Better Home Plastics Corp. (BHP) imported shower curtain sets that consisted of an outer textile curtain, an inner plastic magnetic liner, and plastic hooks. While the textile curtain is semitransparent and decorative, the inner liner also matches the curtain and adds to the set’s decorative appearance. The sets are sold to retailers at prices ranging from $5.00 to $6.00.
U.S. Customs and Border Protection classified the merchandise under HTSUS 6303.92.0000 at a rate of duty of 12.8 percent ad valorem. BHP protested that classification, stating that the merchandise should have been classified under HTSUS 3924.90.1010 (by the set’s inner plastic liner) with a prescribed duty of 3.36 percent ad valorem. According to the General Rules of Interpretation, when goods are classifiable under two or more headings such as textile curtain and inner plastic liner, customs must classify the merchandise based on the heading which provides the most specific description (rule of relative specificity). This rule may not apply in cases where both headings are regarded as equally specific and each refers to only part of the items within the set.
In cases where the rule of relative specificity does not apply, merchandise can be classified by the component that gives their essential character (the essential character test).
BHP contends that the essential-character test must be applied to classify the merchandise on the basis of its inner plastic liner, while Customs believes that the essential character of the product is embodied in the textile curtain because (a) the liner is used for a short time when someone uses the shower while the curtain is employed throughout the day; (b) consumers buy the product because of the decorative function of the outer curtain (not the inner plastic liner); and (c) the plastic liner is usually replaceable at one-third to one-quarter the price of the set.
Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.