CLA-2 RR:CR:GC 961095 PH
Mr. William Velasquez
Import/Export Coordinator
Endar Corporation
43195 Business Park Drive
Temecula, California 92590-3697
RE: "Potpourri gift set"; bell-shaped glassware with metal stand
and potpourri; candle holder; glassware for table, kitchen,
toilet, office, indoor decoration; packaging; U.S.-origin
goods returned; principal use; essential character;
composite good; goods put up in sets for retail sale; GRI
3(b); U.S. Additional Note 1(a); U.S. Note 1, Chapter 98;
ENs Rule 3(b)(VIII); Rule 3(b)(IX); Rule 3(b)(X);
Superscope, Inc. v. U.S.; Better Home Plastics Corp. v.
U.S.; TD 91-7; CSDs 89-26; 90-66; HQs 089470; 955857; NY
888716
Dear Mr. Velasquez:
This is in reference to your request to the Area Director of
Customs, New York, N.Y., dated July 18, 1997, for a ruling as to
the tariff classification under the Harmonized Tariff Schedule of
the United States (HTSUS) of a "potpourri gift set". A sample
was provided. Your letter was referred to this office for reply.
We regret the delay.
FACTS:
The merchandise consists of a bell-shaped (rounded bottom,
cylinder shaped body, with a graduated lip) article of clear
glass with a metal stand and a package of "Botanique Potpourri",
all packaged in a cardboard display box. The top diameter of the
glassware is 4" and the inside diameter of the body (not
including the rim) is approximately 2 1/2". The height or depth
of the glassware is approximately 4". The stand, appearing to be
of coated iron or steel, consists of a ring into which the
glassware fits and onto which are attached three straight legs
with feet at the base. The ring portion of the stand is
approximately 3 1/2" in diameter and the stand is approximately
6" in height. The "potpourri" material consists of dried roses,
leaves, and similar matter, wrapped in a cellophane package
closed with a lace-like ribbon. The dimensions of the package
are approximately 3" X 4" X 6". These articles are assembled in
a cardboard display container (opened in front, with cut-out
portions into which the articles fit). The container is
decorated with flower prints on a white and green background and
is labeled "Potpourri GIFT SET".
You state that the potpourri is of U.S. origin and that it
is shipped from the U.S. to Mexico as "finished bagged potpourri"
and that no further processing occurs in Mexico. The container
is also stated to be of U.S. origin. The glassware and stand are
stated to be of Mexican origin. You state that a North American
Free Trade Agreement (NAFTA) certificate will be provided at the
time of importation into the U.S. (you do not request a ruling
pertaining to NAFTA treatment and this ruling does not address
such treatment).
The values of the components are: potpourri - $.474;
glassware - $.325; metal stand - $.350; container - $.630;
packing and labor - $.359.
The subheadings under consideration are as follows:
3307.90.00 Pre-shave, shaving or after-shave preparations,
personal deodorants, bath preparations,
depilatories and other perfumery, cosmetic or
toilet preparations, not elsewhere specified or
included; prepared room deodorizers, whether or
not perfumed or having disinfectant properties:
... Other.
The 1998 general column one rate of duty for goods classifiable
under this provision is 5.4% ad valorem; goods of Mexico
qualifying for NAFTA treatment are duty-free.
7013.99.50 Glassware of a kind used for table, kitchen,
toilet, office, indoor decoration or similar purposes (other than that of heading 7010 or 7018): ... Other glassware: ... Other: ... Other:
... Other: ... Valued over $0.30 but not over $3
each.
The 1998 general column one rate of duty for goods classifiable
under this provision is 30% ad valorem; that for goods of Mexico
qualifying for NAFTA treatment is 20% ad valorem.
7323.99.90 Table, kitchen or other household articles and
parts thereof, of iron or steel; ...: Other: ...
Other: ... Not coated or plated with precious
metal: ... Other: ... Other.
The 1998 general column one rate of duty for goods classifiable
under this provision is 3.4% ad valorem; goods of Mexico
qualifying for NAFTA treatment are duty-free.
9405.50.40 Lamps and lighting fittings including searchlights
and spotlights and parts thereof, not elsewhere specified or included; ...: ...
