The recent Sigvaris appeals decision provides guidance to companies seeking to import products for handicapped or disabled persons and obtain duty free treatment under the Nairobi Protocol.
Sigvaris imported a number of different styles of compression hosiery, which is used to increase blood circulation, and claimed that the products should be entered duty free under the Nairobi Protocol, heading 9817 of the Harmonized Tariff Schedule of the United States (HTSUS). Congress passed the Educational, Scientific, and Cultural Materials Importation Act in 1982, incorporating the Nairobi Protocol into U.S. law and eliminating import duties on items “specifically designed or adapted for the use or benefit of the blind or physically or mentally handicapped persons.”
Customs denied Sigvaris’ duty free claims and the company appealed to the U.S. Court of International Trade (CIT). The CIT determined that Plaintiff Sigvaris’ “500 Medical Therapy Natural Rubber Series” were entitled to duty free treatment under Nairobi Protocol because these products were specifically designed for people suffering from upper-limb lymphedema, a condition sometimes resulting from a mastectomy that causes chronic swelling of the arm, which can limit the affected arm’s use. These high-compression series 500 sleeves and gauntlets were also specifically designed for and marketed to individuals who suffered from upper-limb lymphedema and that doctors prescribed the sleeves and gauntlets to treat the condition. However, the CIT rejected the importer’s claim for an exemption on three other models of compression sleeves, saying their use in treating chronic venous disease, a circulatory disorder, did not qualify them as specialty items for individuals with disabilities. In reaching this conclusion, the CIT stated that “A physical handicap is a permanent physical impairment that substantially limits one or more major life activities such as walking or working.” The court went on to explain that the symptoms experienced in the early stages of CVD do not render a person physically handicapped within the meaning of the Harmonized Tariff Schedule of the United States (HTSUS). The CIT further explained that Sigvaris’ own advertising of its lower-compression Series 120, 145 and 185 compression garments touted their use in treating such conditions as fatigued legs from long periods of standing and prophylaxis during pregnancy, indicating any use of the sleeves for treating CVD would not include advanced stages of the disorder that might be accompanied by significantly impaired mobility.
On Appeal of these three models, the U.S. Court of Appeals for the Federal Circuit panel said it needed to take a step further back to see if the circulatory disease was even the main usage of the compression gear. The panel found that the compression garments were instead created for a variety of usages, including helping people who sit for a long time, and weren’t specifically made for a physical disorder. The court explained that “[a]lthough the Court of International Trade erred in its analysis, we conclude that it reached the correct result,” the Federal Circuit wrote. The Federal Circuit said that since the garments aren’t “specially designed” to treat a physical handicap, the products don’t qualify for an exemption.
For more information regarding your company’s imports and the applicability of the Nairobi protocol please contact us.