CLA-2 CO:R:C:M 952405 EJD
TARIFF NO: 7020.00.00
Thomas Mattina
Area Director of Customs
J.F.K. Airport
Building 178
Jamaica, New York 11430
RE: Internal Advice 43/92; Display Liquor Bottles; Subheading
7010.90.50; Headings 7010, 7020; Additional U.S. Rule of
Interpretation 1(a); ENs 70.10; HQs 085755, 088123; U.S. v.
Carborumbum Company
Dear Mr. Mattina:
This is our response to your memorandum of June 30, 1992
(CLA-2-K:C:A2 GS), regarding Internal Advice (IA) request 43/92,
submitted by Ross & Hardies, on behalf of Seagram Global Markets,
concerning the classification of display whiskey and cognac
bottles under the Harmonized Tariff Schedule of the United States
(HTSUS). Samples were submitted for examination.
FACTS:
Three different samples were forwarded for examination.
They are described as follows:
1. A 1.75 liter bottle with a hand grip on the back, and
labels on the front and back stating that the bottle
contains 12 year old Chivas Regal Scotch Whisky. The
bottle is empty but has been tinted to give the
appearance of having scotch whisky in it (the hand grip
where there would be no whisky is untinted). The
bottle is capped and covered with a plastic seal that
is covered with a paper Chivas Regal seal. The rear
label of the bottle states that the contents have been
"Distilled and Bottled in Scotland". The bottle comes
in a cardboard container stating the contents to be
Chivas Regal.
2. A 700 ml bottle with a unique triangular design. The
bottle has a fluted design on the sides and a circular
indentation just below the point at which the neck
joins the bottle. On the front and back of the bottle
are labels stating that the bottle contains Martell
Cognac XO Supreme. The bottle is filled with a colored
liquid to give the appearance of having cognac in it.
There is a sticker on the back stating that the
contents are "not fit for consumption". The bottle is
capped and covered with a paper Martell seal. Coming
down from underneath the seal is a cloth strip with two
initials and the name "Martell". The cloth seal is
covered on the other end by sealing wax (which is
pressed into the circular indentation) with the Martell
insignia impressed upon it. The cap and paper seal are
sealed in shrink wrap. On the paper seal are the
words, "Produced and Bottled in Cognac France". The
bottle comes in a cardboard container stating the
contents to be Martell Cognac.
3. A 1 liter green bottle with an oval indentation just
below the point where the neck joins the bottle. There
are labels on the front and the back stating that the
bottle contains 12 year old Glenlivet Scotch Whisky.
In the oval indentation is a label showing the
Glenlivet insignia. The bottle is capped and covered
with a plastic seal that is covered with a paper
Glenlivet seal. The bottle comes in a cardboard
container which states that the contents have been
"Bottled in Scotland".
All the bottles are invoiced as "dummy bottles". The term "dummy
bottle" describes bottles used for display purposes to market
goods.
Importer's counsel maintains that these bottles are genuine
bottles and are only invoiced as "dummy bottles" because they
will be used for demonstration purposes, and not as containers,
after importation. He further asserts that the only differences
between these bottles and those used as containers are that they
are either tinted or filled with colored liquid to give the
impression that they contain alcoholic beverages.
Importer's counsel argues that the bottles should be
classified based upon their principal use and not their actual
use. He cites additional U.S. Rule of Interpretation 1(a),
HTSUS, as well as Headquarters Ruling Letters (HQ)s 085755, dated
February 27, 1990, and 088123, dated February 25, 1991, which
require that where classifications are based on use, the use must
be principal use and not actual use.
Importer's counsel argues that these display bottles are
more properly classified in heading 7010, HTSUS, which is a "use"
provision. He maintains that these bottles belong to a class or
kind of bottle principally used as a container for the commercial
packaging of distilled spirits. He contends that these bottles
are identical to those used for packaging, their actual use as
demonstration bottles is of no legal significance.
You believe that these display bottles are properly
classifiable under subheading 7020.00.00, HTSUS. Counsel
contends that these bottles should be classified under subheading
7010.90.50, HTSUS.
ISSUE:
Whether the display liquor bottles are classifiable under
subheading 7010.90.50, HTSUS, as glass bottles of a kind used for
the conveyance or packing of goods, or under subheading
7020.00.00, HTSUS, as other articles of glass.
LAW AND ANALYSIS:
The classification of goods under the HTSUS is governed by
the General Rules of Interpretation (GRIs), taken in order. GRI
1 provides that classification shall be determined according to
the terms of the headings and any relative section or chapter
notes.