Non-electrical lamps and lighting fittings: ...
Other: ... Other.
The 1998 general column one rate of duty for goods classifiable
under this provision is 6.3% ad valorem; goods of Mexico
qualifying for NAFTA treatment are duty-free.
9801.00.10 Products of the United States when returned after
having been exported, without having been advanced
in value or improved in condition by any process
of manufacture or other means while abroad.
Goods classifiable under subheading 9801.00.10 receive duty-free
treatment.
ISSUES:
(1) Whether the packaged bell-shaped glassware with metal
stand and potpourri is classifiable as other preparations for
perfuming or deodorizing rooms in subheading 3307.90.00, HTSUS,
glassware of a kind used for indoor decoration or similar
purposes in subheading 7013.99.50, HTSUS, other table, kitchen or
other household articles of iron or steel in subheading
7323.99.90, HTSUS, or other non-electrical lamps and lighting
fittings in subheading 9405.50.40, HTSUS.
(2) Whether the components which are products of the U.S.
may qualify for duty-free treatment under subheading 9801.00.10,
HTSUS.
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff
Schedule of the United States (HTSUS) in accordance with the
General Rules of Interpretation (GRIs). GRI 1 states in part
that for legal purposes, classification shall be determined
according to the terms of the headings and any relative section
or chapter notes, and provided the headings or notes do not
require otherwise, according to GRIs 2 through 6. Pursuant to
GRI 3(b), when goods are prima facie classifiable under two or
more headings, classification shall be effected as follows:
(b) Mixtures, composite goods consisting of different
materials or made up of different components, and goods put
up in sets for retail sale, which cannot be classified by
reference to 3(a) [by reference to the heading which
provides the most specific description], shall be classified
as if they consisted of the material or component which
gives them their essential character, insofar as this
criterion is applicable.
The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs) constitute the official interpretation of
the Harmonized System. While not legally binding on the
contracting parties, and therefore not dispositive, the ENs
provide a commentary on the scope of each heading of the
Harmonized System and are thus useful in ascertaining the
classification of merchandise. Customs believes the ENs should
always be consulted. See Treasury Decision (TD) 89-80, published
in the Federal Register August 23, 1989 (54 FR 35127, 35128).
U.S. Note 1, Chapter 98, HTSUS, provides that:
The provisions of this chapter are not subject to the rule
of relative specificity in [GRI] 3(a). Any article which is
described in any provision in this chapter is classifiable
in said provision if the conditions and requirements thereof
and of any applicable regulations are met.
In Superscope, Inc. v. United States, 13 CIT 997, 727 F.
Supp. 629 (1989), the Court held that certain glass panels of
U.S. origin that were exported, repacked abroad with certain
foreign components, and returned, without being advanced in value
or improved in condition while abroad, to the U.S. as part of
unassembled audio cabinets were entitled to duty-free entry under
the predecessor to subheading 9801.00.10, HTSUS (item 800.00,
Tariff Schedules of the United States (TSUS)). Customs has taken
the position that, "since TSUS item 800.00 and relevant Schedule
8, TSUS, headnotes were carried over virtually unchanged into the
HTSUS", the decision in Superscope is equally applicable to
similar situations arising under the HTSUS (Customs Service
Decision (CSD) 90-66; see also TD 91-7).
TD 91-7 is an interpretative rule setting forth the position
of Customs in regard to, among other things, the dutiable status
of sets, mixtures, and composite goods when a portion thereof
consists of American-made goods returned to the U.S. In addition
to stating that Superscope applies under the HTSUS, the TD stated
it to be Customs position that (in pertinent part):
... [A] set or mixed or composite goods can exist, within
the meaning of GRI 3(b), even though a portion of the
collection consists of American goods returned. ... GRI
3(b) (and, if applicable, GRI 3(c)) should be used to
determine the tariff classification of a set or mixed or
composite goods where a portion of the collection consists
of materials or items qualifying for subheading 9801.00.10,
HTSUS, treatment. ... With respect to GRI 3(b), ... [if] an
item in a set not imparting the essential character to the
set qualifies for free entry under subheading 9801.00.10,
HTSUS ... only the U.S.-origin item will receive free
treatment under this tariff provision while the remainder of
the set will be dutiable at the rate applicable to the
foreign-origin item which imparts the essential character to
the set. ... [W]hen the item qualifying for subheading
9801.00.10, HTSUS, treatment imparts the essential character
to the set ... the use of GRI 3(b) or, if applicable 3(c),
to classify sets or mixed or composite goods should be
accomplished without reference to the eligibility of certain
of the materials or components contained therein for
subheading 9801.00.10, HTSUS, treatment.
