CLA-2 RR:CTF:TCM W968315 HkP
Tariff No.: 4202.92.4500
Sandra Liss Friedman, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016
RE: Tariff classification of a polyvinyl chloride pouch, with printing
Dear Ms. Friedman:
This is in response to your letters of May 9, and June 7, 2006, in which you requested a binding ruling on behalf of your client, First Cost Trading, Inc., d/b/a Carrigar (“Carrigar”), regarding the tariff classification of a certain polyvinyl chloride (“PVC”) pouch. Your letters and sample were forwarded to this office for a response.
In reaching our decision we have also taken into account information provided to U.S. Customs and Border Protection (“CBP”) by you during a meeting held at our office on October 5, 2006.
The merchandise at issue is a pouch made of clear PVC sheeting with a thickness of approximately 15 mils. The pouch is roughly rectangular in shape, measures approximately 6 ½” x 5” x 2 ½ “ and, on the upper portion, has a nylon coil zipper with a metal zipper tab. The zipper opening is reinforced with textile material. The seams of the pouch are stitched and reinforced with clear plastic binding. A pocket on the outside of the pouch, made of clear PVC sheeting, measures approximately three inches by two inches and is of a size suitable for the placement of a business card. On the sample provided, the name of a prescription drug is imprinted on the pouch directly behind the clear outer pocket so that it is visible through the pocket when the pocket is empty. The Internet web address of the prescription drug is printed below and to the right of the outer pocket. On the rear of the pouch the phrase “Please read enclosed patient information” is printed on the lower left side, and the drug’s trademark is printed on the lower right side.
During our meeting you showed us several PVC bags sold as cosmetic bags in a drugstore. You stated that these bags differed from your product because your product has printing on the outside, which shows, you argue, that its intended purpose is as packaging. In addition, you informed us that a bar-coded sheet, which includes dosage and other information, would be inserted into the outer pocket of the pouch after importation. You stated that the bar-code would be scanned by pharmacists in order to track how many patients followed-up on taking the medication. It is your belief that the bar-coded information sheet is a further indication that the pouch is packaging. However, you also told us that the pouch is imported without this bar-coded sheet.
Whether the pouch is classified in heading 3923, HTSUS, which provides for, inter alia, articles for the conveyance or packaging of goods, of plastics, or in heading 4202, HTSUS, which provides for, inter alia, traveling, toiletry and similar bags of plastics.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics:
* * *
Sacks and bags (including cones):
* * *
3923.29.0000 Of other plastics …..
4202 Trunks, suitcases, vanity cases, … ; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, … and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper:
* * *
4202.92 With outer surface of sheeting of plastic or of textile materials:
Travel, sports and similar bags:
* * *
4202.92.4500 Other …..
Note 2(ij) to Chapter 39, HTSUS, provides, in part, that chapter 39 “does not cover trunks, suitcases, handbags or other containers of heading 4202.”
Note 2(A)(a) to chapter 42, HTSUS, provides, “heading 4202 does not cover: bags made of sheeting of plastics, whether or not printed, with handles, not designed for prolonged use (heading 3923).”
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80.
Heading 3923, HTSUS, provides for, inter alia, “articles for the conveyance or packing of goods, of plastics.” EN 39.23 explains that heading 3923, HTSUS, covers all articles of plastics commonly used for the packing or conveyance of all kinds of products. These articles include sacks and bags.
Heading 4202, HTSUS, provides for, inter alia, traveling bags, toiletry bags, and similar containers. However, Note 2(A)(a) to Chapter 42, HTSUS, excludes bags made of plastic sheeting not designed for prolonged use from Chapter 42.
Both headings in contention are “use” provisions, in that, in order to be classified in either heading merchandise must be used for the purposes enumerated therein. Additional U.S. Rule of Interpretation 1(a) provides:
[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.
Generally, the courts have provided several factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. They include: (1) general physical characteristics, (2) expectation of the ultimate purchaser, (3) channels of trade, environment of sale (accompanying accessories, manner of advertisement and display), (4) use in the same manner as merchandise which defines the class, (5) economic practicality of so using the import, and (6) recognition in the trade of this use (collectively, “the Carborundum factors”). See Lennox Collections v. United States, 20 CIT 194, 196 (1996). See also United States v. Carborundum Co., 63 CCPA 98, 102, 536 F.2d 373, 377 (1976), cert denied, 429 U.S. 979 (1976); Kraft, Inc. v. United States, 16 CIT 483, 489 (1992); and G. Heileman Brewing Co. v. United States, 14 CIT 614, 620 (1990).
CBP’s administrative record shows, with regard to the merchandise of headings 3923 and 4202, HTSUS, that physical characteristics indicating reusability and durability prove the most useful tools in differentiating between the goods of these headings. See, for example, Headquarters Ruling Letter (“HQ”) 968194, dated July 27, 2006.
