical transactions, effective for merchandise entered or withdrawn from warehouse for consumption on or after Dec. 2.
Polyester Monofilament Yarn
| Item: Polyester Monofilament Yarn. Yarns produced by Best Key that are made with aluminum powder or zinc powder, both which contain titanium. The aluminum or zinc powder is added to the slurry that is extruded to create the filaments. |
| New Ruling: HQ H202560 (dated 07/02/13), revokes NY N187601 (2011) |
| Old HTS/Rate: 5605.00.9000, 13.2% (Metalized yarn, whether or not gimped, being textile yarn, combined with metal in the form of thread, strip, or powder or covered with metal; Other). |
| New HTS/Rate: 5402.47.90, 8% (Synthetic filament yarn (other than sewing thread), not put up for retail sale, including synthetic monofilament of less than 67 decitex: Other, of polyesters: Other). |
| Reason: CBP said that while the yarn itself contains metal, but it was not combined with metal in any way, rather the polyester slurry was combined with metal prior to the spinning of the yarn. The Explanatory Notes of heading 5605 "clearly contemplate that not every product combining yarn and metal in some fashion will be considered a metalized yarn for tariff purposes," showing that "the mere presence of metal in the yarn does not automatically result in classification in heading 5605," said CBP. CBP also consulted the American Fiber Manufacturers Association and the National council of Textile Organizations, which agreed that the textile industry considers metalized yarn to be either textile yarn covered with metal or a plastic film deposited with metal and slit into yarn, the agency said. While CBP doesn't have "a strict requirement with respect to the amount of metal that must be present in order for a yarn to be considered metalized," the Best Key yarn included only trace amounts of metal, said CBP. "To classify any fiber with as little metal as is present in the instant yarn in heading 5605 would expand the heading far beyond its current scope, to include any yarns which contain trace amounts of metal as a byproduct of common textile treatments and which have never been considered metalized yarn," said CBP. |
"Johnny Collar" Garments
| Item: "Johnny Collar" Pullover Garment. A men’s pullover garment that features a V-neckline with a rib knit spread collar (Johnny collar); short, hemmed sleeves; and a straight, hemmed bottom. The finely knit fabric measures 30 stitches per 2 centimeters counted in the horizontal direction. The garment is made from a polyester yarn made by Best Key by mixing metal power into a polyester slurry. |
| New Ruling: HQ H226262 (dated 09/17/13), revokes NY N196161 (2012) |
| Old HTS/Rate: 6110.30.3053, 32% (Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted: of man-made fibers: other: other: other: other: men’s or boys’: other.) |
| New HTS/Rate: 6110.90.90, 6% (a knitted or crocheted pullover of “other” textile materials (i.e., not of polyester)). |
| Reason: The ruling is being revoked because when it was issued, another ruling on the classification of the Best Key yarn, remained in effect. That Best Key yarn ruling is being revoked (see above). |
(See ITT's Online Archives 13042908 for summary of the proposed revocation of these rulings.)