In an example of the latter situation (a set or composite
good consisting of a component qualifying for subheading
9801.00.10, HTSUS, treatment and a non-qualifying component with
the qualifying component providing the essential character of the
set or composite good), TD 91-7 makes clear that classification
of the set or composite good is under the HTSUS classification in
Chapters 1 through 97, HTSUS, for the qualifying component. That
is, the qualifying component receives duty-free treatment under
subheading 9801.00.10, HTSUS, but, under GRI 3(b), imparts its
classification (in Chapters 1 through 97, HTSUS) to the set or
composite good. To paraphrase TD 91-7, "[t]he practical effect
of applying GRI 3(b) in this manner is that the foreign-made
[non-qualifying component is] assessed duties at the rate
application to the [qualifying component] as if this item were
ineligible for subheading 9801.00.10, HTSUS, treatment."
Subheadings 7013.99.50, 7323.99.90, and 9405.50.40, HTSUS,
as applicable to the merchandise under consideration, are
controlled by use (other than actual use) (see Group Italglass
U.S.A., Inc. v. United States, 17 CIT 1177, 839 F. Supp. 866
(1993); E.M. Chemicals v. United States, 923 F. Supp. 202 (CIT
1996); Stewart-Warner Corp. v. United States, 3 Fed. Cir. (T) 20,
25, 748 F.2d 663 (1984)). In such provisions, articles are
classifiable according to the use of the class or kind of goods
to which the articles belong. If an article is classifiable
according to the use of the class or kind of goods to which it
belongs, Additional U.S. Rule of Interpretation 1(a), HTSUS,
provides that:
In the absence of special language or context which
otherwise requires-- (a) a tariff classification controlled
by use (other than actual use) is to be determined in
accordance with the use in the United States at, or
immediately prior to, the date of importation, of goods of
that class or kind to which the imported goods belong, and
the controlling use is the principal use.
In other words, the article's principal use in the U.S. at
the time of importation determines whether it is classifiable
within a particular class or kind (principal use is distinguished
from actual use; a tariff classification controlled by the latter
is satisfied only if such use is intended at the time of
importation, the goods are so used and proof thereof is furnished
within 3 years after the date the goods are entered (U.S.
Additional Note 1(b); 19 CFR 10.131 - 10.139)).
The Courts have provided factors, which are indicative but
not conclusive, to apply when determining whether merchandise
falls within a particular class or kind. They include: general
physical characteristics, expectation of the ultimate purchaser,
channels of trade, environment of sale (accompanying accessories,
manner of advertisement and display), use in the same manner as
merchandise which defines the class, economic practicality of so
using the import, and recognition in the trade of this use. See
Lenox Collections v. United States, 19 CIT 345, 347 (1995);
Kraft, Inc, v. United States, 16 CIT 483 (1992), G. Heileman
Brewing Co. v. United States, 14 CIT 614 (1990); and United
States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F.2d
373 (1976), cert. denied, 429 U.S. 979 (1976).
This office recently has exhaustively reviewed the principal
use of articles such as those under consideration (glassware in
various forms contended to be principally used as candle
holders). In the March 25, 1998, edition of the CUSTOMS
BULLETIN, Volume 32, Number 12, page 32, Customs issued a notice
under 19 U.S.C. 1625 proposing to modify or revoke two
Headquarters and five New York ruling letters (including the
ruling you cite, New York Ruling Letter (NY) 888716 dated August
20, 1993), to classify the articles described therein as other
glassware of a kind used for indoor decoration or similar
purposes in subheading 7013.99, HTSUS, instead of as candle
holders in subheading 9405.50.40, HTSUS. The comments submitted
in response to this notice provided considerable information
regarding the "pertinent factors" (see above) related to the
principal use of the class or kind of goods to which the goods
considered in the proposed rulings belong. Based on this
information, Customs has concluded that the class or kind for
goods such as those under consideration is defined by the form or
shape of the article (e.g., bell-shape, similar to bell-shape,
flower pot shape, tulip or flower petal shape, cube or rectangle
shape, disk shape, bowl shape, and other shapes) and its size.
