CLA-2 CO:R:C:T 954437 ch
District Director
U.S. Customs Service
300 South Ferry Street
Terminal Island
San Pedro, California 90731
RE: Application for further review of Protest No. 2704-93-
101294 under 19 U.S.C., section 1514(c)(2);
Classification of a bag insert or expander; GRI 5(b);
packing material; of a kind normally used for packing;
Fontana Hollywood Corp v. United States.
Dear Sir:
The above-referenced protest was forwarded to this office
for further review. We have considered the protest and our
decision follows.
FACTS:
A representative sample of item #8295-1, a child's backpack
with a cardboard insert, has been submitted to this office for
examination. The insert, which is described as a bag expander,
consists of two parallel members and a biasing means utilizing a
rubber band. When the flat cardboard parallel members of the
apparatus are subjected to external force or weight, the two ends
of the biasing means are pushed together, thus stretching the
rubber band and collapsing the device. When the force or weight
is removed, the memory of the rubber band automatically restores
the device to its original position, pushing the two parallel
members apart, and appearing to fill the bag to its capacity, for
purposes of presenting these bags for retail sale. The bag
expander is the subject of a United States patent.
The expander is inserted into the backpack in its flattened
state and is shipped overseas and inland freight in this
condition to conserve space and reduce freight charges.
Presumably, the merchandise is transported directly to retail
outlets where it assumes its expanded form as soon as the
shipment is unpacked. The insert allows one to dispense with the
need of having the backpack stuffed at a facility in the United
States in order to prepare it for display.
The protestant entered the bag expander under heading 4823,
HTSUSA, as an article of paper. However, it was liquidated with
certain travel bags and luggage under heading 4202, HTSUSA.
ISSUE:
What is the proper tariff classification for the bag
expander?
LAW AND ANALYSIS:
Classification of goods under the HTSUSA is governed by the
General Rules of Interpretation (GRI). GRI 1 provides that
classification is determined first in accordance with the terms
of the headings of the tariff and any relative section or chapter
notes. Where goods cannot be classified on the basis of GRI 1,
the remaining GRI will be applied in order.
Pursuant to GRI 1, the bag expander is classifiable as an
article of paper in Chapter 48, HTSUSA. However, GRI 5 provides
that:
In addition to the foregoing provisions, the following
rules shall apply in respect of the goods referred to
therein:
(a) Camera cases, musical instrument cases, gun cases,
drawing instrument cases, necklace cases and similar
containers, specially shaped or fitted to contain a
specific article or set of articles, suitable for long-
term use and entered with the articles for which they
are intended, shall be classified with such articles
when of a kind normally sold therewith. This rule does
not, however, apply to containers which give the whole
its essential character;
(b) Subject to the provisions of rule 5(a) above,
packing materials and packing containers entered with
the goods therein shall be classified with the goods if
they are of a kind normally used for packing such
goods. However, this provision is not binding when
such packing materials or packing containers are
clearly suitable for repetitive use. (Emphasis added).
GRI 5(a) is inapplicable in this instance as it concerns
containers. However, the insert may be classified with the
backpack if it is packing material.
Protestant contends that packing materials are limited to
materials which serve to "protect, cushion, or brace the bag
while in transit." As the insert does not serve to protect the
goods during shipping, but rather is designed as a means to
display the backpack, protestant argues that GRI 5(b) is
inapplicable. Accordingly, the expander must be entered as a
separate article.
The petitioner cites Headquarters Ruling Letter (HRL)
084257, dated July 18, 1989, in support of this proposition. In
that ruling, we concluded that a textile drawstring pouch
containing golf shoes was "not normally sold with or used for
packing shoes" for the purposes of GRI 5(a) and GRI 5(b). We
pointed out that a shoe box was the normal packing container for
footwear.
Textile shoe bags may be distinguished from the instant
merchandise. We note that GRI 5(b) is inapplicable when packing
materials are clearly suitable for repetitive use. Textile shoe
bags are generally re-usable and often function as travel or
storage containers for shoes independent from any role they might
play in packing footwear. On the other hand, packing materials
are generally disposed of immediately after purchase. The
cardboard bag expander is not designed for repetitive use and has
no function other than to package the backpack for display.
Hence, any analogy between the textile shoe bags of HRL 084257
and the bag expander is misplaced.
In (HRL) 555806, dated January 14, 1991, we found that
certain thin gauge plastic bags which were inflated to give shape
to handbags for display in retail stores were packing materials
for the purposes of GRI 5(b). In that decision, we stated:
We are of the opinion that the thin gauge plastic bags
are properly considered non-reusable packaging
material. Although the plastic bags are not the
typical packing material associated with the shipment
of goods, they are an alternative to paper stuffing
often used in imported sport and handbags.
Furthermore, the plastic bags are the kind of packing
material often associated with the display of articles
offered for retail sale.
Thus, we concluded that stuffing used to prepare sport and
handbags for display purposes were "packing materials" as that
term is used in GRI 5(b). As the subject merchandise performs
this function, we regard it as packing materials.
Protestant points out that even if the insert may be viewed
as packing materials, GRI 5(b) requires that such materials be
"of a kind normally used for packing such goods" in order to be
classified with the backpack. Noting that the expander has been
awarded a patent, which implies a high degree of novelty or
originality, petitioner argues that it is not packing normally
used for packing the merchandise. Therefore, as entered the
expander should be classified independent of the backpack.
