CLA-2 CO:R:C:T 951028 BC
Peter J. Fitch, Esq.
Fitch, King and Caffentzis
116 John Street
New York, New York 10038
RE: Revocation of HRL 086186 and HRL 089830; classification of
jewelry presentation cases; jewelry boxes; suitable for long term
use; GRI 2(a); GRI 5(a); subheading 4202.92.9020, HTSUSA
Dear Mr. Fitch:
This letter is in furtherance of our letter of January 27,
1992, wherein we notified you of our intention to reconsider two
Headquarters Ruling Letters (HRL's) issued to you on behalf of
two of your clients who are importers of jewelry presentation
cases. In response, you submitted two letters, dated April 2,
1992, and July 6, 1992, opposing revocation of the rulings. On
January 26, 1993, you and representatives of importers met with
officials of the Office of Regulations and Rulings (OR&R) to
present your clients' case. At that time, you made another
written submission. On February 9, 1993, representatives of
domestic producers of jewelry presentation cases met with
officials of OR&R to present their views. We received a final
written submission from you, dated February 11, 1993.
FACTS:
Headquarters Ruling Letters 086186 (January 2, 1990) and
089830 (July 26, 1991) concerned similar merchandise to which the
same classification was applied. The merchandise there and here
at issue are small containers of various dimensions used in the
presentation and/or sale of jewelry and other items. HRL 086186
covered twelve sample containers which are described in greater
detail therein. HRL 089830 covered five sample containers. The
majority of the frames are made of metal or plastic; one is made
of paperboard. Most are covered on the exterior with a textile
material; one is covered with paper. Most of the containers have
lining and/or inserts and hinges for secure opening and closing.
The cited rulings held that these articles are to be
classified by application of General Rule of Interpretation (GRI)
3(b) of the Harmonized Tariff Schedule of the United States
Annotated (HTSUSA) - that is, by determining the constituent
material that gives them their essential character. Both rulings
found that the case's frame provides its essential character. In
HRL 086186, a binding ruling as to classification of the cases
was not provided due to insufficient information regarding
constituent materials. In HRL 089830, the cases were classified
under subheading 7310.29.0050, HTSUSA, covering boxes of steel.
Subsequent to the issuance of these rulings, a review of the
classification of jewelry presentation cases was undertaken in an
effort to ensure uniformity in the classification of these and
similar containers.
ISSUE:
What is the proper classification of the jewelry
presentation cases at issue?
LAW AND ANALYSIS:
Classification of goods under the HTSUSA is governed by the
General Rules of Interpretation (GRI's). GRI 1 provides that
"classification shall be determined according to the terms of the
headings and any relevant Section or Chapter notes." Merchandise
that cannot be classified in accordance with GRI 1 is to be
classified in accordance with subsequent GRI's applied in
sequential order.
The Explanatory Notes (EN's) to the Harmonized Commodity
Description and Coding System constitute the official
interpretation of the tariff at the international level. The
EN's "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." While they are
not legally binding, "they should be consulted for guidance" in
the classification of merchandise. (See Treasury Decision 89-
80, quoting from a report of the Joint Committee on the Omnibus
Trade and Competitiveness Act of 1988, 23 Cust. Bull. 379 (1989),
54 Fed. Reg. 35,127 (August 23, 1989).) In T.D. 89-80, Customs
stated that the EN's should always be consulted when classifying
merchandise.
In HRL's 086186 and 089830, Customs determined that GRI 1
was not applicable, since the jewelry presentation cases were
found not to be either ejusdem generis or in pari materia with
the exemplars explicitly set forth in heading 4202. Since no
other headings described the cases at issue, classification by
application of GRI 1 gave way, eventually, to classification by
application of GRI 3(b). The cases were held to be classifiable
according to the constituent material of the frames that imparted
their essential character, plastic or metal in most instances.
Upon review of the matter regarding the classification of
jewelry presentation cases, we now conclude that the above
analysis does not reflect the correct interpretation of the law
(as it currently exists). Contrary to the view expressed in the
rulings to be revoked, GRI 1 is applicable and these presentation
cases will be classified accordingly.
