Before Bryson, Circuit Judge, Archer, Senior Circuit Judge, and Gajarsa Circuit Judge.
The opinion of the court was delivered by: Bryson, Circuit Judge.
Appealed from: United States Court of International Trade Senior Judge James L. Watson
This customs classification case involves imported strands of electric lights that are packaged with decorative plastic covers. The Customs Service classified the light strands under subheading 9405.30.00 of the Harmonized Tariff Schedule of the United States (HTSUS). That subheading is termed "lighting sets of a kind used for Christmas trees." Appellant Primal Lite challenged the classification in the Court of International Trade. Primal Lite agreed that its goods were properly classified under heading 9405 of the HTSUS, "lamps and lighting fittings," but it argued that the goods should have been classified under subheading 9405.40.80 of the HTSUS, a residual subheading. The Court of International Trade agreed with Primal Lite that Customs had improperly classified the goods and granted summary judgment in Primal Lite's favor.
The pertinent facts are undisputed. The imported goods at issue in this case are 14-foot-long light strands bearing 10 equally spaced light bulbs. Each strand is packaged with two replacement bulbs and plastic covers sized to fit over and attach to the light bulbs. The plastic covers depict various objects including fruits, vegetables, hearts, rearing horses, and American flags. The government does not contend that any of the depictions on the plastic covers relate to the Christmas holiday.
In the Court of International Trade, Primal Lite submitted an affidavit by its president, and the trial court found on the basis of that affidavit that light strands having the physical characteristics of the imported goods, i.e., goods commercially fungible with the imported light strands, are predominantly used for decorating that is not associated with the Christmas holidays or Christmas trees. The trial court read the reference to "lighting sets of a kind used for Christmas trees" in subheading 9405.30.00 to require that use in connection with Christmas trees be the predominant or principal use of those goods that are commercially fungible with the imported goods. The court rejected the government's argument that the goods should be classified based on the use of other goods within the broader class of "electric garlands," to which the imported goods belonged. The court therefore held that the imported goods should not have been classified under subheading 9405.30.00, but instead should have been classified under subheading 9405.40.80. The government has appealed from the trial court's judgment.
The parties agree that Primal Lite's imported merchandise was properly classified under heading 9405, but they disagree about the subheading that should have been used. The government argues that Customs correctly classified the goods under subheading 9405.30.00 ("Lighting sets of a kind used for Christmas trees"), while Primal Lite argues that the Court of International Trade was correct to hold that the goods should have been classified under subheading 9405.40.80, the residual eight-digit subheading under the six-digit subheading for "other electric lamps and lighting fittings." The government takes the position that the legal issue in this case is subject to plenary review; it does not argue that Customs' legal position is entitled to any special deference from this court. We therefore have no occasion to decide whether the Supreme Court's decision in United States v. Haggar Apparel Co., 119 S. Ct. 1392 (1999), which required deference to a position taken in a formal Customs Service regulation, should be extended to cases, such as this one, in which no regulation is at issue.
Subheading 9405.30.00 is a "use" provision, because the classification decision turns on whether the imported lighting sets are "of a kind used for Christmas trees." Additional Rule of Interpretation 1 (ARI 1) of the HTSUS dictates how tariff classifications should be construed when the classification decision is controlled by use. ARI 1 provides as follows (emphasis added):
"1. In the absence of special language or context which otherwise requires-"
"(a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use;"
"(b) a tariff classification controlled by the actual use to which the imported goods are put in the United States is satisfied only if such use is intended at the time of importation, the goods are so used and proof thereof is furnished within 3 years after the date the goods are entered . . . ."
As the text makes clear, ARI 1(b) addresses "actual use" provisions, while ARI 1(a) deals with "principal use" provisions.
The government contends that subheading 9405.30.00 is a "principal use" provision and that the classification decision in this case is therefore governed by ARI 1(a). We agree. However, we conclude that ARI 1 supports Primal Lite's position, not the government's.
As applied to the goods at issue in this case, the government argues that the term "of a kind" in subheading 9405.30.00 and the term "class or kind" in ARI 1(a) must be defined to include all electric garlands, not simply those particular types of garlands that are normally used as Christmas tree decorations. In the government's view, because certain kinds of electric garlands are used as Christmas tree decorations, and because Primal Lite's goods fall within the general class of electric garlands, Primal Lite's goods must be deemed to be "lighting sets of a kind used for Christmas trees." The government's argument, however, does not make sense as a matter of either precedent or logic.
The purpose of "principal use" provisions in the HTSUS is to classify particular merchandise according to the ordinary use of such merchandise, even though particular imported goods may be put to some atypical use. Thus, a classification covering vehicles principally used for automobile racing would cover a race car, even if the particular imported car was actually used solely in an advertising display. See Clarendon Mktg., Inc. v. United States, 144 F.3d 1464, 1467 (Fed. Cir. 1998) (a principal use provision "may function as a controlling legal label, in the sense that even if a ...