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Federal Circuit: Tariff classification of imported sausage casings

Tariff classification of imported sausage casings

The U.S. Court of Appeals for the Federal Circuit today affirmed a judgment of the trade court concerning the tariff classification of imported sausage casings.

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The trade court granted summary judgment for the government, finding that the casings (comprised of both textile and plastic materials) were not “completely embedded in plastics” and thus were subject to a customs duty rate of 7% (and not the customs duty rate of 3.1% as asserted by the company).

The case is: Kalle USA Inc. v. United States, 2018-1378 (Fed. Cir. May 2, 2019). Read the Federal Circuit decision [PDF 127 KB] that includes a concurring opinion.

Summary

The company imported casings from Germany to be used to encase processed food products (including sausage, ham, and cheese). The casings were comprised of a woven textile sheet that was coated with a thin layer of plastic on one side.

The company imported nine entries of the casings between July and August 2010. The casings were liquidated by U.S. Customs and Border Protection (CBP) in June 2011 under the Harmonized Tariff Schedule of the United States (HTSUS) subheading 6307.90.9 that covers “other made up articles, including dress patterns:…[o]ther… [o]ther” and subject to a customs duty rate of 7%.

The company filed a protest in September 2011, arguing that the casings were properly classified under the HTSUS subheading 3917.39.0050 that covers “[t]ubes, pipes and hoses and fittings therefor (for example, joints, elbows, flanges), of plastics” and subject to a customs duty rate of 3.1%. CBP denied the company’s protest. Eventually, the matter ended up before the U.S. Court of International Trade, which granted summary judgment in favor of the government and concluded that the casings “cannot be classified under heading 3917” as the company had asserted. The company appealed, asserting that the trade court had erroneously interpreted the phrase “completely embedded in plastics” as used in HTSUS chapter 59 and that, instead, the casings were to be classified as plastics under HTSUS chapter 39.

The Federal Circuit today affirmed the result reached by the trade court after finding that the casings were not “completely embedded in plastics” under HTSUS chapter 59. Still, the Federal Circuit affirmed the decision to classify the casings under HTSUS subheading 6307.90.98.

 

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Managing Director
T: 202-533-3247
E: aahanchian@kpmg.com

Robert Waldrop
Principal
T: 212-954-8117
E: rwaldrop@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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