SC Johnson & Son v. USA (Fed. Cir. 2021)
There is a big (electronic) book known as the Harmonized Tariff Schedule of the United States (“HTSUS”) that is used to classify commercial imports. Each classification will have its own tariff rate, that will often also depend upon other factors such as the country of origin.
In this case, the Customs (part of Homeland Security) classified the bags under HSTSUS Subheading 3923.21.00, but SCJohnson argues that the proper classification is 3924.90.56, which would reduce the tariff from 3% ad valorem to 0% (duty free).
3923.21.00–Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Sacks and bags (including cones): Of polymers of ethylene. [3% tariff ad valorem]
3924.90.56–Tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics: Other: Other. [Nominally 3.4% tariff, but duty free under the Generalized System of Preferences]
The United States Court of International Trade found that the bags could be classified under either heading and consequently chose what it deemed to be the more specific–bags made of ethylene. On appeal, the Federal Circuit has affirmed.
The Federal Circuit follows a similar law/fact divide that it does for patent infringement. “(1) determining the proper meaning of the tariff provisions, which is a question of law; and (2) determining which heading the particular merchandise
falls within, which is a question of fact.” Slip Op. (Quoting Deckers (Fed. Cir. 2008)).
One of the key questions in the appeal is whether the 3924 heading should be classified as a “use provision” or an “eo nomine” provision.
An eo nomine provision ‘describes an article by a specific name,’ whereas a use provision describes articles according to their principal or actual use.
Slip Op. Quoting Schlumberger (Fed. Cir. 2017) and Aromont (Fed. Cir. 2012). Use provisions are more narrowly construed – and that would make it more likely that the court would choose SCJohnson’s preferred classification. On appeal though, the Federal Circuit interpreted it as eo nomine and affirmed.