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HQ 952405


November 4, 1992

CLA-2 CO:R:C:M 952405 EJD

CATEGORY: CLASSIFICATION

TARIFF NO: 7020.00.00

Thomas Mattina
Area Director of Customs
J.F.K. Airport
Building 178
Jamaica, New York 11430

RE: Internal Advice 43/92; Display Liquor Bottles; Subheading 7010.90.50; Headings 7010, 7020; Additional U.S. Rule of Interpretation 1(a); ENs 70.10; HQs 085755, 088123; U.S. v. Carborumbum Company

Dear Mr. Mattina:

This is our response to your memorandum of June 30, 1992 (CLA-2-K:C:A2 GS), regarding Internal Advice (IA) request 43/92, submitted by Ross & Hardies, on behalf of Seagram Global Markets, concerning the classification of display whiskey and cognac bottles under the Harmonized Tariff Schedule of the United States (HTSUS). Samples were submitted for examination.

FACTS:

Three different samples were forwarded for examination. They are described as follows:

1. A 1.75 liter bottle with a hand grip on the back, and labels on the front and back stating that the bottle contains 12 year old Chivas Regal Scotch Whisky. The bottle is empty but has been tinted to give the appearance of having scotch whisky in it (the hand grip where there would be no whisky is untinted). The bottle is capped and covered with a plastic seal that is covered with a paper Chivas Regal seal. The rear label of the bottle states that the contents have been "Distilled and Bottled in Scotland". The bottle comes in a cardboard container stating the contents to be Chivas Regal.

2. A 700 ml bottle with a unique triangular design. The bottle has a fluted design on the sides and a circular indentation just below the point at which the neck joins the bottle. On the front and back of the bottle are labels stating that the bottle contains Martell Cognac XO Supreme. The bottle is filled with a colored liquid to give the appearance of having cognac in it. There is a sticker on the back stating that the contents are "not fit for consumption". The bottle is capped and covered with a paper Martell seal. Coming down from underneath the seal is a cloth strip with two initials and the name "Martell". The cloth seal is covered on the other end by sealing wax (which is pressed into the circular indentation) with the Martell insignia impressed upon it. The cap and paper seal are sealed in shrink wrap. On the paper seal are the words, "Produced and Bottled in Cognac France". The bottle comes in a cardboard container stating the contents to be Martell Cognac.

3. A 1 liter green bottle with an oval indentation just below the point where the neck joins the bottle. There are labels on the front and the back stating that the bottle contains 12 year old Glenlivet Scotch Whisky. In the oval indentation is a label showing the Glenlivet insignia. The bottle is capped and covered with a plastic seal that is covered with a paper Glenlivet seal. The bottle comes in a cardboard container which states that the contents have been "Bottled in Scotland".

All the bottles are invoiced as "dummy bottles". The term "dummy bottle" describes bottles used for display purposes to market goods.

Importer's counsel maintains that these bottles are genuine bottles and are only invoiced as "dummy bottles" because they will be used for demonstration purposes, and not as containers, after importation. He further asserts that the only differences between these bottles and those used as containers are that they are either tinted or filled with colored liquid to give the impression that they contain alcoholic beverages.

Importer's counsel argues that the bottles should be classified based upon their principal use and not their actual use. He cites additional U.S. Rule of Interpretation 1(a), HTSUS, as well as Headquarters Ruling Letters (HQ)s 085755, dated February 27, 1990, and 088123, dated February 25, 1991, which require that where classifications are based on use, the use must be principal use and not actual use.

Importer's counsel argues that these display bottles are more properly classified in heading 7010, HTSUS, which is a "use" provision. He maintains that these bottles belong to a class or kind of bottle principally used as a container for the commercial packaging of distilled spirits. He contends that these bottles are identical to those used for packaging, their actual use as demonstration bottles is of no legal significance.

You believe that these display bottles are properly classifiable under subheading 7020.00.00, HTSUS. Counsel contends that these bottles should be classified under subheading 7010.90.50, HTSUS.

ISSUE:

Whether the display liquor bottles are classifiable under subheading 7010.90.50, HTSUS, as glass bottles of a kind used for the conveyance or packing of goods, or under subheading 7020.00.00, HTSUS, as other articles of glass.

