CLA-2 OT:RR:CTF:TCM HQ H155796 TNA
Port Director, Dallas/ Fort Worth Service Port
U.S. Customs and Border Protection
P.O. Box 619050 DFW Airport, TX 75261-9050
Attn: Melissa Ethridge, Import Specialist
RE: Internal Advice Request; classification of porcelain bowls
Dear Port Director:
This is in response to your request for internal advice, dated March 16, 2011, concerning the classification of porcelain bowls imported by Marck & Associates (“Marck” or “the importer”) under the Harmonized Tariff Schedule of the United States (“HTSUS”). In reaching our decision, we have taken into consideration additional arguments made during a conference between members of my staff and Marck’s counsel on August 11, 2011, as well as supplemental submissions made on July 7, 2011 and November 7, 2011.
FACTS:
The subject merchandise consists of Item Number IUE-H2363, a white bowl imported as part of a single special order that was sold to a commercial food services company. The rest of this order consisted of soufflé dishes, ramekins, Welsh rarebit dishes, creamers, sugar packet holders, stackable mugs, and bowls, including the bowl at issue. A sample of the subject bowl was received and examined by this office, as was a sample bowl from Marck’s Dover line of merchandise, and a sample plate from Marck’s Bristol line. Marck submitted samples of the Dover and Bristol lines because of their similarity to Item Number IUE-H2363; additional samples of Item Number IUE-H2363 and other pieces from the special order of which it was a part were unavailable.
The Port sent a sample of the merchandise at issue to a U.S. Customs and Border Protection (“CBP”) laboratory for testing. The resulting laboratory report, numbered HT20101003 and issued on December 13, 2010, states:
The sample is a white colored glazed bowl-shaped ceramic article having no decorations or embellishments on the inner or outer surfaces. It measures approximately 10.5 cm in diameter at the top rim and about 4.5 cm in overall height. Laboratory analysis indicates the bowl has a fired white body, is translucent in thickness of several millimeters and absorbs less than 0.5 percent of its weight in water. The sample meets the requirements of porcelain as per Additional U.S. Note 5(a) to Chapter 69, HTSUS.
The subject merchandise entered on January 8, 2010, in subheading 6911.10.37, HTSUS, which provides for “Tableware, kitchenware, other household articles and toilet articles, of porcelain or china: Tableware and kitchenware: Other: Other: Available in specified sets: In any pattern for which the aggregate value of the articles listed in additional U.S. note 6(b) of this chapter is over $56: Aggregate value not over $200.” The port issued a request for information on January 28, 2011. Based on the information contained in the response, the subject merchandise was reclassified in subheading 6912.00.20, HTSUS, which provides for “Ceramic tableware, kitchenware, other household articles and toilet articles, other than of porcelain or china: Tableware and kitchenware: Other: Hotel or restaurant ware and other ware not household ware.”
Marck’s response to the change in classification asserted that the merchandise was made of porcelain, precluding classification in heading 6912, HTSUS. The Port subsequently requested this internal advice.
ISSUES:
1. Whether the subject merchandise is classified in heading 6911, HTSUS, as porcelain tableware, or under heading 6912, HTSUS, as ceramic tableware?
2. Whether the subject merchandise is classified under the subheading for hotel or restaurant use, or for other (household) tableware?
3. If the merchandise is determined to be household tableware, whether items from other styles are required to be included in order to meet the “specified sets” requirement of Additional U.S. Note 6 to Chapter 69, HTSUS?
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, GRIs 2 through 6 may then be applied in order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and, mutatis mutandis, to the GRIs.
The HTSUS provisions under consideration are as follows:
6911 Tableware, kitchenware, other household articles and toilet articles, of porcelain or china:
6911.10 Tableware and kitchenware:
6911.10.10 Hotel or restaurant ware and other ware not household ware
Other:
Other:
Available in specified sets:
In any pattern for which the aggregate value of the articles listed in additional U.S. note 6(b) of this chapter is over $56:
6911.10.37 Aggregate value not over
$200
6912.00 Ceramic tableware, kitchenware, other household articles and toilet articles, other than of porcelain or china:
Tableware and kitchenware:
Other:
6912.00.20 Hotel or restaurant ware and other ware not household ware
Other:
Available in specified sets:
6912.00.39 In any pattern for which the aggregate value of the articles listed in additional U.S. note 6(b) of this chapter is over $38
Additional U.S. Note 5 to Chapter 69, HTSUS, states, in pertinent part, the following:
For the purposes of headings 6909 through 6914:
The terms “porcelain,” “china” and “chinaware” embrace ceramic ware (other than stoneware), whether or not glazed or decorated, having a fired white body (unless artificially colored) which will not absorb more than 0.5 percent of its weight of water and is translucent in thicknesses of several millimeters. The term “stoneware” as used in this note, embraces ceramic ware which contains clay as an essential ingredient, is not commonly white, will absorb not more than 3 percent of its weight of water, and is naturally opaque (except in very thin pieces) even when absorption is less than 0.1 percent.
