US Customs recently decided that no specialty provisions existed to avoid the payment of customs duties, or severely reduce them, on haute couture garments imported by Christian Dior Couture® (CDC).
According to US Customs, a determination was
sought acknowledging that the garments could either qualify
(a) for duty free treatment enter under an A.T.A. carnet
as samples
(b) under a Temporary Importation Bond (TIB) as articles
not for sale or sale on approval to be repaired, altered or processed, or
(c) for unused merchandise drawback.
Each of these types of treatment would have resulted in preferred duty treatment.
The facts presented with respect to the use of the
garments were as follows:
“Christian Dior
Couture imports haute couture garments so that they may be furnished to
celebrities at no cost to wear at high-profile events, such as the Academy
Awards ceremony. The garments serve an important form of advertising for the company
because they allow the company to increase its brand awareness and showcase the
latest fashions and increase sales. Once
entered into the United States, each piece is fitted to the particular person
wearing the haute couture piece so that it may properly display the intended
design. Such fittings include hemming, shortening, and/or otherwise altering
for the measurements of the person displaying the piece. Only one of each piece
will be imported. After exhibition at the event for which the piece was
imported, the piece is returned to the company’s U.S. office, and shipped back
to the company’s office in Paris, France. During this time, the company does
not sell the garments, but retains ownership. The haute couture pieces
generally spend no more than a week in the United States.”[1]
Despite these details, Customs claimed that while it did
meet the test of being for purposes of soliciting orders, it also served to
provide a celebrity with a garment to use to a high-profile event, which is
precisely the environment that they are meant to be worn in and in the manner
intended. These therefore, constituted a
normal use of the garment, and when you factored in the reality that there was
no intention of soliciting orders for the item while being worn, the haute
couture did not qualify for entry under an A.T.A. Carnet.
As for qualifying under a TIB, CDC needed the garments to
qualify as articles being repaired, altered or processed here in the US and for
which would be exported within 1 year from the date of importation. From CDC’s description of the use of the
garments however, it was clear to Customs that the main purpose for importation
was something other than for an alteration, repair or processing, and for this
reason, it didn’t qualify under a TIB.
Regarding drawback, to qualify for this the garments
needed to be exported in the same condition as imported within 3 years from the
date of importation, having not been used in the US. Customs reasoned however, that since the
pieces of haute couture were furnished to celebrities for use at a high profile
event, that the garments were in fact “used,” and therefore not eligible for
duty drawback either. This is because
Customs description of “use” turns on the article being “employed for the
purpose for which it was built, which in this case, include[d] celebrities
wearing and exhibiting the haute couture pieces at events.” [2]
While there is a special provision does allow women’s
wearing apparel to enter duty free for purposes of soliciting orders, it cannot
be removed from the importer's establishment for reproducing, copying,
painting, sketching, or for any other use by others, nor be used in the
importer's establishment for such purposes except by the importer or his
employees.
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