On Sunday at the 87th Academy Awards, when Julianne Moore walks to the podium to accept her first Oscar for Best Actress in a Leading Role, she will likely be wearing a mesmerizing gown designed by Givenchy. Such high-profile celebrity events provide an important opportunity for haute couture designers to advertise their latest fashions and increase brand awareness. Many foreign designers temporarily import their latest dresses, suits, jewelry, and shoes for celebrities to wear at such events, and then export the products back to the designer. A recent ruling by U.S. Customs and Border Protection (“CBP”), responding to a request by Christian Dior Couture, confirmed that such temporary imports are subject to normal import duties.

Specifically, in ruling HQ H251771 (Dec. 16, 2014), CBP rejected three attempts by Christian Dior to qualify its garments for temporary importation under bond or A.T.A. carnet, or for unused merchandise duty drawback.

First, CBP found that the clothing did not qualify for duty-free treatment under an A.T.A. carnet or merchandise “passport”—an international customs and temporary export-import document used to clear customs without paying duties and import taxes on merchandise that is only used for demonstration of the imported articles to solicit orders, and will be re-exported within 12 months[1]—because providing celebrities the imported articles for use (wearing a piece of haute couture) goes beyond “mere demonstration,” the celebrities are not soliciting orders, and wearing the clothing to such events constitutes the normal use of haute couture.. CBP contrasted this with simply showing temporarily-imported merchandise to potential buyers (which could qualify for duty-free treatment).

Second, CBP found that the clothing did not qualify for duty-free treatment under a temporary import bond (“TIB”) as articles not for sale or sale on approval to be repaired, altered, or processed. CBP explained that, although some TIB provisions would cover the alterations or demonstrations at the importer’s premises, TIB provisions do not cover lending the clothing to celebrities to wear at events (which is the main reason for importation).

Finally, CBP found that the clothing was not eligible for unused merchandise duty drawback because furnishing haute couture pieces for celebrities to wear and exhibit at high-profile events is a “use” prior to exportation.

KDW’s International Trade and Customs Group specializes in customs, international trade, and supply chain compliance.