You contend that the pouch under consideration is an article for the conveyance and packing of a pharmaceutical product (one or two pills enclosed in foil and relevant product literature) and “is not suitable for general conveyance or packing of goods because of the product information printed on its surfaces.” (Emphasis added.)
General Physical Characteristics
CBP has previously considered the issue of the reusability of PVC bags (used for packaging blankets and pillows), though in relation to the country of origin marking requirements. In HQ 734190 (November 18, 1991), bags described as being of clear vinyl, box-like, measuring approximately 18 inches in length, 15 inches in width, and 5 inches in depth, and with edges piped with a sewn on white vinyl strip, were at issue. The U.S. Customs Service (now, CBP) ruled that the bags must be individually marked with the country of origin since they were durable enough to be used again and had a separate identity and use apart from the products that would be sold with them. Our findings were based on: (1) the sturdy construction of the bag - the edges were reinforced with piping to encourage, if not ensure, continued reuse; (2) the zipper feature at one end of the bag which allowed repetitive access to the bag; (3) the durable nature of the plastic employed to make the bags, i.e., it was not flimsy, thin, or of a throw-away variety (a consideration based on ruling C.S.D. 87-1, October 10, 1986); and, (4) the nature of the merchandise packaged in the vinyl bags - durable goods such as pillows and blankets that are often seasonally used and stored in the bags in which they are sold. We consider HQ 734190 to be a useful guide in determining the reusability of the bags at issue.
With regard to the issue of durability, CBP considers PVC bags to be durable if they are composed of clear, unembossed, PVC plastic sheeting measuring 4 mils or more in thickness. We have found this degree of thickness to be generally indicative of a bag or similar container that is designed for prolonged use to carry personal effects (UNLESS the container is not of a kind normally sold at retail on its own merits; and ABSENT single use indicators such as hangers, cutouts, tabs, odd shapes, etc.). However, previous CBP determinations as to whether such PVC bags are designed for prolonged use have been based upon whether or not the bag: (1) is of a kind sold at retail on its own merits; and (2) is of a kind normally sold as packaging with contents. In instances in which merchandise has satisfied both criteria, CBP has consistently considered whether or not the bags can be sold on their own merit to be the determining factor. See, for example, HQ 962363, dated January 19, 2000, which modified New York Ruling Letter (“NY”) D80975 (September 9, 1998) and was therefore subject to notice and comment (published in Customs Bulletin, Vol. 33, No. 46, Dec. 8, 1999). Specifically, HQ 962363 proposed that “determinations as to whether such plastic bags are ‘not designed for prolonged use’ are properly based upon whether or not a bag: 1) is of a kind normally sold at retail on its own merits as a traveling or toiletry bag; and 2) is of a kind normally sold at retail as packaging with contents.” The only comment received endorsed the use of these factors in classifying display and presentation bags made of clear, unembossed, PVC retail packaging not designed for prolonged use. See also HQ 963112, dated February 16, 2000, which relied in part on HQ 962363, and HQ 961092, dated March 28, 1998.
Using the reasoning employed in HQ 734190 as a guide in the instant case, we find the pouch under consideration here to be “reusable”. The pouch is of sturdy construction, contains a zipper that will withstand many uses, and is made of PVC of a gauge sufficient to resist rips and tears. Moreover, we note that the vinyl packaging industry considers such pouches and similar containers to be reusable. The website www.abondcorp.com promotes its vinyl packaging bags in this way:
If you are looking for promotional ideas, why not have your corporate logo stamped on a vinyl bag? Since our bags are reusable, a custom promotional package will provide advertising for you far beyond the original sale. (Original emphasis.)
Based on the foregoing, we find that the cosmetic bags presented for our consideration and the pouch at issue to belong to the same class or kind, that is, durable and reusable bags sold at retail on their own merits.
With regard to the issue of the pouch being printed, CBP has found that any PVC bag or similar article with a special design feature that limits the use of the article to retail packaging and puts it in a class that is not sold on its own at retail, is not classifiable in heading 4202, HTSUS. CBP has consistently held that such features indicate packaging of heading 3923, HTSUS. In HQ 962363, CBP found that one of the bags under consideration was properly classified as packaging in heading 3923, even though it measured over 4 mils in thickness, because it was not of a kind normally sold at retail on its own merits. It had a top center cutout through which a flimsy plastic hanger protruded. In HQ 963112, CBP classified a packaging article that measured 11 mils in thickness in heading 3923 because it was of a kind used for packing specific contents and was not of a kind normally sold at retail on its own merits. The bag featured a top center cutout through which a flimsy plastic hanger protruded, and a cutout on the rear exterior of the bag through which a prospective purchaser could feel and manipulate the contents. In this instance, although the pouch may be intended for use as unique packaging to favorably present the prescription drug sample and to carry it from the doctor’s office to the patient’s home, we find that the pouch is of a kind normally sold at retail on its own merits as a traveling or toiletry bag. Further, we find that the printing on the pouch is not a special design feature that would limit its use to retail packaging because we do not consider printing equivalent to a cutout, hanger, or other feature which would indicate that the pouch is not designed for prolonged use. We note that CBP has previously classified a carrying bag made partly of PVC and decorated with hearts and cartoon characters, into which a box of candy would be inserted after importation, in heading 4202, HTSUS. See HQ 958174, dated January 31, 1996.
