CLA 2 RR:CR:TE 966090 SG
Steven Weiser, Esq.
6 Pine Hill Drive
Dix Hills, New York 11746
RE: Reconsideration of HQ 960454, dated December 9, 1997, regarding the classification of a jewelry box; heading 4202; paper coated with a sheeting of plastic; subheading 4202.92; “outer surface of”; “sheeting of plastics”; Sarne Handbags Corp. v. United States; effect of stipulation; established and uniform practice
Dear Mr. Weiser:
This is in reply to your letter of December 12, 2002, renewing your March 18, 1998, request for reconsideration of HQ 960454, dated December 9, 1997, issued to Meadows Wye & Co., Inc., a Customs Broker acting on behalf of your client, Fortunoff Fine Jewelry & Silverware, Inc. (Fortunoff). HQ 960454 was issued in response to correspondence dated March 10, April 8, and August 18, 1997, requesting a binding ruling for the tariff classification of two jewelry containers. By letter dated January 22, 1999, the Textile Branch of the Office of Regulations and Rulings of the Customs Service (now Customs and Border Protection [CBP]) declined to rule on the request for reconsideration on the grounds that an issue related to the classification of the goods involved was then pending before the U.S. Court of International Trade (Sarne v. United States, Court No. 97-0600959-S). Inasmuch as the Sarne case has now been decided, you are renewing your request for reconsideration based on the arguments made in your letter of March 18, 1998. In addition, you alternatively request that the goods be classified under subheading 4202.99.10, HTSUS, based upon an established and uniform practice which you claim was effective for such merchandise. A telephonic conference was held with you in June, 2003.
FACTS
HQ 960454 classified both a jewelry box and a trifold jewelry folder imported from Thailand. The sample for which reconsideration is sought is a jewelry box, which is of a kind normally sold at retail with its contents. It is manufactured of a molded plastic box covered on all sides with a foam base material. The exterior is covered with a plastic-coated paper identified as Skivertex®, while the interior has been lined with simulated suede fabric. The jewelry box is sturdy and of a kind that is suitable for long term use. Samples of the finished products as well as the coated paper were submitted.
ISSUES:
1. Whether a court-approved stipulation has precedential effect over the classification of merchandise not subject to that order?
2. What is the correct classification of the subject jewelry gift boxes? 3. Was HQ 960454 issued contrary to 19 U.S.C. 1625(c)(1)?
4. Was there a uniform and established practice of classifying jewelry boxes, the exterior of which is paper coated with Skivertex®, under subheading 4202.99.10, HTSUS?
LAW AND ANALYSIS:
STIPULATION
We first address the claim that a stipulation agreed to in Kalencom v. United States, Court No.01-00030, should control the disposition of the instant case. That proceeding involved presentation boxes covered with “Skivertex®”. The merchandise was initially classified by CBP as “jewelry boxes and similar containers, wholly or mainly covered with sheeting of plastics:… Other:… With outer surface of sheeting of plastic or of textile materials:… Other:…Other” under subheading 4202.92.90, HTSUS. That litigation ended with the assent of the parties to a stipulated agreement in which CBP reclassified the merchandise as “jewelry boxes and similar containers, … wholly or mainly covered with paper: Other:… Other: Of materials (other than leather, composition leather, sheeting of plastics, textile materials, vulcanized fiber or paperboard) wholly or mainly covered with paper: Of Plastics” under subheading 4202.99.10, HTSUS.
The Court of International Trade (CIT) has indicated that a case submitted on an agreed stipulation of facts, without trial or briefing by the Court, lacks precedential value. See Siemens America, Inc. and Siemens Corp. v. United States, 2 CIT 136, 140 (1981), aff’d. 1 Fed. Cir. (T) 9, 692 F.2d 1382 (Fed. Cir. 1982), where three prior judgments which were predicated on an agreed statement of facts had no stare decisis effect on subsequent liquidations. The reasoning for the conclusion that an agreement to stipulate should have no effect as precedent was that the agreement may be based on a variety of factors which are unique to the particular facts of the case. Furthermore, the Supreme Court has made it clear that, as collateral estoppel does not apply in classification cases, the government is free to relitigate the classification of merchandise at issue in an action covering other entries. United States v. Stone & Downer Co., 274 U.S. 225 (1927). See also Schott Optical Glass, Inc., v. United States, 748, 677 (Fed. Cir. 1984); Heraeus Amersil, Inc. v. United States, 13 CIT 764, 766 (1989); Ashdown, U.S.A., Inc. v. United States, 12 CIT 808, 810 n.1, 696 F. Supp. 661 (1988). In an action before the CIT, if the court makes a determination that merchandise which is before it should be classified in a certain manner, there is nothing precluding similar merchandise in future importations from being treated differently by the CBP. Thus, CBP is under no obligation to classify the jewelry gift boxes imported by protestant in the same subheading as the presentation boxes in Kalencom. We find that the stipulation does not control the classification of the boxes subject to this reconsideration.
