CAFC Affirms Lower Court on Tariff Classification of Scrapbooking Paper Hole Punches
The U.S. Court of Appeals for the Federal Circuit affirmed on Nov. 5 a lower court ruling on the tariff classification of hole punches for paper scrapbooks. As the Court of International Trade had done in September 2012 (see 12100102), the appeals court held Wilton Industries’ “Stampin’ Up!” hole punches should be classified as “perforating punches” under Harmonized Tariff Schedule heading 8203, rather than Wilton’s preferred classification as paper cutting machines under heading 8441. The former heading exactly describes Wilton’s hole punches, while the latter is reserved for paper manufacturing machinery, CAFC said.
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Wilton imports its “Stampin’ Up!” paper punches from Taiwan for use in scrapbooking and other craft products. Different models of punches are used to cut various shapes or designs out of paper. They come in a variety of sizes between about 2-8 inches long by about 1-2.65 inches wide. They’re actuated by hand to make the intended cut. CBP originally liquidated the punches under HTS subheading 8203.40.60 (“Tools, implements, cutlery, spoons, and forms, of base metal … : files, rasps … perforating punches and similar handtools, and base metal parts thereof: Pipe cutters, bolt cutters, perforating punches and similar tools, and parts thereof: Other (including parts”), dutiable at 3.3%. Wilton protested, arguing the punches should have instead been classified under subheading 8441.10.00 (“Other machinery for making up paper pulp, paper or paperboard, including cutting machines of all kinds … : cutting machines”), which enters duty free. CBP denied the protest, and Wilton filed suit.
Wilton said the punches are used for cutting paper, a function that is exactly described by heading 8441. “Perforating punches” under heading 8203, on the other hand, are understood by industry to be tools for making holes in metal. Despite Wilton’s arguments, CIT in September 2012 found the hole punches should be classified in heading 8203, in the process reversing CBP’s classification of several models of punches that had been put in heading 8441 on the basis of an agreement with Wilton.
On appeal, CAFC agreed with the lower court’s classification as perforating punches. The key difference between the two headings is that 8203 includes handtools, while 8441 covers industrial machines, the appeals court said. As a tool that can be picked up and manipulated with the hands, Wilton’s punches belong in the first category under heading 8203. Wilton’s argument that perforating punches are only for use on metal found no sympathy with the appeals court, either. CAFC pointed to the Explanatory Notes for chapter 82, which list ticket punches for making holes in paper as examples of products classifiable under heading 8203, to justify its conclusion.
(Wilton Industries v. U.S., CAFC No. 13-1028, dated 11/05/13, Judges Lourie, Prost, and Taranto)
(Attorneys: Maria Celis of Neville Peterson for plaintiff Wilton Industries, Inc.; Beverly Farrell for defendant U.S. government)