Wwrd US, LLC v. United States

Citation: 886 F.3d 1228Docket: 17-1945

Court: Court of Appeals for the Federal Circuit; April 2, 2018; Federal Appellate Court

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WWRD US, LLC appealed a decision from the United States Court of International Trade (CIT) that denied its motion for summary judgment and granted the government’s cross-motion. The CIT upheld the U.S. Customs and Border Patrol's (CBP) classification of WWRD's imported goods, which included decorative ceramic plates, mugs, and crystal items designed for Thanksgiving and Christmas, asserting they were not eligible for duty-free treatment under HTSUS 9817.95.01. This subsection provides duty-free status for certain articles associated with religious or cultural celebrations. WWRD contested the CBP's classification, arguing that its items were used during specific cultural rituals and therefore should qualify as duty-free. The CIT examined the historical context of HTSUS 9817.95.01, noting that prior to its establishment, such items were classified under Chapter 95, which allowed broad duty-free coverage for festive articles. Ultimately, the Federal Circuit affirmed the CIT's ruling.

In 2007, Chapter 95 was amended to exclude certain utilitarian articles, including various textiles and kitchenware, from its scope. However, subheadings 9817.95.01 and 9817.95.05 provided duty-free status for specific items used in religious or cultural rituals, which became the focal point of a legal dispute regarding WWRD’s imports. The court needed to determine if WWRD's items were used "in the performance of specific religious or cultural ritual celebrations." 

The Court of International Trade (CIT) evaluated this phrase by applying the General Rules of Interpretation (GRI) but found the chapter's context unhelpful. Instead, it relied on the ordinary meaning of "ritual." The court recognized Thanksgiving and Christmas as cultural holidays with associated dinners; however, these dinners did not constitute specific rituals, which require formal or solemn scripted acts. The CIT emphasized that if subheading 9817.95.01 was meant to include all utilitarian items used during celebrations, the term "ritual" would be unnecessary.

The trial court examined examples within the subheading, such as Seder plates and menorahs, which serve distinct purposes in rituals, contrasting them with WWRD's imports that were deemed merely decorative and not ritualistic. Consequently, the court ruled that WWRD’s items did not qualify as articles used in specific religious or cultural rituals, denying WWRD’s summary judgment motion and granting the Government’s cross-motion. Jurisdiction for the appeal was established under 28 U.S.C. 1295(a)(5), with the review conducted de novo, affirming the presumption of correctness for Customs and Border Protection classifications.

Classifying articles under the Harmonized Tariff Schedule of the United States (HTSUS) involves a two-step process. The Court first interprets the meaning of specific terms in the tariff provisions, a legal question. Following that, it assesses which HTSUS subheading the goods fall under, a factual question. If there are no material facts in dispute, the classification review focuses solely on the legal interpretation of the HTSUS terms. The HTSUS consists of headings and subheadings, with classification governed by the General Rules of Interpretation (GRIs), particularly GRI 6, which dictates that subheading classification depends on the terms of those subheadings and related notes. GRI 1 requires classification based on the headings and relevant notes.

The analysis begins with defining "articles used in the performance of specific religious or cultural ritual celebrations." The trial court concluded that "specific" modifies "ritual," indicating that rituals consist of prescribed acts often performed formally or solemnly. However, the appellate court agrees that while formality and solemnity are relevant, they are not essential characteristics of all specific religious or cultural rituals. The parties presented differing interpretations, with the Government advocating for a stricter definition requiring formal repetition of actions. Ultimately, the Court identifies two core requirements for rituals: they must involve prescribed acts or codes of behavior, consistent with definitions from authoritative dictionaries.

A ritual must possess cultural or religious significance, as defined by dictionaries, which include elements such as rites, public worship, and social customs. The trial court is tasked with evaluating additional factors, including the formality of the acts, their recognition, the organization behind them, and their purpose within the cultural or religious context. WWRD contends that Thanksgiving and Christmas dinners qualify as ritual celebrations; however, the court requires these rituals to be 'specific' and unambiguous, focusing on well-defined acts with clear cultural or religious meanings. 

WWRD lists elements of these dinners as gatherings for celebration, special food and drink consumption, formal settings, and the shared intent to honor the holidays. However, the court points out that 'intent' is not a specific act, and the actions described do not meet the necessary specificity outlined in the legal subheading. The court provides examples of rituals with clear, defined acts, such as the Seder plate for Passover and the menorah for Hanukkah, to illustrate the required level of specificity. Ultimately, the court concludes that the acts associated with Thanksgiving and Christmas dinners are too ambiguous and lack the defined characteristics that make them rituals as required by the subheading, noting the variability in how families celebrate these occasions.

The requirement under subheading 9817.95.01 mandates that imported items must be 'used in the performance' of a ritual to qualify for duty-free status. WWRD contends that items used for utilitarian purposes but contributing to the event's ambience qualify as such. However, the ruling clarifies that mere use during a ritual is insufficient; the items must fulfill a specific role within the ritual. Examples include a Seder plate for symbolic foods and a menorah for candles, which serve distinct purposes in their respective rituals. The ruling posits that typical dinnerware for Thanksgiving or Christmas does not enhance the ritual of dining, as the ritual continues regardless of decorative motifs. WWRD must identify specific acts with religious or cultural significance to justify duty-free claims. Legislative history indicates a shift in 2007 to limit duty-free status to items integral to specific rituals, contradicting WWRD's interpretation which seeks to widen the scope abandoned by Congress. Ultimately, while a more flexible definition of 'ritual' is adopted, the trial court correctly ruled that WWRD's imports do not meet the criteria for duty-free status, leading to an affirmation of the trial court’s decisions without costs.