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. 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, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The EN to heading 6911, HTSUS, provides, in pertinent part:
See the Explanatory Note to heading 69.12.
The EN to heading 6912, HTSUS, provides, in pertinent part:
Tableware, kitchenware, other household articles and toilet articles are classified in heading 69.11 if of porcelain or china, and in heading 69.12 if of other ceramics such as stoneware, earthenware, imitation porcelain (see General Explanatory Note to sub-Chapter II).
The General Explanatory Note to sub-Chapter II of heading 6912, HTSUS, provides, in pertinent part:
(I) PORCELAIN OR CHINA
Porcelain or china means hard porcelain, soft porcelain, biscuit porcelain (including parian) and bone china. All these ceramics are almost completely vitrified, hard, and are essentially impermeable (even if they are not glazed). They are white or artificially colored, translucent (except when of considerable thickness), and resonant.
Hard porcelain is made from a body composed of kaolin (or kaolinic clays), quartz, feldspar (or feldspthoids), and sometimes calcium carbonate. It is covered with a colorless transparent glaze fired at the same time as the body and thus fused together.
Soft porcelain contains less alumina but more silica and fluxes (e.g., feldspar). Bone china, which contains less alumina, contains calcium phosphate (e.g., in the form of bone ash); a translucent body is thus obtained at a lower firing temperature than with hard porcelain. The glaze is normally applied by further firing at a lower temperature, thus permitting a greater range of underglaze decoration…
We first address classification at the heading level as between headings 6911, HTSUS, and 6912, HTSUS. We note that the CBP laboratory concluded that the subject bowls are made of porcelain within the meaning of Additional U.S. Note 5(a) to Chapter 69, HTSUS. Hence, the subject merchandise cannot be classified in heading 6912, HTSUS. To the contrary, it is described by heading 6911, HTSUS, which provides for “Tableware, kitchenware, other household articles and toilet articles, of porcelain or china.”
At GRI 6, we must determine whether the instant merchandise belongs to the class or kind of goods described as “hotel or restaurant ware and other ware not household ware.” This provision has been found to be a use provision. See HQ 960552, dated March 2, 1999; HQ W967535, dated July 1, 2005; HQ 959745, dated July 20, 1998. To determine principal use, CBP has consistently applied the factors that the court established in United States v. Carborundum Company. See United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F. 2d 373 (1976), cert. denied, 429 U.S. 979. These factors include: 1) general physical characteristics; 2) expectation of the ultimate purchaser; 3) channels of trade; 4) environment of sale (accompanying accessories, manner of advertisement and display); 5) usage of the merchandise; 6) economic practicality of so using the import; and 7) recognition in trade of this use. See United States v. Carborundum Company, 63 CCPA 98. See also United States v. The Baltimore & Ohio R.R. Co., 47 C.C.P.A. 1; C.A.D. 719 (C.C.P.A. 1959). See also Lenox Collections v. United States, 20 C.I.T. 194; 18 Int’l Trade Rep. (BNA) 1181; 1996 Ct. Intl. Trade LEXIS 38; SLIP OP. 96-30 (Ct. Int’l Trade 1996). CBP has codified this principle in subsequent rulings. See, e.g., HQ 082780, dated December 18, 1989. This principle has been carried over to the HTSUS, as courts have determined that principal use under the HTSUS is defined as the use which “exceeds all other uses.” See Lenox Collections, 20 C.I.T. 194, 196. See also NY C88291, dated December 11, 1998.