LAW AND ANALYSIS:

The classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRIs), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.

Heading 7010, HTSUS, is considered a "use" provision. Additional U.S. Rule of Interpretation 1(a), HTSUS, ("the rule") provides:

In the absence of special language or context which otherwise requires, 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 goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.

The two competing headings for these "dummy bottles" are the following:

Heading 7010, HTSUS, which provides for "[c]arboys, bottles, flasks, jars, pots, vials, ampoules and other containers, of glass, of a kind used for the conveyance or packing of goods

Heading 7020, HTSUS, which provides for "[o]ther articles of glass."

The importer acknowledges that these bottles are to be used as "dummy bottles" for display purposes. He also acknowledges that there is a tint on the Chivas Regal bottle, there is a nonconsumable fluid in the Martell bottle, and that all three bottles are sealed with the proper seals. The importer further contends that we are basing our classification on the actual use of the bottles and not the principal use of the bottles of the same class or kind.

Counsel relies upon the rule, as well as HQs 085755 and 088123, to support his position. In HQ 085755, Customs dealt with a glass container which was being imported to convey medicine, but which could also be used as laboratory glassware. In HQ 085755, Customs determined that the principal use of the item was as laboratory glassware. It is the counsel's opinion that the same principle applies here. He maintains that these bottles belong to a class or kind whose principal use is as packaging and their actual use as display bottles has no legal significance.

However counsel's arguments disregard a cardinal rule of Customs law that merchandise is classified in its condition as imported. Classification of the display bottles will be determined according to the class or kind to which they belong, as imported.

To determine whether, as imported, a particular item falls within a class or kind of merchandise, the courts have established certain guidelines to be followed. In The United States v. Carborumbum Company, 536 F.2d 373, C.A.D. 1172 (June 17, 1976), the court enumerated the factors to be considered in establishing class or kind. Among the pertinent factors are the general physical characteristics of the merchandise, the expectation of the ultimate purchaser, the channels, class or kind of trade in which the merchandise moves, the environment of the sale, the economic practicality of so using the import, and the recognition in the trade of its use.

When we apply these factors to the sample display bottles, it is clear that they will not fall into the same class or kind as bottles used for the conveyance or packing of goods. The bottles are display bottles as entered. They are physically different from bottles provided for under heading 7010, HTSUS, in that such bottles would be imported not only in an empty condition, but also untinted and unsealed (ready to be filled). It is also likely that they would not have labels or stickers. When purchasing "dummy bottles", it is the expectation of the ultimate consumer, i.e., liquor store owner, that these items will be used for display purposes only. It is our belief that these bottles which are empty, tinted or filled with a liquid which simulates liquor, and which are sealed, would be recognized among those in the trade as being "dummy bottles" for display purposes.

The Harmonized Commodity Description and Coding System (HCDCS) Explanatory Notes (ENs) constitute the Customs Cooperation Council's official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the ENs 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. Customs believes the notes should always be consulted. See T.D. 89-80.

EN 70.10 states that "[t]h[is] heading does not include: ...(f) [s]pecial display bottles and display jars of a kind used in shops (heading 70.20)." HCDCS, p. 934. This note makes it clear that there is a class of glass articles which are display bottles.

The importer acknowledges that the Explanatory Notes to heading 7010, HTSUS, specifically exclude from classification under that subheading, "[s]pecial display bottles...of a kind used in shops". But, he contends despite the differences and the seals, the subject samples are still identical to bottles which are used for packaging of their respective liquor products and that the bottles are not "special" enough to be considered display bottles. He states that they were not manufactured as display bottles and they could have been used for packaging.

It is our position that counsel's arguments are not convincing and completely belie the facts as they apply to the imported articles. In our opinion, the addition of shrink seals, tinted glass and/or colored nonconsumable liquid are steps taken subsequent to the process of manufacturing those bottles which are for the conveyance or packing of goods. The bottles are manufactured for display purposes prior to importation. To use them as for packaging would involve the reversal of this process and would be economically impractical.

HOLDING:

The three sealed liquor "dummy" bottles are properly classified under subheading 7020.00.00, HTSUS, which provides for "[o]ther articles of glass."

You should advise the Internal Advice applicant of this decision.

Sincerely,

John Durant, Director

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