Imported cookware sets, preferential tariff treatment | KPMG | GLOBAL

Components of imported cookware sets, preferential tariff treatment under GSP

Imported cookware sets, preferential tariff treatment

The U.S. Court of International Trade granted an importer’s motion for partial summary judgment concerning imports of cookware sets that included components from Thailand (a “beneficiary developing country”—BDC) and glass lids from China (a non-BDC country). The trade court found that the cookware sets were not completely disqualified from preferential treatment under the Generalized System of Preferences (GSP) because of the presence of the lids from China among the sets.

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U.S. Customs and Border Protection (CBP) had denied the preferential tariff treatment due to the presence of the non-BDC glass lids. The trade court granted summary judgment as to the GSP eligibility of the BDC components of the imported cookware sets and denied GSP eligibility of the non-BDC components. The court also granted the government’s motion for partial summary judgment with respect to CBP’s denying the first sale transaction valuation treatment, based on the evidence presented at the administrative level.

The case is: Meyer Corp. U.S. v. United States, Slip Op. 17-110 (CIT August 23, 2017). Read the trade court’s opinion [PDF 473 KB] 

Summary

A brief summary of the facts in this case is, as follows:

  • Cookware, pots and pans were produced in Thailand and qualified for duty-free entry under the GSP. 
  • The pots and pans were packaged together with glass lids imported into Thailand. The glass lids were produced in China, and were not GSP eligible.
  • At issue was whether the pots and pans continued to qualify for duty-free entry under GSP, or whether the entire “retail set” was disqualified due to the presence of non-eligible lids from China.
  • The goods were shipped directly from Thailand into the United States, but were sold through a related intermediary / middleman to the importer (all parties were related). 
  • The importer claimed “first sale” as the basis for valuation.
  • CBP treated the parent company of the importer as the “firm” under the “all costs plus profit” test.

 

The trade court: 

  • Determined that combining GSP-eligible and non-eligible items under a single tariff classification—“retail set” pursuant to General Rule of Interpretation (GRI) 3(b)—did not disqualify the GSP-eligible articles in the set. 
  • Viewed that the tariff classification rules (for the purpose of determining HTSUS classification) and the GSP eligibility rules must be considered separately (i.e., the GSP 35% value-added test did not apply to the entire “retail set”).  
  • Clarified that a customs classification is based on the contours of the set, as a whole, while GSP analysis considers whether and to what extent preferential treatment extends to the content of the set (i.e., to the individual “articles” in the set).  
  • Ultimately determined that there were insufficient facts to assess whether the “first sale” transaction was at arm’s length, but that the parent company’s financial information was “relevant to examining whether any non-market influences affect the legitimacy of the sales price.”  

 

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 | dzuvich@kpmg.com

Andrew Siciliano | +1 (631) 425-6057 | asiciliano@kpmg.com

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