In addition, our attention is directed to Fontana Hollywood
Corp. v. United States, 64 Cust. Ct. 204 (1970), which was
decided under our prior tariff, The Tariff Schedule of the United
States (TSUS). General Headnote 6(b)(i), TSUS, provided:
6. Containers or Holders for Imported Merchandise.
For the purposes of the tariff schedules, containers or
holders are subject to tariff treatment as follows:
* * *
(b) Not Imported Empty: Containers or holders if
imported containing or holding articles are
subject to tariff treatment as follows:
(i) The usual or ordinary types of shipping
or transportation containers or holders, if
not designed for, or capable of, reuse, and
containers of usual types ordinarily sold at
retail with their contents, are not subject
to treatment as imported articles. Their
cost, however, is, under section 402 or
section 402a of the tariff act, a part of the
value of their contents and if their contents
are subject to an ad valorem rate of duty
such containers or holders are, in effect,
dutiable at the same rate as their contents,
except that their cost is deductible from
dutiable value upon submission of
satisfactory proof that they are products of
the United States which are being returned
without having been advanced in value or
improved in condition by any means while
abroad (Emphasis added).
Thus, containers usually or ordinarily used to transport or ship
their contents, or which were ordinarily sold with their contents
at retail, were classified with their contents. Obviously, this
provision bears strong resemblance to GRI 5(b), which accords
similar treatment to packing containers and materials if they are
"of a kind normally used for packing such goods."
In Fontana, the Court concluded that certain long-neck
gallon bottles used to hold wine were not "usual containers" for
tariff purposes. The bottles in that case possessed necks three
feet in height and the overall bottles were four feet tall.
Protestant cites specific language in that decision which
indicates that the term "usual" refers to ordinary practice in
the trade. Petitioner contends that the patented expander is not
ordinarily used in the trade to pack merchandise.
In reaching its decision, the Court in Fontana focused on
the function of the bottle in relation to its contents, and not
merely on the fact that it possessed an unusual shape:
The sum of the testimony in this case establishes that
the gallon cammelloni bottles are of the family of
bottles known in Italy as "fiasco," meaning in English
"flasks," of which there are literally hundreds of
varieties. Chianti wine is also imported in straight
sided "Bordeaux" bottles and in fancy chinaware bottles
or odd-shaped bottles...One can readily understand the
testimony that the four-foot cammelloni bottle will not
pour wine conveniently into a glass and the wine is
best emptied into a pitcher first. Cammellini and
cammelloni bottles are not imported empty and both are
sold to wholesalers to help display and sell chianti.
The "flamboyant" form (R.18) of the cammelloni bottle
helps market the wine...Wine in cammelloni size bottles
is sold mostly to consumers, and the retail price of a
cammelloni bottle of wine is substantially higher than
that for a gallon of wine in a more standard short-
neck type of gallon flask. One witness called the
cammelloni bottle a "fun bottle." (Emphasis added) Id.
at 210.
Thus, the Court recognized that wine bottles could come in
hundreds of shapes. A novel shape in and of itself is not
sufficient reason to find that the container is "unusual." The
Court found that the cammelloni bottle was "unusual" for the
reason that the bottle was not utilized merely to package the
wine. The cammelloni bottle helped to market the wine in the
sense that consumers placed a value on the bottle itself and were
willing to pay more for the product as packaged. The bottle had
little value as ordinary packing material for the reason that it
is difficult to pour a glass of wine from a bottle four feet in
height. Indeed, under GRI 5(b) we have ruled that a container is
not "of a kind normally used for packing" when it possesses
independent commercial appeal and added significantly to the
value of the goods. See HRL 085766, dated February 1, 1990
(bubble bath container).
In this instance, we recognize that the bag expander
features a unique means by which to inflate or expand soft-sided
merchandise. However, this article continues to be "of a kind"
normally used for packing goods pursuant to GRI 5(b), for the
reason that it is merely an alternative to other methods of
stuffing used to expand merchandise for presentation purposes.
The insert does not enhance the value of the backpack and the
public does not bargain for inclusion of this item as part of the
purchase price. The expander functions solely as presentation
packing. For these reasons, it is classifiable with the
backpack.
HOLDING:
Therefore, based on the foregoing discussion, this protest
should be denied in full. The bag expanders are classifiable
with the merchandise with which they were entered, under
subheadings 4202.12.2085 and 4202.92.4500, HTSUSA, which provide,
inter alia, for travel bags, suitcases and briefcases. The
applicable rate of duty is 20 percent ad valorem. A copy of this
decision should be attached to the CF 19 Notice of Action to
satisfy the notice requirement of section 174.30(a), Customs
Regulations.
In accordance with Section 3A(11)(b) of Customs Directive
099 3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office to the
protestant no later than 60 days from the date of this letter.
Any reliquidation of the entry in accordance with the decision
must be accomplished prior to mailing of the decision. Sixty
days from the date of the decision the Office of Regulations and
Rulings will take steps to make the decision available to Customs
personnel via the Customs Rulings Module in ACS and the public
via the Diskette Subscription Service, Lexis, Freedom of
Information Act and other public access channels.
Sincerely,
John Durant, Director