In their Inaugural Newsletter KMPG summarized The U.S. Court of International Trade’s (CIT) recent decision in Meyer v. United States, ruling that importing retail “sets”, comprised of both GSP-eligible and non-eligible products classified under a single tariff provision, does not disqualify the GSP-eligible products in the set from the lower GSP duty preference (nor would the existence of GSP eligible products in the set impart eligibility on the non-eligible products). This decision clarifies the Customs law in this area and brings additional predictability on whether the lower duty GSP preferential treatment will be granted to products classified under the HTSUS as retail “sets.”
Specifically, the importer entered shipments of cookware “sets,” which included pots and pans produced in Thailand, a Beneficiary Developing Country (BDC) eligible for preferential duty treatment under the Generalized System of Preferences (GSP), and glass lids produced in the People’s Republic of China, a non-BDC (and thus, not GSP eligible). U.S. Customs and Border Protection (CBP) denied GSP treatment to the imported sets due to the presence of the non-BDC glass lids.
The court decided in the favor of the importer and determined that the pots and pans do qualify for GSP treatment while the glass lids do not. However, as KMPG adroitly points out, “The CIT left open the issue(s) of whether the rate of duty applicable to the non-eligible items should be the duty rate applicable to the tariff classification of the entire set as a whole under GRI 3(b), or the duty rate applicable to the classification of the individual non-eligible article itself (e.g, the glass lids), including how it would need to be presented upon Customs entry, CBP Form 7501.”
That leaves something for us Customs Geeks to ponder… Should the set should be ‘broken out’ into 2 lines; one for the pots/pans and another for the lids? Or, how about using the X,V,V logic? Frankly, at CNI, we don’t believe the X,V,V logic will work in this case since the X line carries the duty rate. Rather, it would probably be best to break out the components. However, then filers would have to decide if they would use the same HTS for each component based on the ‘essential character’ of the set, claiming GSP for the pots/pans value and not claiming GSP for the lids or classifying the pots/pans in chapter 73 and the lids in chapter 70. Either way, legal assistance is suggested in these situation.