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HQ 951028


March 3, 1993

CLA-2 CO:R:C:T 951028 BC

CATEGORY: CLASSIFICATION

TARIFF NO.: 4202.92.9020

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

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