CLASSIFICATION
The issue raised in your request for reconsideration concerns the subheading under which to classify the jewelry containers. At the six digit level, the nomenclature classifies the majority of goods in Chapter 42 by the material which comprises the “outer surface.” HQ 087640, dated November 8, 1990. To be classified in subheading 4202.92, HTSUS, the outer surface of the jewelry box must be of sheeting of plastic or of textile materials.
It is your view that the outer surface of the subject jewelry box is not of sheeting of plastic. You assert that the top coating at issue here, which you state has a minuscule thickness of .0025 mm, or one hundredth of the minimum amount required to construct plastic sheeting, is not a sheeting of plastic; it is merely latex coated paper.
The question of what is “sheeting of plastics” was before the court in Sarne Handbags Corp. v. United States, Slip Op. 00-51, May 5, 2000. The court cited Pillowtex Corp. v. United States, 171 F.3d 1370, 1374 (Fed. Cir. 1999), which held that a tariff term’s correct meaning is its common meaning. It then held that “…'sheeting' is material in the form of or suitable for forming into a broad surface of something that is unusually thin, or is a material in the form of a continuous thin covering or coating.” The court found that the outer surface of the merchandise at issue contained a “plastic” or “plastics” component that was exposed, entirely “covered” the textile component, and was relatively thin in comparison to its breadth, and as such the merchandise was correctly classified under the provision for merchandise with an outer surface of ”sheeting of plastics.” The court in Sarne went on to state:
U.S. Note 2 provides support for the Court’s conclusion. While U.S. Note 2 relates only to specific subheadings within 4202, HTSUS, and therefore, is not binding for determining prima facie classifiability under heading 4202, HTSUS, it is persuasive as to what Congress intended the phrase “sheeting of plastics” to mean in the context of the statute as a whole. Cf. Productol Chem. Co. v. United States, 74 Cust. Ct. 138, 151 (1975) (when the same word or phrase is used in different parts of the same statute it will be presumed to have the same meaning, unless a contrary intent is indicated). Thus, it appears that when “textile fabric [is] impregnated, coated, covered, or laminated with plastics” and “the plastic constituent makes up the exterior surface of the article”, Congress intended the material on the outer surface of the merchandise to be considered a “sheeting of plastics.” See U.S. Note 2, Chapter 42.
Laboratory analysis of the paper which covers the molded plastic box at issue here found that it is entirely covered with plastic. The sample before us is a jewelry box whose outer surface contains a plastic or plastics component that is exposed, entirely covers the paper component, and is relatively thin in comparison to its breadth.
Applying the principles set forth in Sarne and a number of CBP rulings extending Note 2 to paper (HQ 961175, dated June 21, 1998, and HQ 959966, dated August 31, 1997), we find that the outer surface of the jewelry box covered in Skivertex® is "plastic sheeting" under subheading 4202.92, HTSUS. Having determined that the jewelry box had an outer surface of plastic sheeting, it is classified under subheading 4202.92, HTSUS which provides for other articles that have an outer surface of sheeting of plastic or textile materials.
APPLICATION OF 19 U.S.C. 1625(c)(1)
Under section 625 of the Tariff Act of 1930, as amended, 19 U.S.C. §1625 (1994), a proposed interpretive ruling or decision which would modify (other than to correct a clerical error) or revoke a prior interpretive ruling or decision which has been in effect for at least 60 days, or have the effect of modifying the treatment previously accorded by CBP to substantially identical transactions, must be published in the Customs Bulletin and will become effective 60 days after the date of its final publication.
You contend that HQ 960454, dated December 9, 1997, was issued to your client on the same merchandise as was the subject of HQ 953610, dated April 30, 1993, and therefore had the "effect of modifying a prior interpretive ruling or decision which was in effect for at least 60 days". You argue that as notice of HQ 960454 was never published in the Federal Register, it is in violation of 19 U.S.C. 1625(c)(1).
At the time your client requested a classification ruling on its jewelry boxes covered with Skivertex®, no claim was made that CBP had previously classified a jewelry box covered with Skivertex®, or that the box classified in HQ 953610 was covered in a material that was the same as your client's in all material respects. If the merchandise was similar or identical it was the responsibility of your client to provide us with a list of all transactions claimed to be substantially identical; information as to how they were substantially identical; the quantity; the value; as well as any other similarities, in the request for a ruling. This was not done.
