U.S. Customs Service Interpretation of HTS Code 6309.00

In recent years, many SMART members have run into problems importing second hand clothing under the U.S. Customs and Border Protection's (CBP) interpretation of the U.S. Harmonized Tariff Schedule (HTSUS) code that exists for "worn clothing," (HTS 6309). Items classified under HTS 6309 enter the U.S. duty-free. According to the HTSUS and explanatory notes included in the World Customs Organization's Harmonized System document, "worn clothing" properly classified under HTS 6309 must: 1) show signs of "appreciable wear"; and 2) be "presented in bulk (e.g. railway goods wagons) or in bales, sacks or similar bulk packings, or in bundles tied together without external wrapping, or packaged roughly in crates."

However, ever since 1998, when CBP issued its first ruling on the classification of worn clothing, the agency has held that 'worn clothing' under HTS 6309 must be "worn out," pointing to the dictionary translation of the words 'appreciable' and 'wear' to justify its interpretation. Specifically, CBP states, in order "to qualify for the provision 6309, the goods must show clear signs of appreciable wear (meaning be in poor condition)the assumption is that clothing imported under this provision will most likely be used as rags or other non-apparel purpose."

The global market for used clothing does not fit CBP's interpretation since the greatest demand for second hand clothing is for apparel that can still be worn. Nonetheless, CBP maintains the position, that used clothing which is still wearable does not fit its definition of HTS 6309 and therefore, should be assigned the same classification as that for a new item of clothing in the same category. This has resulted in U.S. importers of second hand clothing being charged the same duties levied on new items, despite the fact that second hand goods are inherently different in terms of the end-product quality, value perceived by the consumer, profit margins, and target markets. The result is that U.S. imports are subject to such high duties that it is virtually impossible to re-sell the goods at rates the market will bear.

SMART has launched several administrative challenges of CBP's counterintuitive interpretation over the years, supplying documentation showing that other countries allow these items to enter under HTS 6309, providing records demonstrating the clear difference between used and new items in valuation terms, submitting letters of support from organizations like Goodwill, and questioning the legal basis for CBP's literal interpretation of "appreciable wear." Yet CBP clings to the precedent, and gives little additional justification for its position despite the fact that other countries, academic experts, and other agencies within the U.S. government recognize that second hand clothing should be classified under HTS 6309.

More recently, CBP has been questioning SMART members who are importing shipments of used clothing that are being brought into the U.S. solely to be cut up as rags, often imposing duties as high as 32 percent on these shipments.

CBP's intransigence is threatening an industry that clothes some of the world's neediest people, generates revenue for well-established charitable organizations, is broadly recognized for its contribution to global recycling efforts, creates countless jobs, and contributes to the economy all over the United States.


Importing Commingled Clothing

Although CBP's final ruling on this matter in 2006 upheld its flawed interpretation of used clothing, as a result of SMART's efforts, it did include one significant concession. In that decision, CBP agreed to permit imports of commingled used clothing provided the importer pays the duty rate charged the commingled item that requires the highest duty rate for the entire shipment. Without this agreement in place, importers would have been required to provide fiber content, country of origin, etc. for each class of goods in any given commingled shipment, more than likely stifling these imports permanently.

The steps for utilizing the 'highest rate procedure' for commingled clothing are detailed below:

  1. The goods should be described as "bales of commingled used clothing, classified at the highest applicable rate of duty. See General Note 3(f)(i), HTSUS, 19 C.F.R. 152.13(b); HQ 968010 (June 28, 2006); HQ 967718 (Oct. 31, 2005)."
  2. If CBP personnel cannot determine the quantity or value of each class of goods in the commingled entry, importers have the option of paying the highest rate of duty of any commingled good. The highest rate of duty for a textile that we are aware of is 32 percent, the rate of duty for bodysuits and bodyshirts of man-made fibers, other garments, knitted or crocheted, in subheading 6114.30.20, HTSUS.
  3. Duty is payable on the transaction value (the price actually paid or payable for the merchandise when sold for exportation to the United States). Transaction value also includes packing costs incurred by the buyer, selling commissions incurred by the buyer, and certain other costs.
  4. Importers may deduct from transaction value those expenses actually incurred for transportation, insurance, and related services incident to the international shipment of the goods from the country of exportation to the place of importation in the U.S., as well as reasonable costs or charges incurred for transporting the goods after importation provided these deductions are separately identified on the invoice. Again, in order to take full advantage of the deductions for transportation costs, the invoice should separately identify transportation services and costs, and should break out services and costs related to transportation to the United States and transportation after importation.