Heading 7010, HTSUS, is considered a "use" provision.
Additional U.S. Rule of Interpretation 1(a), HTSUS, ("the rule")
provides:
In the absence of special language or context which
otherwise requires, 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.
The two competing headings for these "dummy bottles" are the
following:
Heading 7010, HTSUS, which provides for "[c]arboys, bottles,
flasks, jars, pots, vials, ampoules and other containers, of
glass, of a kind used for the conveyance or packing of goods
* * *."
Heading 7020, HTSUS, which provides for "[o]ther articles of
glass."
The importer acknowledges that these bottles are to be used
as "dummy bottles" for display purposes. He also acknowledges
that there is a tint on the Chivas Regal bottle, there is a
nonconsumable fluid in the Martell bottle, and that all three
bottles are sealed with the proper seals. The importer further
contends that we are basing our classification on the actual use
of the bottles and not the principal use of the bottles of the
same class or kind.
Counsel relies upon the rule, as well as HQs 085755 and
088123, to support his position. In HQ 085755, Customs dealt
with a glass container which was being imported to convey
medicine, but which could also be used as laboratory glassware.
In HQ 085755, Customs determined that the principal use of the
item was as laboratory glassware. It is the counsel's opinion
that the same principle applies here. He maintains that these
bottles belong to a class or kind whose principal use is as
packaging and their actual use as display bottles has no legal
significance.
However counsel's arguments disregard a cardinal rule of
Customs law that merchandise is classified in its condition as
imported. Classification of the display bottles will be
determined according to the class or kind to which they belong,
as imported.
To determine whether, as imported, a particular item falls
within a class or kind of merchandise, the courts have
established certain guidelines to be followed. In The United
States v. Carborumbum Company, 536 F.2d 373, C.A.D. 1172 (June
17, 1976), the court enumerated the factors to be considered in
establishing class or kind. Among the pertinent factors are the
general physical characteristics of the merchandise, the
expectation of the ultimate purchaser, the channels, class or
kind of trade in which the merchandise moves, the environment of
the sale, the economic practicality of so using the import, and
the recognition in the trade of its use.
When we apply these factors to the sample display bottles,
it is clear that they will not fall into the same class or kind
as bottles used for the conveyance or packing of goods. The
bottles are display bottles as entered. They are physically
different from bottles provided for under heading 7010, HTSUS, in
that such bottles would be imported not only in an empty
condition, but also untinted and unsealed (ready to be filled).
It is also likely that they would not have labels or stickers.
When purchasing "dummy bottles", it is the expectation of the
ultimate consumer, i.e., liquor store owner, that these items
will be used for display purposes only. It is our belief that
these bottles which are empty, tinted or filled with a liquid
which simulates liquor, and which are sealed, would be recognized
among those in the trade as being "dummy bottles" for display
purposes.
The Harmonized Commodity Description and Coding System
(HCDCS) Explanatory Notes (ENs) constitute the Customs
Cooperation Council's 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 under
the System. Customs believes the notes should always be
consulted. See T.D. 89-80.
EN 70.10 states that "[t]h[is] heading does not include:
...(f) [s]pecial display bottles and display jars of a kind used
in shops (heading 70.20)." HCDCS, p. 934. This note makes it
clear that there is a class of glass articles which are display
bottles.
The importer acknowledges that the Explanatory Notes to
heading 7010, HTSUS, specifically exclude from classification
under that subheading, "[s]pecial display bottles...of a kind
used in shops". But, he contends despite the differences and the
seals, the subject samples are still identical to bottles which
are used for packaging of their respective liquor products and
that the bottles are not "special" enough to be considered
display bottles. He states that they were not manufactured as
display bottles and they could have been used for packaging.
It is our position that counsel's arguments are not
convincing and completely belie the facts as they apply to the
imported articles. In our opinion, the addition of shrink seals,
tinted glass and/or colored nonconsumable liquid are steps taken
subsequent to the process of manufacturing those bottles which
are for the conveyance or packing of goods. The bottles are
manufactured for display purposes prior to importation. To use
them as for packaging would involve the reversal of this process
and would be economically impractical.
HOLDING:
The three sealed liquor "dummy" bottles are properly
classified under subheading 7020.00.00, HTSUS, which provides for
"[o]ther articles of glass."
You should advise the Internal Advice applicant of this
decision.
Sincerely,
John Durant, Director