The Explanatory Note
In April 1988, the Harmonized System Committee (HSC)
deliberated concerning the classification of presentation cases
of the kind at issue here. The United States had formally
expressed its concern as to the possibility of expanding the
scope of heading 4202 beyond the coverage for which it was
intended. Ultimately, the HSC amended the EN's to heading 4202
to clarify the meaning of the term "jewelry boxes." This
amendment became effective on January 1, 1990. The following
paragraph was added:
The term "jewellery boxes" covers not only
boxes specially designed for keeping
jewellery, but also similar lidded containers
of various dimensions (with or without hinges
or fasteners) specially shaped or fitted to
contain one or more pieces of jewellery and
normally lined with textile material, of the
type in which articles of jewellery are
presented and sold and which are suitable for
long-term use.
This language makes it clear that cases used in the
presentation and sale of jewelry are included in the term
"jewelry boxes" in heading 4202. Because these cases are
"jewelry boxes," cases used in the presentation and sale of other
articles are "similar containers" as that phrase appears in the
heading. Thus, cases of the kind at issue - whether they are
used ultimately to hold an item of jewelry, pen and pencil set,
perfume bottle, or various other articles - are classifiable
under heading 4202.
In your submissions, you assert that EN's are not legally
binding and are not to be dispositive of an issue. You put this
forward apparently to suggest that the EN, in its amended form,
should be disregarded. We disagree with this suggestion. As
stated previously, the EN's are relevant as a guideline in
determining the scope of a heading. Both Congress and Customs
have endorsed their use in the classification of merchandise. In
T.D. 89-80 (cited on page 2), Customs set forth that EN's, along
with decisions of the Harmonized System Committee that are
published in the Compendium of Classification Opinions, are to be
accorded appropriate weight in making classification
determinations and that they (EN's) should always be consulted.
Further, both Congress, in the report of the Joint Committee on
the Omnibus Trade and Competitiveness Act of 1988, and Customs,
in the T.D., have acknowledged that the EN's will be modified
from time to time. That being the case, it is clear that
Congress anticipated that EN's would be amended periodically, and
that Customs, in such instances, would appropriately consider
EN's in their amended form. The EN, as amended, has had the
effect of clarifying the scope of heading 4202. We have come to
the view that the term "jewelry boxes" in heading 4202 includes
the presentation cases at issue. While we recognize that EN's
are not to be considered dispositive in all situations, on the
facts of the instant case, we see no reason to disregard the EN
as it is currently written.
It should be noted that the rulings herein revoked do not
cite the EN and apply ejusdem generis and in pari materia
analyses only in determining that the presentation cases at issue
are not traditional "jewelry boxes" as that term appears in
heading 4202. We agree that the presentation cases in question
do not conform precisely to the design of traditional jewelry
boxes; yet, we disagree with the conclusion of these rulings that
this precludes their classification under heading 4202.
It should also be clarified that prior to 1990, presentation
cases were usually classified according to the constituent
material that imparted essential character. Since January 1,
1990, the effective date of the amended EN, most presentation
cases have been classified under heading 4202; the two rulings
herein revoked are exceptions.
Suitable for Long-Term Use
In your submissions, you take the position that these cases
do not fall within the definition of jewelry boxes as set forth
in the EN. Specifically, you assert that they are not suitable
for long term use. In this regard, you state that they are made
of cheap materials and not used by customers to store the jewelry
or other item purchased.
We disagree with your contention that the cases at issue are
not suitable for long term use. The subject plastic and metal
framed cases, as well as many paperboard framed cases, are
suitable for use after the sale to store and protect the item
purchased. They are sufficiently well constructed to provide
durability adequate for these purposes. This is not a novel
view. In HRL 081456 (August 17, 1988), a ruling you cited
because Customs therein held that a jewelry presentation case
(for one pair of earrings) made of plastic is not within heading
4202, it is acknowledged that the presentation case provides
protective storage for the earrings. That presentation case was
found - in 1988, prior to amendment of the EN - to be outside of
heading 4202 because it was not a traditional jewelry box, not
because it was unsuitable for long term use. Likewise, in HRL
084732 (August 24, 1989), another ruling you cited, Customs
acknowledged that the plastic ring box was sufficiently well
constructed to provide protective storage for the ring. Again,
that ruling held that the ring presentation case was not a
traditional jewelry box; it did not hold that it was unsuitable
for long term use. Various other rulings have found that
presentation cases of the kind at issue (for jewelry and other
items) are suitable for long term use. (See NYRL 086393 (August
15, 1990), HRL 087787 (December 20, 1990), NYRL 859141 (January
7, 1991), NYRL 859318 (January 29, 1991), NYRL 862128 (April 16,
1991), NYRL 862417 (May 7, 1991), HRL 088571 (May 31, 1991), and
HRL 950703 (December 3, 1991).)
