CAFC Finds Use a Factor in 'Eo Nomine' Tariff Classification
Use can be considered when interpreting “eo nomine” tariff provisions, said the U.S. Court of Appeals for the Federal Circuit on Aug. 4 as it vacated a lower court ruling on the classification of screws. The Court of International Trade had found screws imported by GRK Canada to be “self-tapping screws” instead of “wood screws”, in part because the description “wood screws” refers to a type of screw by name, and not to the intended use of the screws. But without reaching a verdict on where GRK’s screws should be classified, CAFC found that wood screws means “screws for use in wood,” and ordered CIT to reconsider its decision under the new interpretation.
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GRK’s screws are made of corrosion resistant case-hardened steel, and have sharp-threaded gimlet points, coarse pitch spaced threads, and a partially unthreaded shank. The screws meet certain strength requirements, and are capable of cutting their own mating threads without a separate tapping operation. They are marketed for use in carpentry as building material fasteners, and can be used in wood, particle board, plastic, sheet metal, cement fiber board, and wood decking. CBP had classified GRK’s screws under HTS subheading 7318.12.00 as “other wood screws,” dutiable at 12.5 percent. GRK protested, arguing its screws were instead correctly classified under HTS subheading 7318.14.10 as “self-tapping screws,” dutiable at 6.2 percent.
An “eo nomine” tariff provision identifies an article by name, as opposed to “principal use” provisions that identify articles by the “class or kind to which the imported goods belong,” and “actual use” provisions that require proof of use within 3 years. The Court of International Trade found both subheadings to be eo nomine provisions. The government pointed to the screws’ intended use in wood to support classification as “other wood screws.” But CIT found that, as an eo nomine provision, “wood screws” describes screws having certain characteristics rather than screws that are for use in wood. Finding the GRK’s screws share the characteristics of both wood screws and self-tapping screws, CIT classified them under the subheading which occurs last in numerical order under General Rule of Interpretation 3(c) in subheading 8317.14.10 as “self-tapping screws” (see 13011528).
On appeal, CAFC found that CIT should have considered the screws’ intended use. “Although an eo nomine provision generally describes the merchandise by name, not by use, such a provision may be limited by use when the name itself inherently suggests a type of use.” In several cases, courts have analyzed use to classify items in “eo nomine” provisions. For example, CAFC in 2011 found CamelBak hydration packs were not classifiable as backpacks because of their “unique identity and use” (see 11062315). And products can only be considered vanity cases if containing cosmetics is their “predominant use,” said the Appeals Court.
“In sum, even under the HTSUS, use of subject articles may under certain circumstances be considered in tariff classification according to eo nomine provisions,” said CAFC. This may occur at the stage of establishing the proper meaning of a designation when a provision’s name ‘inherently suggests a type of use.’ Or, once tariff terms have been defined, it may be the case that the use of subject articles defines an article’s identity when determining whether it fits within the classification’s scope,” it said. Finding CIT improperly disregarded the screws’ intended use in wood, CAFC vacated the trade court’s decision and told it to reconsider.
Reyna’s Dissent Says Majority Blurs Fundamental Distinction
Judge Jimmie Reyna dissented from the majority, arguing the majority’s decision eliminates the clear distinction between eo nomine and principal use provisions that forms a fundamental principle of tariff classification. Rather than find that use can never be considered when interpreting an eo nomine provision, CIT said that it couldn’t consider use in this instance because “a use limitation should not be read into an eo nomine provision unless inherent in the provision’s common commercial meaning, said Reyna. Here, the common commercial meanings of wood screws and self-tapping screws include design characteristics, but not intended uses, and use should not have been a factor, he said. “The majority blurs the boundaries between eo nomine and principal use provisions in ways that will promote confusion and error in future classification cases,” said Reyna.
(GRK Canada, Ltd. v. U.S., Fed. Cir. 2013-1255, dated 08/04/14, Judges Prost and Clevenger, Judge Reyna Dissenting)
(Attorneys: Craig Ziegler of Montgomery McCracken for plaintiff-appellee GRK Canada; Jason Kenner for defendant-appellant U.S. government)