Issue 407, July 15, 2003
Over the last several days, the Port of New York has issued a large number of Notices of Proposed Action (CF-29s) concerning the classification of handbags. This action could result in a 300% or more increase in duties for importers of these articles.

At the direction of the National Commodity specialist, the Port has re-evaluated the classification of handbags claimed to be with an exterior surface of leather. These bags would have been entered with duty at between 5.3% and 10% ad valorem. Based upon recent rulings, Customs has taken the position that these bags feature a coating on the outer surface of the leather. As a result, Customs is proposing to classify the bags as having an outer surface of "sheeting of plastic." Handbags under this classification carry a duty rate of 16.4% ad valorem. Industry sources report that most leather handbags and similar articles have some sort of protective coating on the leather exterior to prevent water staining and scratching. However, Customs rulings have found a coating as thin as 0.04 mm thick results in an article with an outer surface of sheeting of plastic. As a result, this reclassification could result in most "leather" handbags being subject to the higher duty rate. If you are an importer of such articles and receive a Notice of Action from Customs, you will have 20 days to respond.

While we believe Customs has not looked at other similar articles yet, this action could affect the classification of other products classified under heading 4202 including luggage, purses, briefcases, travel bags, etc. In addition, given the involvement of the National Commodity Specialist, this action could likely be expanded to other ports outside the New York region.

Our contributing writer, David M. Murphy, is a licensed Customs broker and a Partner at the Customs and International Trade law firm of Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, and can be reached via email (dmurphy@gdlsk.com) or at (212) 557-4000.

Please note that due to the complex nature of the subject matter, DHL Danzas Air & Ocean cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with DHL Danzas Air & Ocean.