You cited the EN's for GRI 5(a) in support of your view that
the cases at issue are not suitable for long term use. GRI 5(a)
pertains to containers of various kinds that are entered with the
articles they are designed to hold. The exemplars include camera
cases, gun cases, and necklace cases. These cases, when entered
with the items they are designed to hold, and when of a kind
normally sold with such articles, will be classified with such
articles. The EN for GRI 5(a) provides the following:
This Rule shall be taken to cover only those
containers which . . . are suitable for long
term use, i.e., they are designed to have a
durability comparable to that of the articles
for which they are intended . . .
You contend that the presentation cases at issue do not meet
the language of the EN, because the long life expectancy of many
items of jewelry - in some cases decades or centuries - does not
compare to the life expectancy of the cases in which they are
presented and/or sold. You therefore conclude that the cases are
not designed to have the durability described in the EN.
While we recognize the relevance of the EN as a guideline in
interpreting the tariff, we disagree with your interpretation.
First, GRI 5(a) is not applicable to the facts of this case,
since the cases are not entered with the jewelry or other item
they are designed to hold. We recognize that you cite it only to
illuminate the meaning of the phrase "suitable for long term use"
which is not defined in the tariff.
Second, the low cost presentation cases at issue are not
used generally to hold jewelry or other items of the high quality
you suggest. High value items of that kind would likely be
presented and/or sold in much more expensive cases than those
under consideration, in which instance the life expectancy of
such cases would likely be greater than that of the cases at
issue. (Recall the $60 presentation case you submitted at the
January 26, 1993, meeting at the Office of Regulations and
Rulings.) Our analysis must be limited to the context presented
by the facts. Yet, regardless of the quality of the jewelry, we
believe that the containers at issue are suitable for long term
use. The suggestion that a presentation case for jewelry and
similar articles must be made durable enough to last up to 100
years in order to meet the "suitable for long term use" standard
is without merit.
Third, upon examination of the samples addressed by the
rulings to be revoked, as well as those you subsequently
provided, we believe that these cases are sufficiently durable to
last a considerable length of time, sufficient to serve the
protective storage function. We will not attempt to prescribe a
sum certain in number of years that is requisite to indicate
suitability for long term use for these cases. However, we
believe that, when used properly to provide protective storage,
these cases are capable of lasting for many years. In our view,
this is sufficient to evidence suitability for long term use in
the context of the merchandise at issue.
Finally, as evidence that these cases are not suitable for
long term use, you indicate that some of the more cheaply made
cases cause tarnishing of jewelry because of sulphur in the glue
used in their construction. You submitted statements from
several persons involved in the jewelry business who indicate
that cases that cause tarnishing are occasionally encountered and
that such inferior cases could not be used to store jewelry.
We note that you have not asserted that the presentation
cases which were the subject of HRL's 086186 and 089830 are of
this cheap variety that causes tarnishing. Neither have you
stated that any of your clients's imports are of this type. In
fact, as far as we can determine, the appearance of these cases
(in retail inventory) is evidenced on a sporadic basis and is
viewed by jewelry retailers as a problem. Thus, it appears
doubtful that jewelers would knowingly order such inferior
merchandise or that a supplier of presentation cases would
knowingly advertise and sell a product that will have a harmful
effect on the goods they contain.
Based on the fact that the information we have on this issue
is contradictory, and in view of the fact that you have not
identified specific shipments comprised of this potentially
harmful merchandise, we will not consider it germane to the issue
of this case.
Disposability
While we disagree with your assertion that customers discard
presentation cases after purchase, we note that, for
classification purposes, actual use of the cases after purchase
is irrelevant. They do not have to be used after purchase for
protective storage; they need only be suitable for such use.
(See HRL 950703 (December 3, 1991).)