With regard to your contention that your product is not classifiable in heading 4202, HTSUS, because that heading only provides for travel bags, we note that the Court of International Trade has clarified that articles designated eo nomine in heading 4202, HTSUSA, are designed to organize, store, protect and carry. Totes, Inc. v. United States (“Totes”), 865 F. Supp. 867 (Ct. Int’l Trade 1994). In Totes the CIT considered, among other things, the broad reach of the residual provision for “similar containers” in heading 4202 and noted that the individual exemplars of the heading are “disparate in their physical characteristics, purposes and uses”. At 872. We find that your product is provided for in heading 4202, HTSUS, because it is a named article of that heading, i.e., toiletry bags.
At our meeting you directed our attention to NY M84705, dated July 18, 2006, in which CBP classified a bag composed of high-density polyethylene plastic sheeting and printed with product information in heading 3923, HTSUS, as packaging. It is your belief that your product is similar to that described in NY M84705 and that your product should be similarly classified. However, we note that your product is made of polyvinyl chloride, a more substantial plastic than polyethylene (commonly used to make snack food packaging such as potato chip bags), and is similar to or the same as bags used for toiletries and cosmetics. Furthermore, the bag described in NY M84705 is not of a kind sold at retail on its own merits. Accordingly, we find that your PVC pouch is not similar to the bag described in NY M84705 and cannot be similarly classified.
As to the bar-coded information sheet, we rely on the well-established classification principle that goods are classified in their imported condition. XTC Products, Inc. v. United States, 771 F. Supp. 401, 405 (1991). See also United States v. Citroen, 223 U.S. 407 (1911). The pouch at issue is not imported with the sheet; therefore, the information contained thereon cannot be considered in reaching our classification decision.
Expectations of the Ultimate Purchaser, Channels of Trade, Environment of Sale, and Use
You state that the pouches will be sold only to drug companies/ distributors for distribution to patients who may take a certain drug. Based on this, you contend that the expectations of the ultimate purchaser, the channels of trade in which the merchandise moves, and the environment in which the merchandise is sold show that the pouch is packaging properly classified in heading 3923, HTSUS. You further contend that because the pouch is imprinted with product information and will be used to hold drug samples and related literature, it will be used in the same manner as merchandise which defines the class to which it belongs.
CBP has previously considered the identity of the ultimate purchaser of plastic shopping bags, in relation to country of origin marking requirements. We found that the ultimate purchaser was not the retail store, but its customer who was the user of the bags and the last to receive them in the form in which they were imported. Similarly here, we find that the ultimate purchaser of the PVC pouch will be the patient in the doctor’s office and not the drug companies and distributors because the patient will be the last person in the U.S. to receive the pouch in the form in which it was imported. See HQ 734190, dated Nov. 18, 1991, and C.S.D. 87-1, dated Oct. 10, 1986.
With regard to the channels of trade and environment of sale, we have found several websites selling bags similar to the pouch under consideration, as toiletry/cosmetic bags. See www.treetopapparel.com, www.dollardays.com, www.sks-bottle.com, www.lbuinc.com, and www.goinginstyle.com.
Applying the criteria of HQ 962363 and the Carborundum factors to the PVC pouch under consideration, we find that although the pouch will be used as ordinary packaging for pharmaceutical products and accompanying product information, it does not constitute the type of merchandise ordinarily discarded after the contents have been utilized. The physical characteristics of the pouch indicate that it is of the kind of durable plastic bag that is suitable for repetitive use. The environment of sale and the channels of trade of similar PVC items indicate that the pouch is of a kind of merchandise sold as a toiletry or traveling bag. Based on these factors, we find that the pouch is of the class of merchandise used as toiletry bags and that the expectation of the ultimate purchaser will be that the pouch is ultimately a toiletry bag. Based on the foregoing information and CBP’s administrative record, we find that the pouch is of a kind of durable PVC merchandise sold at retail on its own merits as a traveling or toiletry bag, and is therefore classified in heading 4202, HTSUS. Further, because the pouch is designed for prolonged use, we find that it is not excluded from classification in Chapter 42, HTSUS, by operation of Note 2(A)(a) to that chapter.
By application of GRI 1 we find that the pouch under consideration is properly classified in heading 4202, HTSUS, and is specifically provided for in subheading 4202.92.4500, HTSUS, which provides for: “Trunks, suitcases, vanity cases, … : traveling bags, … toiletry bags, … and similar containers, … of sheeting of plastics … : Other: With outer surface of sheeting of plastic or of textile materials: Travel, sport and similar bags: Other.” The 2006 general column one rate of duty is 20% ad valorem.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
Gail A. Hamill, Chief
Tariff Classification and Marking Branch