In HQ 082780, dated December 18, 1989, for example, CBP classified a number of patterns of china dinnerware that were produced chiefly for household use, but were also marketed and sold to hotels and restaurants for use in their finer dining sections. After reviewing all of the evidence presented, CBP found that household china is different from hotel china in both physical and design characteristics because hotel china is heavier in weight and is stackable and chip resistant. The plates also generally do not have a center design. CBP also found that hotel china is generally less expensive than household china and is offered for sale by independent sales representatives to wholesalers or hotel chains, an industry that also has its own trade publications and trade shows. Furthermore, if the dinnerware were marked with the crest or initials of the establishment, this spoke in favor of it belonging to the class chiefly used in hotels or restaurants. By contrast, household china was found to be generally lighter in weight, more expensive, and did not possess some of the characteristics of hotel ware. CBP also found that such china was sold nationwide to department stores, gift stores and directly to the consumer.
In HQ W967570, dated January 31, 2008, CBP considered whether Pillivuyt’s porcelain tableware and kitchenware imported from France was principally for household use or hotel and restaurant use. In an analysis similar to the one undertaken in HQ 082780, CBP cited prior rulings and various reference books to determine what physical characteristics are indicative of household use versus restaurant and hotel use. In American china, such characteristics included composition, translucency, degree of absorption, and a very high mechanical shock resistance. Thickness was also a significant factor, as one cited source divided American hotel china, which it described as “vitrified ware of very high strength,” into three grades based on wall thickness: Grade (1), “Thick china,” which had 5/16 to 3/8 inch walls and is used in lunch counters and army messes; Grade (2), “Hotel China,” which contained 5/32 to ¼ inch walls and were used in hotels and restaurants; and Grade (3), “medium-weight China”, which had less than ¼ inch walls and was used in high-class eating places, home use, and also for numerous jars, trays, etc., in hospitals. See HQ W967570; HQ 959745, dated July 20, 1998; HQ 962208, dated April 19, 2000; Rexford Newcomb, Jr., Ceramic Whitewares, Pitman Publishing Corp., New York (1947) at pp. 222 and 227; Felix Singer & Sonja S. Singer, Industrial Ceramics, Chemical Publishing Co., Inc., New York (1963), at p. 1096. HQ W967570 also examined trade publications to determine the physical characteristics that are standard for restaurant and hotel ware, and quoted, “the single greatest thing a hotel demands and we produce are plain, white, round plates.” See HQ W967570, citing an article by Villeroy & Boch, USA at http://findarticles.com/p/ articles/mi_m3072/is_7_219/ai_n6028235.
HQ W967570 then examined the rest of the Carborundum factors. Three out of the seven factors conclusively indicated household use, while the remaining four were inconclusive. As a result, HQ W967570 found that Pillivuyt’s French porcelain was for household use.
In the present case, we apply the Carborundum factors as follows:
(1) physical characteristics. The subject special order of Marck’s merchandise consists of bowls and dishes that are plain, white, round and stackable. Rather than being translucent and delicate, they are heavy dishes that are durable and able to withstand heavy use. In addition, whereas the sample of the special order that was received by this office does not contain a logo at the bottom, the samples of the Dover and Bristol styles, which were submitted as being similar to the subject special order, do contain the logo of International Tableware Incorporated. International Tableware Incorporated is Marck’s restaurant supply line. See http://www.internationaltableware.com/aboutus.aspx. These characteristics are all indicative of restaurant or hotel use.
In addition, one characteristic of commercial china is that it is vitrified. Restaurant China, Volume 1: Identification and Value Guide for Restaurant, Airline, Ship, and Railroad Dinnerware states that “during vitrification the body components fuse together, making the china: (1) non-porous, thus resisting penetration of liquids even when glaze is worn or chipped and (2) more durable, resisting breakage caused by heat and handling.” See Barbara J. Conroy, Restaurant China, Volume 1: Identification and Value Guide for Restaurant, Airline, Ship, and Railroad Dinnerware, Collector Books, Paducah (1998) at p. 7. In the present case, Marck’s website states that the subject merchandise has been vitrified. See www.internationaltableware.com/aboutus.aspx. The subject merchandise’s low water absorption rate also indicates that it has been vitrified. This further indicates that the subject merchandise is intended for hotel or restaurant use.
Marck has also submitted data showing that the thickness of the rims of dishes from the special order at issue is less than ¼”. This measurement is indicative of medium weight China, used in “high-class eating places, home use, and in hospitals.” See HQ W967570, citing an article by Villeroy & Boch, USA at http://findarticles.com/p/articles/ mi_m3072/is_7_219/ai_n6028235.
