HQ 0082780 - Internal Advice on the classification of household china. - United States International Trade Commision Rulings

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HQ 082780

December 18, 1989

CLA-2 CO:R:C:G 082780 SS

CATEGORY: CLASSIFICATION

TARIFF NO.: 533.64, 533.52.

Area Director
New York Seaport
U.S. Customs Service
6 World Trade Center
New York, New York 10048-0945

RE: Internal Advice on the classification of household china.

Dear Sir:

This is our response to your request for internal advice concerning the tariff classification of certain patterns of china dinnerware imported by Villeroy & Boch Tableware Ltd.

FACTS:

The merchandise in issue consists of certain patterns of china dinnerware. The names of the patterns are as follows: Albertine, Alt Amsterdam, Amapola, Aragon, Arco White, Arlano, Basket Blue, Green, Red, Coburg, Collage, Castello, Castell Gold, Delta, Facette Rouge, Facette Gold, Fruit Garden, Gold Brocade, Indian Summer, Lombardi White, Louiseburg White, Blue, Gold, Orlando, Palatino, Petite Fleur, Royal Gold, Siera, Summerday, Trio, Verona, and Vieux Luxembourg.

The above patterns represent the manufacturer's fine china produced chiefly for household use. However, this china is also marketed and sold to hotels and restaurants for use in their finer dining sections. The information supplied in the catalogue advertising these chinaware patterns indicates certain patterns may be ordered in a design which conforms more to hotel and restaurant use. For example, the pattern, Basket, may be ordered without the center decoration on the china.

The percentage of total sales to hotels and restaurants varies according to the pattern of chinaware and year of the sales. For example, in 1985, the pattern Petite Fleur reflected a 49% sale, while in 1986, it showed a 17.44% sale. Further, according to the data supplied by the importer, certain patterns of china had sales to hotels and restaurants varying from 70% to 100% in 1983. Counsel for the importer claims that the total sales to hotel and restaurants for 1986 was 11.16% for household dinnerware, and 11.35 for household bone china. However, it is noted that these percentages are based on sales of all patterns, rather than on specific patterns. The actual percent of sales for a specific pattern ranges from zero to 45.05%, depending on the pattern.

ISSUE:

Whether when classification is determined on the basis of chief use, and certain patterns of household chinaware are also marketed and sold to hotels and restaurants, such chinaware is properly classifiable under the provision for hotelware in item 533.52, or under the provision for household ware in item 533.64, TSUS.

LAW AND ANALYSIS:

In the instant case, the following two situations are presented:

(1) Some restaurants and hotels purchase household china for use in their finer dining areas;

(2) Some restaurants and hotels purchase, by special order, household type china with patterns which have been modified so as to make them more suitable for restaurant and hotel use.

Schedule 5, part 2, subpart C, of the Tariff Schedules of the United States (TSUS), provides for articles chiefly used for preparing, serving, or storing food or beverages. Item 533.52, TSUS, provides specifically for hotel or restaurant ware and other ware not household ware, while item 533.64, TSUS, provides for household ware. In both statutory provisions, the fundamental question for determination is whether the imported articles belong to a class or kind of merchandise chiefly used in the household.

General Interpretative Rule 10(e)(i) defines how use requirements (other than actual use) are to be construed:

(e) in absence of special language or context which otherwise requires-

(i) 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 articles of that class or kind to which the imported articles belong, and the controlling use is chief use, i.e., the use which exceeds all other uses (if any) combined;

In applying the concept of chief use, courts consider several factors as pertinent in determining whether the imported merchandise falls within a particular class or kind. These factors include the general physical characteristics of the merchandise, the expectations of the ultimate purchaser, the channels, class or kind of trade in which the merchandise moves, the environment of the sale, and the manner in which the merchandise is advertised or displayed. (Citations omitted) United States v. Carborundum Co., 536 F.2d 373 (1976). Further, in determining chief use, it is also proper to consider the testimony offered as well as the characteristics of the merchandise itself. United States v. Bruce Duncan Co., 50 CCPA 43, C.A.D. 817 (1963).

In reviewing the facts and evidence submitted, it is ascertained that household china is distinct from hotel china in both physical and design characteristics. Hotel china is heavier in weight, is stackable, and chip resistant. Also, the plates generally do not have a center design. This type of china is generally less expensive than household china and is offered for sale by independent sales representatives to wholesalers or hotel chains. This industry also has its own trade publications and trade shows.

On the other hand, household china is lighter in weight, is generally more expensive, and does not possess some of the characteristics of hotel ware. Further, such china is sold nationwide by company employees to department stores, gift stores and directly to the consumer.

Based on the available information, the character of the china in situation (1) above clearly shows that it is household china. The facts indicate that some of this china is sold for use in hotels and restaurants. It is noted that the percent of sales of this china to restaurants and hotels varies, but it is not "the use of a particular shipment but rather that of class or type of goods involved which determines its chief use." United States v. The Baltimore & Ohio R.R. Co. A/C United China & Glass Company, 47 CCPA 1, C.A.D. 710. Further, it is well settled that a fugitive use or a mere susceptibility or capability of use is not controlling as to chief use. United States v. Carborundum Co., 536 F.2d 373, 377 (1976). Therefore, the mere fact that the subject china may possess some characteristics which permits its use in hotels and restaurants does not establish that it is chiefly used in hotels and restaurants. Also, it is noted that chief use changes depending on trends in society, but classification is determined on the basis of chief use at the time of importation. In this instance the percentage of sales and amount of use of household china by restaurants and hotels neither establish nor constitute chief use within the meaning of General Interpretative Rule 10(e)(i), TSUS, i.e., such use "does not exceed all other uses." Therefore, in this situation, the china in issue belongs to the class of china used chiefly as household china.

We are also cognizant that item numbers 533.11 through 533.77, TSUS, were changed by Section 509 of the Trade Act of 1979, P.L. 96-39. We have also taken into consideration that the apparent intent of these changes was to preclude the low duty entry of ceramic ware which is not household ware. However, the distinction between household ware and hotel ware is premised on the use of the ware. Since classification of these items is governed by chief use, unless ceramic ware is chiefly used as hotel ware within the meaning of General Interpretative Rule 10(e)(i), such china cannot properly be classified as hotel ware in item 533.52, TSUS. On the other hand, since chief use can change depending on trends in society, when and if such china is used chiefly for restaurants, it will be necessary to reevaluate classification.

In the case where restaurants and hotels special order household china in modified patterns more suitable for commercial uses, as described in situation (2) above such modification alone will not provide the imports with a utility different from the class. However, when such modifications include the hotel or restaurant logo or name, it is obvious that such china is in a class chiefly for hotel purposes.

Thus, household china which has been special ordered and modified for hotel and restaurant use by incorporating the hotel /restaurant logo or name in the design, is no longer in the class of china for household use, but belongs to the class of china that is chiefly used for hotels and restaurants.

HOLDING:

The patterns of household china described above, which are of a class used chiefly as household china, but also sold to some hotels and restaurants, are properly classifiable in item 533.64, TSUS.

The patterns of household china which have been modified and special ordered for hotel and restaurant use by incorporating the hotel/restaurant logo or name in the design, are properly classified in item 533.52, TSUS. You should advise the internal advice applicant of this decision.

Sincerely,

John Durant, Director

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