Having stated that, we nonetheless contend that presentation
cases are often kept by the customer for storage of the item
purchased. In your April 2, 1992, submission, you state the
following regarding the cases: "They are not designed for long
term use, albeit that, if left alone in a drawer without being
disturbed, one of these boxes might, in fact, last for a
considerable time." We agree that these cases are sufficiently
well constructed to last a long time if left alone and
undisturbed, and we believe that is essentially the role these
cases play as protective storage cases. Such use would involve
placing the case in a drawer, or on a dresser or shelf, to hold
and protect the item until it is used again. Items that are used
frequently may not be placed in a presentation case during non-
use. On the other hand, items used infrequently or occasionally
can be stored in these cases quite conveniently and for a
considerable time.
Other
In your submissions, you suggest that the importation of
presentation cases without inserts would preclude their being
classified as jewelry boxes under heading 4202. You stated that
classifying them as unfinished jewelry boxes would be
unjustified. You also indicated that without the inserts,
Customs would not know what kind of item would be placed in the
case and, thus, could not know that the case was to be used for
jewelry.
In HRL 089830, one of the rulings herein revoked, we
addressed this issue, finding that cases without inserts and/or
lining, although unfinished, were to be classified as completed
articles. This remains our position, despite the fact we now
hold these articles to be classifiable under a different heading.
GRI 2(a) provides that "[a]ny reference in a heading to an
article shall be taken to include a reference to that article
incomplete or unfinished, provided that, as entered, the
incomplete or unfinished article has the essential character of
the complete or finished article." We believe that a
presentation case without an insert and/or internal lining has
the essential character of such a case in a finished condition.
The essential character of these cases is established by the
protective frame of plastic, metal, or paperboard; the
characteristic lidded style; the characteristic outer coverings
(textile, leather, composition leather, decorative paper, etc.);
the particular dimensions (size and shape) of the case that
suggest the identity of the kind of article contained inside; and
other characteristic external features (which may or may not be
evidenced), such as hinges, cushioning, embroidery, or other
artwork. This conclusion is unchanged where the item to be
placed in the case is a piece of crystal, gold coin, or perfume
bottle. Cases that hold these latter articles are
indistinguishable from cases that hold jewelry, as you have
acknowledged.
Finally, you contend that other customs administrations
classify cases of the subject kind under headings other than
heading 4202. This contention is contrary to information we have
obtained from customs administrations in Europe and elsewhere
indicating that these articles are classified under heading 4202.
Conclusion
Based on the foregoing, we conclude that the presentation
cases at issue are jewelry boxes and similar containers
classifiable under heading 4202. This conclusion follows
precedent established since 1990: HRL 086393, August 15, 1990
(pearl folder for necklace); HRL 087787, December 20, 1990 (pearl
folder for necklace); NYRL 859318, January 29, 1991 (drawstring
pouch); NYRL 862417, May 7, 1991 (gold coin case); NYRL 863339,
May 28, 1991 (ring case and earring case); HRL's 088571 and
088733, May 31, 1991 (perfume cases); and HRL 950703, December 3,
1991 (necklace case).
HOLDING:
Presentation cases used in the presentation and/or sale of
jewelry are included within the meaning of the term "jewelry
boxes" as it appears in heading 4202, HTSUSA. Presentation cases
used in the presentation and/or sale of other items, such as gold
or commemorative coins, perfume, etc., are containers similar to
jewelry boxes as that term appears in heading 4202, HTSUSA. The
presentation cases classified in HRL 089830 under subheading
7310.29.0050, HTSUSA, are classifiable instead under subheading
4202.92.9020, HTSUSA. The duty rate is 20% ad valorem and the
textile restraint category is 670.
This notice to you should be considered a revocation of
HRL's 086186 and 089830 under 19 CFR 177.9(d)(1). It is not to
be applied retroactively to HRL's 086186 and 089830 (19 CFR
177.9(d)(2)) and will not, therefore, affect past transactions
for the importation of your clients' merchandise under those
rulings. However, for the purposes of future transactions in
merchandise of this type, these rulings will not be valid
precedent. We recognize that pending transactions may be
adversely affected by this revocation, in that current contracts
for importations arriving at a port subsequent to this decision
will be classified pursuant to it. If such a situation arises,
your clients may, at their discretion, notify this office and
apply for temporary relief from the binding effects of this
decision as may be warranted by the circumstances, pursuant to 19
CFR 177.9(e)(2). However, please be advised that in some
instances involving import restraints, such relief may require
separate approvals from other government agencies.
Sincerely,
John Durant, Director