We have found there to be a clear distinction between glassware
used as candle holders and that used for general indoor
decoration based on the size of the articles, in the absence of
other pertinent evidence or information. Glassware with an
opening of 4 inches or less in diameter and a height or depth of
5 inches or less is used substantially more frequently as a
candle holder than for any other purpose, according to the
information we have obtained, and larger glassware is used
substantially more frequently for general indoor decoration. See
the July 15, 1998, edition of the CUSTOMS BULLETIN, Volume 32,
Number 28, page 12, wherein the March 25, 1998, CUSTOMS BULLETIN
notice was withdrawn.
The glass component of the article under consideration is
bell-shaped and made of relatively thin clear glass. It has a
top diameter of 4", an inside diameter of approximately 2 1/2",
and a height or depth of approximately 4". This article is of a
form and size, based on the above-described information, which
indicates its inclusion in the class or kind of goods principally
used as candle holders. This is consistent with the pertinent
factors listed by the Courts for determining principal use (see
above). That is, in regard to physical characteristics, the
small size of the opening prevents easy access and the overall
appearance of the article provides, in the words of advertising
literature for similar articles, "[a] dramatic display for
candles". In regard to the other pertinent factors (expectation
of ultimate purchasers; channels of trade; environment of sale;
and usage, economic practicality of such usage, and recognition
of the trade of such usage), the evidence obtained from the
public in response to the March 25, 1998, Customs Bulletin notice
supports principal use of the articles as candle holders.
Accordingly, the glassware and metal stand, by themselves,
would be classifiable as non-electrical lamps and lighting
fittings in subheading 9405.50.40, HTSUS. However, the glassware
and metal stand, as imported, are packaged with the potpourri in
a "potpourri gift set." The potpourri, by itself, would be
classifiable in subheading 3307.90.00, HTSUS (HQs 089470 dated
August 27, 1991, and 955857 dated August 11, 1994). The
glassware and metal stand, packed with the package of potpourri
for sale, make up "goods put up in sets for retail sales" for
purposes of GRI 3(b) (see EN Rule 3(b)(X)). The goods making up
the set are, prima facie, classifiable under different headings.
Therefore, under GRI 3(b), classification of the set is
determined on the basis of the component which gives it its
essential character. EN Rule 3(b)(VIII) lists as factors to help
determine the essential character of such goods the nature of the
materials or components, their bulk, quantity, weight or value,
and the role of a constituent material in relation to the use of
the goods.
Recently, there have been several Court decisions on
"essential character" for purposes of GRI 3(b). Better Home
Plastics Corp. v. United States, 916 F. Supp. 1265 (CIT 1996),
affirmed 119 F.3d 969 (Fed. Cir. 1997), involved the
classification of shower curtain sets, consisting of an outer
textile curtain, inner plastic magnetic liner, and plastic hooks.
Customs had classified the sets on the basis of the textile
curtain under the "default rule of GRI 3(c)", after determining
that neither the relative specificity test nor the essential
character test was applicable (119 F.3d at 971). The CIT found
that the plastic liner performed the indispensable function of
keeping water inside the shower and therefore held that the
plastic liner imparted the essential character upon the set. In
its decision affirming the CIT decision, the CAFC stated:
The [CIT] carefully considered all of the facts, and, after
a reasoned balancing of all the facts, concluded that Better
Home Plastics offered sufficient evidence and argument to
overcome the presumption of correctness. The court
concluded that the indispensable function of keeping water
inside the shower along with the protective, privacy and
decorative functions of the plastic liner, and the
relatively low cost of the sets all combined to support the
decision that the plastic liner provided the essential
character of the sets. ... The court's decision did not
rely solely, or even hinge, on the indispensability of the
water-retaining function. The decision was substantially
based on the importance of the other functions as well as
the cost of the entire set. [119 F.3d at 971]
Other decisions in which the Court looked primarily to the
role of the constituent material in relation to the use of the
goods to determine essential character include Mita Copystar
America, Inc. v. United States, 966 F. Supp. 1245 (CIT 1997),
motion for rehearing and reconsideration denied, 994 F. Supp. 393
(CIT 1998), and Vista International Packaging Co., v. United
States, 19 CIT 868, 890 F. Supp. 1095 (1995). See also,
Pillowtex Corp. v. United States, 983 F. Supp. 188 (CIT 1997), in
which the Court found that, although GRI 3(b) could not be
applied, if a GRI 3(b) analysis were performed, the essential
character would be based upon the composite good's function.
