OT:RR:CTF:VS H311101 tmf
Port Director
U.S. Customs and Border Protection
200 East Bay Street
Charleston, South Carolina 29401
RE: Application for Further Review of Protest No. 1601-18-100179 and associated protests; Articles for the Handicapped; Subheading 9817.00.96, HTSUS
Dear Port Director:
This is in response to an Application for Further Review (“AFR”) of Protest No. 1601-18-100179, timely filed by the law firm of Alston & Bird, “Counsel”), on behalf of its client, the protestant, Gildan USA Inc. This protest which was received by your office June 11, 2018, contests the denial of duty free treatment of three entries of certain socks under subheading 9817.00.96, Harmonized Tariff Schedule of the United States (HTSUS), which provides for, among other things, “articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons . . . other.” The AFR was properly approved by the port. Our decision follows.
FACTS:
On January 26, 2017, CBP liquidated the subject entry of sock merchandise, marketed as “Medipads® for symptoms of diabetes and related conditions” in subheading 6115.96.9020, HTSUSA, which provides for "Panty hose, tights, stockings, socks and other hosiery, including stockings for varicose veins, and footwear without applied soles, knitted or crocheted: Other: Of synthetic fibers: Other: Other…Other,” dutiable at 14.6 percent.
These socks are labeled as “Medipads”, a registered trademark of Gildan Activewear, Inc., and under license of Peds Legwear (USA) Inc. The socks are manufactured in China. The socks’ physical characteristics are detailed on the packaging as: “non-binding top with extra stretch and comfort”; “moisture wicking” technology; “Lycra fiber hugs your foot for perfect fit”; “cushion sole for shock absorption and rebounding” and a “smooth toe seam reduces pressure points.”
In this protest, Counsel argues that the subject socks should be classified in subheading 9817.00.96 as “articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons.” Counsel states the subject socks are diabetic socks that are specially designed for use or benefit of people with diabetes.
On July 23, 2020, Counsel was afforded the opportunity to discuss this protest matter.
ISSUE:
Whether the socks at issue are eligible for duty-free treatment under subheading 9817.00.96, HTSUS, which provides, in pertinent part for “articles specially designed or adapted for the handicapped.”
LAW AND ANALYSIS:
Subheading 9817.00.96, HTSUS, provides for:
Articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons; parts and accessories (except parts and accessories of braces and artificial limb prosthetics) that are specially designed or adapted for use in the foregoing articles . . . Other.
Subheading 9817.00.96 excludes “(i) articles for acute or transient disability; (ii) spectacles, dentures, and cosmetic articles for individuals not substantially disabled; (iii) therapeutic and diagnostic articles; or, (iv) medicine or drugs.” U.S. Note 4(b), Subchapter XVII, Chapter 98, HTSUS.
Accordingly, eligibility within subheading 9817.00.96, HTSUS, depends on whether the article in question is “specially designed or adapted for the use or benefit of the blind or physically and mentally handicapped persons,” and whether it falls within any of the enumerated exclusions. Note 4(a) to Chapter 98, HTSUS, provides:
(a) For purposes of subheadings 9817.00.92, 9817.00.94 and 9817.00.96, the
term “blind or other physically or mentally handicapped persons” includes any person suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities, such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working.
This list of exemplar activities indicates that the term “handicapped persons” is to be liberally construed so as to encompass a wide range of conditions, provided the condition substantially interferes with a person’s ability to perform an essential daily task. While the HTSUS and subchapter notes do not provide a proper definition of “substantial” limitation, the inclusion of the word “substantially” denotes that the limitation must be “considerable in amount” or “to a large degree.”
In the Court of Appeals for the Federal Circuit’s decision in Sigvaris, Inc. v. United States, 899 F.3d 1308 (Fed. Cir. 2018), the court found that the Court of International Trade reached the correct conclusion in finding the merchandise at issue therein, compression stockings, not eligible for subheading 9817.00.96, HTSUS, treatment, but the court disagreed with the lower court’s analysis. The court found that the Court of International Trade looked to the condition or disorder and whether it is a handicap. The court stated:
The plain language of the heading focuses the inquiry on the “persons” for whose use and benefit the articles are “specially designed,” and not on any disorder that may incidentally afflict persons who use the subject merchandise.
* * *
. . . we must ask first, “for whose, if anyone’s, use and benefit is the article specially designed,” and then, “are those persons physically handicapped?”
Id.
The language of subheading 9817.00.96, HTSUS, states that the provision provides for “articles specially designed or adapted” for the use or benefit of the physically handicapped. The design and construction of an article may be indicative of whether it is specially designed or adapted for the use or benefit of the handicapped. The HTSUS does not establish a clear definition of what constitutes “specially designed or adapted for the use or benefit” of handicapped persons. In the absence of a clear definition, the Court of the International Trade stated that it may rely upon its own understanding of the terms or consult dictionaries and other reliable information. See Danze, Inc. v. United States, Slip Op. 18-69 (Ct. Int’l Trade 2018). Moreover, in analyzing this same provision in Sigvaris v. United States, the Court of International Trade construed these operative words as follows:
The term “specially” is synonymous with “particularly,” which is defined as “to an extent greater than in other cases or towards others.” [Webster’s] at 1647, 2186
. . . The dictionary definition for “designed” is something that is “done, performed, or made with purpose and intent often despite an appearance of being accidental, spontaneous, or natural.” [Webster’s] at 612 . . . .