The Customs Regulations provide in 19 CFR 177.9(b)(1) that each ruling letter "will be applied only with respect to transactions involving articles identical with the ruling request or to articles whose description is identical to the description set forth in the ruling letter." HQ 953610 and HQ 960454 do not appear to involve articles whose descriptions are identical to the descriptions set forth in the ruling letters. It is therefore our view that the classification set forth in HQ 953610 does not apply to the transaction set forth in HQ 960454. Therefore HQ 960454 neither modified nor revoked HQ 953610. Accordingly your 19 U.S.C. (c)(1) claim has not been successfully met.
In addition, we note that in a number of rulings issued from 1994 through 1997, we held that boxes of heading 4202, covered with plastic coated paper, were classified in heading 4202.92.90, HTSUS, contrary to your claim that such goods have been consistently classified in subheading 4204.99.10, HTSUS. See NY DD899152, dated July 16, 1994, NY A88268, dated November 1, 1996, [affirmed in HQ 961175, dated June 21, 1998], and HQ 959966, dated August 31, 1997. An importer searching the publicly available rulings would locate the above-cited rulings. Your client would also have located NY A88268, which has the same classification position set forth in HQ 960454.
ESTABLISHED AND UNIFORM PRACTICE
You then argue that there was an established and uniform practice of classifying your goods under subheading 4202.99.10, HTSUS, and that CBP has failed to comply with the requirements of 19 U.S.C. 1315(d) which concerns the effective date of administrative rulings resulting in higher rates. Section 1315(d) provides as follows: No administrative ruling resulting in the imposition of a higher rate of duty or charge than the Secretary of Treasury shall find to have been applicable to imported merchandise under an established and uniform practice shall be effective with respect to articles entered for consumption or withdrawn from warehouse for consumption prior to the expiration of thirty days after the date of publication in the Federal Register of notice of such ruling; but this provision shall not apply with respect to the imposition of anti-dumping duties or the imposition of countervailing duties under section 1303 of this title....
The Court of International Trade has spoken to the issue of which types of importing scenarios serve to create an established and uniform practice. Essentially, the judicial search for a uniform practice is "concentrated largely on evidence of uniform classification and liquidation of merchandise at various ports over an extended period of time." See Heraeus-Amersil, Inc. v. United States, 600 F. Supp. 221, at 223, 8 CIT. 329 (1984). In Hereaus- Amersil, the court stated that the factors to be considered in determining an established and uniform practice are: ...the number of entries resulting in the alleged uniform classifications, the number of ports at which the merchandise was entered, the period of time over which the alleged uniform classifications took place, and whether there had been any uncertainty regarding the classification over its history. In essence, the question is whether a uniform and established practice existed that would lead an importer, in the absence of notice that change in classification will occur, reasonably to expect adherence to the established classification practice when making an importation. Although you argue that a "uniform and established practice" exists, it is not premised on any substantive fact. The alleged "uniform and established practice" is not stated to exist as CBP's position in general, with respect to this commodity, but only for six entries by your client at two separate New York area ports, during a particular three-month period. We note that more substantial treatments of entries have not resulted in the finding of uniform and established practices. See, e.g., Kalan Inc. v. United States, 12 C.I.T. 1142 (1988) (nine liquidations over a one-year period); United States v. H. Reeve Angel & Co., Inc., 33 CCPA 114 (1946) (two importers' entries at two ports); Siemens America, (a classification ruling letter and 100 subsequent entries); Washington Handle Co. v. United States, 34 CCPA 80 (1946) (28 shipments at two ports). Long-continued administrative practice must be shown by positive evidence. It is not established by the rulings of one or two ports as to a few shipments. We believe that the six entries of the Skivertex® covered presentation boxes by your client through just two ports during a three month period cannot support a finding that there is an established uniform practice of classifying the boxes under subheading 4202.99.10, HTSUS.
HOLDING:
The stipulation agreed to in Kalencom v. United States is not precedential.
The jewelry box is classified in subheading 4202.92.9060 of the HTSUSA, which provides for “Trunks, suitcases. . .and similar containers; traveling bags. . . jewelry boxes. . . 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: Other: With outer surface of sheeting of plastic or of textile materials: Other: Other: Other: Other”. The jewelry box is dutiable at the general column one rate of duty. The current general column one rate of duty is 18.6 percent ad valorem.
HQ 960454 was not issued contrary to 19 U.S. C. 1625(c)(1).
There is no uniform practice of classifying Skivertex® covered jewelry boxes under subheading 4202.99.10, HTSUSA.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division