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HQ 954437


November 9, 1993

CLA-2 CO:R:C:T 954437 ch

CATEGORY: CLASSIFICATION

TARIFF NO.: 4202.92.4500; 4202.12.2085

District Director
U.S. Customs Service
300 South Ferry Street
Terminal Island
San Pedro, California 90731

RE: Application for further review of Protest No. 2704-93- 101294 under 19 U.S.C., section 1514(c)(2); Classification of a bag insert or expander; GRI 5(b); packing material; of a kind normally used for packing; Fontana Hollywood Corp v. United States.

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the protest and our decision follows.

FACTS:

A representative sample of item #8295-1, a child's backpack with a cardboard insert, has been submitted to this office for examination. The insert, which is described as a bag expander, consists of two parallel members and a biasing means utilizing a rubber band. When the flat cardboard parallel members of the apparatus are subjected to external force or weight, the two ends of the biasing means are pushed together, thus stretching the rubber band and collapsing the device. When the force or weight is removed, the memory of the rubber band automatically restores the device to its original position, pushing the two parallel members apart, and appearing to fill the bag to its capacity, for purposes of presenting these bags for retail sale. The bag expander is the subject of a United States patent.

The expander is inserted into the backpack in its flattened state and is shipped overseas and inland freight in this condition to conserve space and reduce freight charges. Presumably, the merchandise is transported directly to retail outlets where it assumes its expanded form as soon as the shipment is unpacked. The insert allows one to dispense with the need of having the backpack stuffed at a facility in the United States in order to prepare it for display.

The protestant entered the bag expander under heading 4823, HTSUSA, as an article of paper. However, it was liquidated with certain travel bags and luggage under heading 4202, HTSUSA.

ISSUE:

What is the proper tariff classification for the bag expander?

LAW AND ANALYSIS:

Classification of goods under the HTSUSA is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification is determined first in accordance with the terms of the headings of the tariff and any relative section or chapter notes. Where goods cannot be classified on the basis of GRI 1, the remaining GRI will be applied in order.

Pursuant to GRI 1, the bag expander is classifiable as an article of paper in Chapter 48, HTSUSA. However, GRI 5 provides that:

In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein:

(a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long- term use and entered with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character;

(b) Subject to the provisions of rule 5(a) above, packing materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use. (Emphasis added).

GRI 5(a) is inapplicable in this instance as it concerns containers. However, the insert may be classified with the backpack if it is packing material.

Protestant contends that packing materials are limited to materials which serve to "protect, cushion, or brace the bag while in transit." As the insert does not serve to protect the goods during shipping, but rather is designed as a means to display the backpack, protestant argues that GRI 5(b) is inapplicable. Accordingly, the expander must be entered as a separate article.

The petitioner cites Headquarters Ruling Letter (HRL) 084257, dated July 18, 1989, in support of this proposition. In that ruling, we concluded that a textile drawstring pouch containing golf shoes was "not normally sold with or used for packing shoes" for the purposes of GRI 5(a) and GRI 5(b). We pointed out that a shoe box was the normal packing container for footwear.

Textile shoe bags may be distinguished from the instant merchandise. We note that GRI 5(b) is inapplicable when packing materials are clearly suitable for repetitive use. Textile shoe bags are generally re-usable and often function as travel or storage containers for shoes independent from any role they might play in packing footwear. On the other hand, packing materials are generally disposed of immediately after purchase. The cardboard bag expander is not designed for repetitive use and has no function other than to package the backpack for display. Hence, any analogy between the textile shoe bags of HRL 084257 and the bag expander is misplaced.

In (HRL) 555806, dated January 14, 1991, we found that certain thin gauge plastic bags which were inflated to give shape to handbags for display in retail stores were packing materials for the purposes of GRI 5(b). In that decision, we stated:

We are of the opinion that the thin gauge plastic bags are properly considered non-reusable packaging material. Although the plastic bags are not the typical packing material associated with the shipment of goods, they are an alternative to paper stuffing often used in imported sport and handbags. Furthermore, the plastic bags are the kind of packing material often associated with the display of articles offered for retail sale.

Thus, we concluded that stuffing used to prepare sport and handbags for display purposes were "packing materials" as that term is used in GRI 5(b). As the subject merchandise performs this function, we regard it as packing materials.

Protestant points out that even if the insert may be viewed as packing materials, GRI 5(b) requires that such materials be "of a kind normally used for packing such goods" in order to be classified with the backpack. Noting that the expander has been awarded a patent, which implies a high degree of novelty or originality, petitioner argues that it is not packing normally used for packing the merchandise. Therefore, as entered the expander should be classified independent of the backpack.