Based on the foregoing, we conclude that in an essential
character analysis for purposes of GRI 3(b), the role of the
constituent material or components in relation to the use of the
goods is generally of primary importance, but the other factors
listed in EN Rule 3(b)(VIII) should also be considered, as
applicable. In this case, the "indispensable function" (Better
Home Plastics, supra) of the set, used to determine the role of
the constituent material or components in relation to the use of
the goods, is not conclusive. That is, the function of potpourri
is to release scent and the role of the glassware and stand is to
hold the potpourri. However, as established above by the
principal use analysis, the glassware and stand may also be used
for other purposes, such as to hold a candle. By its nature,
potpourri loses its ability to provide scent and is discarded and
replaced. Thus, the glassware and stand component of the set
could continue to be used, whether to hold potpourri or a candle
or for some other use, after the potpourri is no longer usable
(in this regard, we note that your company markets individual
potpourri packages like that in the set).
The other factors listed in EN Rule 3(b)(VIII), however, may
be used to establish essential character. Quantity is not
relevant (i.e., there is one of each component). Although the
bulk of the potpourri is approximately the same as that of the
glassware and stand (in the sense of the space taken by each
component), the weight and value of the glassware and stand are
considerably greater than those of the package of potpourri (we
note that in both Better Home Plastics decisions, the Court took
note of value as a factor in the determination of essential
character (916 F. Supp. 1268; 119 F.3d at 971). Accordingly, we
conclude that the essential character of the set is provided by
the glassware and stand. The set is classifiable as other non-electrical lamps and lighting fittings in subheading 9405.50.40,
HTSUS.
This conclusion is distinguished from HQ 955857, referred to
above, in which glass vases filled with potpourri with the
opening of the vases covered with lace and secured by a
decorative ribbon and artificial flower glued in place were
classified as other glassware of a kind used for table, kitchen,
toilet, office, indoor decoration or similar purposes in
subheading 7013.99.50, HTSUS. In that case, the value of the
potpourri was substantially greater than that of the vase, lace,
and ribbon and flower. Furthermore, the fact that the cover was
relatively permanently secured with a cover which would permit
the scent to escape indicated a dedication of the article to use
as a potpourri holder and scent releaser. Even in the face of
these facts, HQ 955857 found that it was impossible to positively
ascertain which of the components imparted the essential
character to the potpourri vase and classification was on the
basis of GRI 3(c).
Although the set is classifiable in subheading 9405.50.40,
HTSUS, pursuant to U.S. Note 1, Chapter 98, HTSUS (see also
Superscope, supra, CSD 90-66, and TD 91-7), the U.S.-origin
potpourri may qualify for duty-free treatment under subheading
9801.00.10, HTSUS, assuming that the requirements of the
subheading and the applicable regulations (see 19 CFR 10.1 et
seq.) are met. The U.S.-origin packing also may qualify for
duty-free treatment under subheading 9801.00.10, HTSUS, subject
to the same conditions (see CSD 89-26).
HOLDINGS:
(1) The packaged bell-shaped glassware with metal stand and
potpourri is classifiable as other non-electrical lamps and
lighting fittings in subheading 9405.50.40, HTSUS.
(2) The components which are products of the U.S. (the
potpourri and packaging) may qualify for duty-free treatment
under subheading 9801.00.10, HTSUS, provided that the
requirements of the subheading and applicable regulations are
met.
EFFECT ON OTHER RULINGS:
HQ 955857 dated August 11, 1994, DISTINGUISHED.
Sincerely,
John Durant, Director
Commercial Rulings Division