At the August 11 conference and in its November 7 submission, Marck argues the thickness standards espoused by HQ W967570 are no longer as relevant as they were when the sources cited were first published several decades ago. Marck argues that in the intervening years, the distinction between dishes for hotels and restaurants and those used in the home have blurred as consumers buy restaurant ware for household use precisely for its clean looks and sturdiness. However, even if the distinction between hotel/restaurant ware and home dishware is a difficult one to determine, medium-weight dishes, such as the ones at issue here, still favor the class or kind of dishes used in restaurants or hotels.
(2) Environment of sale and (3) channels of trade: in HQ 082780, CBP examined sales data in the context of the multiple factors that, as a whole, determined whether the merchandise was for household or industrial use. The percentage of total sales to hotels and restaurants varied according to the pattern of chinaware and year of the sales. For example, in 1985, 49% of the sales of the pattern Petite Fleur was to hotels and restaurants, while in 1986, the percentage was 17.44%. Furthermore, certain patterns had sales to hotels and restaurants varying from 70% to 100% in 1983. In 1986, “the total sales to hotel and restaurants was 11.16% for household dinnerware, and 11.35% for household bone china,” but these percentages were based on sales of all patterns, rather than on specific patterns. The actual percentage of sales for each of the specific patterns ranged from zero to 45.05%, depending on the pattern. In addition to sales data and the general physical characteristics of the merchandise, HQ 082780 examined other factors such as the importer’s catalogue advertising these chinaware patterns, which indicated that certain patterns could be ordered in a design that conformed more to hotel and restaurant use. For example, certain patterns could be ordered without the center decoration on the china, a factor which spoke more to hotel and restaurant use. Thus, we held that the amount of use of household china by restaurants and hotels did not “exceed all other uses” in this case. See HQ 082780.
Furthermore, in NY C88291, the merchandise at issue was white porcelain tableware that was marketed and sold for hotel, restaurant and household use. There, the importer submitted information to indicate that approximately 60 percent of the “Acapulco” patterned dinnerware was sold to hotel and restaurant users; the remaining 40 percent was sold to retailers. CBP found that the percentage of sales indicated that hotel and restaurant use exceeded all other uses. See NY C88291.
In the present case, Marck, in its November 7 submission, presented data in support of its claim that 60-65% of its merchandise is for household use. In examining this data and the list of companies to which Marck sells, we found that Marck sells a significant percentage of its merchandise to companies that emboss logos on it and resell it. Marck attributes these sales to household use. We disagree with this assessment, as a logo is one factor in favor of commercial use. Furthermore, the merchandise at issue is marketed under the ITI dinnerware line.
Marck submitted a catalogue for ITI, the line to which the imported special order is similar. Its catalogue shows the merchandise arranged in the same manner as one would expect in a restaurant or hotel, with food arranged on it in the manner one would expect to receive it in a restaurant. Furthermore, the merchandise advertised in this catalogue is sold in quantities of at least one dozen, and many items are sold in quantities of two or three dozen, large quantities that speak to it being for restaurant or hotel use. Taken together, these factors favor hotel or restaurant use. As a result, the vast majority of Marck’s sales are for commercial use. This is in contrast to HQ W967570, where 75% of the merchandise was sold for household use, and 75% was both a relevant and a higher figure than Marck’s 60-65%. As a result, we find that Marck’s 60-65% figure is not dispositive because it does not accurately represent sales figures that are pertinent to the present inquiry.
(4) Expectation of ultimate consumer: many of Marck’s ultimate consumers are in the foodservice industry and expect to use the subject merchandise in hotels, restaurants, etc., and expect the high durability and appearance that characterizes the dishes that are used in restaurants and hotels. The ultimate consumer expects the same of restaurant-quality dishes. Thus, even when consumers purchase these products for home use, they expect their dishes to look like and last as long as the dishes used in the foodservice industry. Thus, this factor speaks in favor hotel and restaurant use.
(5) Usage of the merchandise: based on Marck’s submitted sales data, it is clear that the subject merchandise is bought both by the foodservice industry and retail stores. This factor is therefore inconclusive.
(6) Recognition of use in the trade: The subject merchandise is also recognized in the trade as being bought and sold for both the household and in restaurants and hotels. Thus, this factor also supports both uses.