See Sigvaris, 227 F. Supp. 3d at 1336. See also, Sigvaris, Inc. v. United States, 899 F.3d 1308 (Fed. Cir. 2018), wherein the court cited the definitions relied upon by the Court of International Trade in Sigvaris, in concluding that “articles specially designed for handicapped persons must be made with the specific purpose and intent to be used by or benefit handicapped persons rather than the general public.” See Sigvaris, 899 F.3d 1308 (Fed. Cir. 2018). The Court of Appeals for the Federal Circuit refined this requirement which it found to be incomplete. The court concluded that:
to be “specially designed,” the subject merchandise must be intended for the use or benefit of a specific class of persons to an extent greater than for the use or benefit of others.
Sigvaris, 899 F.3d 1308.
Finally, the legislative history further aids our analysis of these terms as used in subheading 9817.00.96, HTSUS. The Senate stated in its Report that one of the goals of this law was to benefit the handicapped and show U.S. support for the rights of the handicapped. The Senate stated, in relevant part:
By providing for duty-free treatment of articles specially adapted for the blind or other physically or mentally handicapped persons, the committee does not intend that an insignificant adaptation would result in duty-free treatment for an entire relatively expensive article. Otherwise, the special tariff category will create incentives for commercially motivated tariff-avoidance schemes and pre-import and post-entry manipulation. Rather, the committee intends that, in order for an entire modified article to be accorded duty-free treatment, the modification or adaptation must be significant, so as clearly to render the article for use by handicapped persons.
S. Rep. No. 97 564, 97th Cong. 2nd Sess. (1982). The Senate was concerned that persons would misuse this tariff provision to avoid paying duties on expensive products. Similarly, in Danze v. United States, the court looked to the legislative history and noted that its interpretation of the terms “specially” and “designed” in Sigvaris comported with the legislative intent behind subheading 9817.00.96, HTSUS, that any modification or adaptation be “significant.”
CBP has recognized several factors to be utilized and weighed against each other on a case-by-case basis when determining whether a particular product is “specially designed or adapted” for the benefit or use of handicapped persons. See U.S. Customs Serv. Implementation of the Duty-Free Provisions of the Nairobi Protocol, Annex E, to the Florence Agreement, T.D. 92-77, 26 Cust. B. & Dec. 240, 241 (1992) (“Implementation of the Nairobi Protocol”) at 243-244. These factors include: (1) the physical properties of the article itself (i.e., whether the article is easily distinguishable by properties of the design, form, and the corresponding use specific to this unique design, from articles useful to non-handicapped persons); (2) whether any characteristics are present that create a substantial probability of use by the chronically handicapped so that the article is easily distinguishable from articles useful to the general public and any use thereof by the general public is so improbable that it would be fugitive; (3) whether articles are imported by manufacturers or distributors recognized or proven to be involved in this class or kind of articles for the handicapped; (4) whether the articles are sold in specialty stores which serve handicapped individuals; and, (5) whether the condition of the articles at the time of importation indicates that these articles are for the handicapped. See also Danze, Inc. v. United States, Slip Op. 18-69 (Ct. Int’l Trade 2018); Sigvaris, Inc. v. United States, 227 F.Supp.3d 1327 (Ct. Int’l Trade, 2017), aff’d, 899 F.3d 1308 (Fed. Cir. 2018). The court in Sigvaris, 899 F.3d. 1308 (Fed. Cir. 2018), found that “[t]hese factors aid in assessing whether the subject merchandise is intended for the use or benefit of a specific class of persons to a greater extent than for the use or benefit of others.” The court adopted these factors into its analysis.
Looking to the court’s analysis in Sigvaris, 899 F.3d 1308 (Fed. Cir. 2018), we must first examine for whose use and benefit the subject socks are “specially designed,” and whether such persons are physically handicapped. In other words, we must consider whether such persons are suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities. In this case, the life activity for which the subject socks are “specially designed” is the ability to assist with walking.
With regard to the first two factors to consider in determining whether an article is “specially designed,” i.e., the physical properties of the article and any characteristics of the article that easily distinguish it from articles useful to the general public, we find the socks do not possess a design feature that distinguish them from other socks which are useful to the general public. Many socks have extra stretch and comfort with the addition of Lycra fiber, and cushioning sole for shock absorption. In addition, mainstream socks have smooth toe seams to avoid pressure points on the toes. In sum, there is nothing distinguishable from socks that are sold to the public. In fact, we find that there are no other features that significantly render these socks for use or benefit by handicapped persons. See Danze, Inc. v. United States, Slip Op. 18-69 (Ct. Int’l Trade 2018), wherein the court stated that “[a]ny adaptation or modification to an article to render it for use or benefit by handicapped persons must be significant.”
In October 2018, you provided supplemental information concerning ten protests to the AFT CEE. Specifically, you provided marketing and sales information depicting Gildan’s MediPeds® marketing as diabetes care products in retailers such as Walgreens and Walmart. In Walmart, you provide retail marketing information which features the MediPeds® as “Health/Home Health Care/Diabetic Supplies.” During a recent meeting, you claimed that the sample diabetic socks are specially engineered and constructed to alleviate leg and foot problems experienced by persons with diabetes.
After careful consideration of the samples, the supplemental information provided to the CEE and the presentation at the meeting, we do not find the socks at issue with a bit less elasticity easily distinguishable by properties of the design and form from socks useful to non-diabetic persons). As discussed above, many mainstream socks also are designed to prevent toe pressure points and moisture wicking. Further, the subject socks are not specifically endorsed by the American Medical Association to alleviate diabetic condition. Rather, Gildan is a sponsor of the American Diabetic Association, and the socks are widely available for mainstream purchase.
HOLDING:
On the basis of the information provided, we find the socks at issue are not eligible for subheading 9817.00.96, HTSUS treatment as “articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons . . . other.” Therefore, this protest should be DENIED.
In accordance with the Protest/Petition Processing Handbook (CIS HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial Trade and Facilitation Division