In addition, our attention is directed to Fontana Hollywood Corp. v. United States, 64 Cust. Ct. 204 (1970), which was decided under our prior tariff, The Tariff Schedule of the United States (TSUS). General Headnote 6(b)(i), TSUS, provided:

6. Containers or Holders for Imported Merchandise. For the purposes of the tariff schedules, containers or holders are subject to tariff treatment as follows:

(b) Not Imported Empty: Containers or holders if imported containing or holding articles are subject to tariff treatment as follows:

(i) The usual or ordinary types of shipping or transportation containers or holders, if not designed for, or capable of, reuse, and containers of usual types ordinarily sold at retail with their contents, are not subject to treatment as imported articles. Their cost, however, is, under section 402 or section 402a of the tariff act, a part of the value of their contents and if their contents are subject to an ad valorem rate of duty such containers or holders are, in effect, dutiable at the same rate as their contents, except that their cost is deductible from dutiable value upon submission of satisfactory proof that they are products of the United States which are being returned without having been advanced in value or improved in condition by any means while abroad (Emphasis added).

Thus, containers usually or ordinarily used to transport or ship their contents, or which were ordinarily sold with their contents at retail, were classified with their contents. Obviously, this provision bears strong resemblance to GRI 5(b), which accords similar treatment to packing containers and materials if they are "of a kind normally used for packing such goods."

In Fontana, the Court concluded that certain long-neck gallon bottles used to hold wine were not "usual containers" for tariff purposes. The bottles in that case possessed necks three feet in height and the overall bottles were four feet tall. Protestant cites specific language in that decision which indicates that the term "usual" refers to ordinary practice in the trade. Petitioner contends that the patented expander is not ordinarily used in the trade to pack merchandise.

In reaching its decision, the Court in Fontana focused on the function of the bottle in relation to its contents, and not merely on the fact that it possessed an unusual shape:

The sum of the testimony in this case establishes that the gallon cammelloni bottles are of the family of bottles known in Italy as "fiasco," meaning in English "flasks," of which there are literally hundreds of varieties. Chianti wine is also imported in straight sided "Bordeaux" bottles and in fancy chinaware bottles or odd-shaped bottles...One can readily understand the testimony that the four-foot cammelloni bottle will not pour wine conveniently into a glass and the wine is best emptied into a pitcher first. Cammellini and cammelloni bottles are not imported empty and both are sold to wholesalers to help display and sell chianti. The "flamboyant" form (R.18) of the cammelloni bottle helps market the wine...Wine in cammelloni size bottles is sold mostly to consumers, and the retail price of a cammelloni bottle of wine is substantially higher than that for a gallon of wine in a more standard short- neck type of gallon flask. One witness called the cammelloni bottle a "fun bottle." (Emphasis added) Id. at 210.

Thus, the Court recognized that wine bottles could come in hundreds of shapes. A novel shape in and of itself is not sufficient reason to find that the container is "unusual." The Court found that the cammelloni bottle was "unusual" for the reason that the bottle was not utilized merely to package the wine. The cammelloni bottle helped to market the wine in the sense that consumers placed a value on the bottle itself and were willing to pay more for the product as packaged. The bottle had little value as ordinary packing material for the reason that it is difficult to pour a glass of wine from a bottle four feet in height. Indeed, under GRI 5(b) we have ruled that a container is not "of a kind normally used for packing" when it possesses independent commercial appeal and added significantly to the value of the goods. See HRL 085766, dated February 1, 1990 (bubble bath container).

In this instance, we recognize that the bag expander features a unique means by which to inflate or expand soft-sided merchandise. However, this article continues to be "of a kind" normally used for packing goods pursuant to GRI 5(b), for the reason that it is merely an alternative to other methods of stuffing used to expand merchandise for presentation purposes. The insert does not enhance the value of the backpack and the public does not bargain for inclusion of this item as part of the purchase price. The expander functions solely as presentation packing. For these reasons, it is classifiable with the backpack.

HOLDING:

Therefore, based on the foregoing discussion, this protest should be denied in full. The bag expanders are classifiable with the merchandise with which they were entered, under subheadings 4202.12.2085 and 4202.92.4500, HTSUSA, which provide, inter alia, for travel bags, suitcases and briefcases. The applicable rate of duty is 20 percent ad valorem. A copy of this decision should be attached to the CF 19 Notice of Action to satisfy the notice requirement of section 174.30(a), Customs Regulations.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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