(7) Economic practicality of using the merchandise: CBP examined prices for ITI’s Bristol and Dover lines, which Marck admits are similar to the subject merchandise, on ITI’s website. The prices for the Bristol cups, for example, vary between $48.75 a dozen for 4 ounce cups that sell in cases of three dozen, and $76.75 a dozen for 12-ounce cups that sell in cases of two dozen. As another example, six-ounce fruit bowls in the Bristol line sell for $49.75 a dozen and sell in crates of three dozen; a 10.5 oz fruit bowl sells for $86.50 for a dozen and sells in crates of three dozen. The 24-ounce pasta serving bowls sell for $430.00 per dozen. In W967570, the fact that French porcelain at issue was significantly more expensive than similar porcelain from China and Thailand was a factor in favor of household use because restaurants and hotels would be less likely to purchase expensive materials because of the amount of breakage involved. In the present case, however, the higher prices are warranted by the size and quality of the items. For example, a family is unlikely to purchase one dozen pasta serving plates that sell for $424.50 for household use. It is just as unlikely that a family would purchase two or three dozen soup or fruit bowls, especially when these bowls sell for $49.75 a dozen and higher. A restaurant, however, would likely purchase serving bowls by the dozen, and soup bowls in quantities of two or three dozen. Hence, this factor supports classification as being for restaurant or hotel use.
In sum, the Carborundum factors indicate that the subject merchandise is for restaurant/hotel use. Four of the seven factors speak in favor of hotel or restaurant use. While we acknowledge that the other three factors support both uses, when some or all of the factors applied here have been analyzed in the courts, a determination of principal use has been based on all or most of the factors addressed being determinative. See, e.g., Essex Manufacturing, Inc. v. United States, 30 C.I.T. 1 (Ct. Intl. Trade 2006-1); St. Eve International v. United States, 267 F.Supp.2d 1371 (Ct. Int’l Trade, 2003), G. Heileman Brewing Co. v. United States, 14 CIT 614, 620 (1990); Lenox Collections v. United States, 20 C.I.T. 194; United States v. Carborundum Co., 63 CCPA 98. Furthermore, in W967570, CBP found in favor of household use even though only three factors spoke in favor of household use and the other four were inconclusive. As a result, in the present case, having five of the Carborundum factors point in favor of restaurant/hotel use is enough to find that Marck’s merchandise belongs to the class or kind of goods principally for commercial use.
With respect to your question of whether, in the alternative, CBP should consider only sales of the particular style at issue to determine principal use, we note that class or kind is defined more broadly than the single shipment at issue. However, sales data for the particular style at issue is relevant to the factors CBP considers in determining principal use. See, e.g., United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F. 2d 373 (1976), cert. denied, 429 U.S. 979. As a result, while sales of a particular style at issue is one factor that should be considered in a principal use determination, this one factor cannot, by itself, determine principal use.
Next, we address the question of whether items from other styles are required to be included in order to meet the “specified sets” requirement of Additional U.S. Note 6 to Chapter 69, HTSUS. Because we found the subject merchandise to be classified as hotel or restaurant ware of subheading 6911.10.10, HTSUS, the issue of “specified sets” at the 8-digit level does not arise. In addition, we note that Marck has filed multiple lawsuits in the Court of International Trade regarding the importation of their ceramic cups and mugs. See, e.g., C.I.T. Court Number 08-00306, among others. The issue in each of these cases is whether the merchandise is available in specified sets. Thus, because this litigation is currently ongoing we could not respond to the question of specified sets even if it were pertinent to the classification.
HOLDING:
Principal use is determined by the use of an entire class or kind rather than the use of a specific import or shipment; as a result, a company’s overall sales can be considered to determine classification, but sales of a specific import could also be used as one factor in the Carborundum analysis.
Following such an analysis, under the authority of GRI 1, the subject tableware is classified in heading 6911, HTSUS. It is specifically provided for in subheading 6911.10.10, HTSUS, which provides for “Tableware, kitchenware, other household articles and toilet articles, of porcelain or china: Tableware and kitchenware: Hotel or restaurant ware and other ware not household ware.” The applicable duty rate is 25%.
Lastly, because we found the subject merchandise to be classified as hotel or restaurant ware of subheading 6911.10.10, HTSUS, the issue of “specified sets” at the 8-digit level does not arise.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
You are to mail this decision to the Internal Advice requester no later than 60 days from the date of the decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel and to the public on CBP’s website, located at www.cbp.gov by means of the Freedom of Information Act and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division