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HQ 964767




April 20, 2001

CLA-2 RR:CR:TE 964767 JFS

CATEGORY: CLASSIFICATION

TARIFF NO.: GRI 5 (b), HTSUSA

Port Director
U.S. Customs Service
2350 N. Sam Houston Parkway
E. Houston, TX 77032

RE: Protest With Application for Further Review, 5301-00-100239; Classification of Paperboard Cartons From Italy; GRI 5; Sanctions on Goods From the European Union.

Dear Port Director:

The above-referenced protest was forwarded to this office for further review. We have considered all submissions and samples. A conference was not requested. For the reasons stated below, the protest with application for further review is granted.

FACTS:

The article that is the subject of this protest is a small noncorrugated paperboard carton measuring 9 5/8 inches, by 7 inches, by 2 inches. The carton is sealed at one end by means of interlocking flaps. The other end can be opened by means of a fold down flap. The carton is collapsible and is plain white with no markings on its exterior.

The cartons were entered by the importer under subheading 4819.20.0040, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides, in pertinent part, for folding cartons, boxes and cases, of noncorrugated paper or paperboard. Customs agreed with this classification. However, subheading 9903.08.10, HTSUSA, requires that all goods provided for in subheading 4819.20, HTSUSA, e.g., paperboard cartons that are from most member countries of the European Union are subject to a 100% duty. Accordingly, Customs assessed the 100% duty. The Protestant alleges that the classification of the cartons in subheading 4819.20, HTSUSA, rather than as packing materials pursuant to GRI 5(b), was the result of clerical error by the Protestant.

The Protestant argues that the cartons should be classified under subheading 6115.11.0020, HTSUSA, which is the provision for stockings/pantyhose. The Protestant contends that (1) the cartons are specially fitted, and (2) the cartons are the normal packing containers for the stockings/pantyhose. The Protestant states that pursuant to General Rules of Interpretation (GRI) 5 (a) and GRI 5(b), the cartons should be classified under subheading 6115.11.0020, HTSUSA. The Protestant also questions the implementation of the 100% duty.

In response to inquiries by Customs, the Protestant provided to Customs instructions, dated October 28, 1999, that the importer sent to the manufacturer of the stockings/pantyhose. The instructions requested the manufacturer to “pack 3 pairs of each size of each color for every article into the white boxes, remember to place the cream color label with the UPC code of 3/pr on the white boxes . . .” The instructions listed 8 styles of hosiery that were to be packaged and labeled. The styles that are named in the instructions correspond with the styles that are listed in the invoices contained in the entry documents.

ISSUE:

Is there sufficient evidence to conclude that the cartons were packing materials as provided for in GRI 5 (b) of the HTSUSA?

LAW AND ANALYSIS:

By statute, a Customs classification decision "is presumed to be correct." Universal Elec. Inc. v. United States, 112 F.3d 488, 491 (Fed. Cir. 1997) (citing 28 U.S.C. § 2639(a)(1)). Customs, relying on the entry documents filed by the Protestant properly determined that the cartons were empty at the time of entry into the United States. Based on this determination, Customs classified the cartons under subheading 4819.20.0040, HTSUSA.

The presumption of correctness afforded Customs determination that the cartons were empty at the time of entry may be rebutted if the importer demonstrates by a preponderance of the evidence that Customs decision was incorrect. Id. at 492. The instructions from the importer to the manufacturer concerning the packaging of the merchandise were created in the normal course of business between the importer and the manufacturer. Moreover, the styles of hosiery named in the instructions mirrors the styles of hosiery named in the entry documents. In this case, the instructions and entry documents constitute reliable evidence of the condition of the cartons at the time of entry. Accordingly, Customs finds that the Protestant has provided substantial evidence that the cartons contained the hosiery with which they were entered.

This finding is consistent with prior Customs rulings. In Headquarters Ruling Letter (HQ) 957644, dated June 21, 1995, the Customhouse Broker failed to deduct the freight costs from the invoice price to determine the value of the imported goods. Customs granted the protest because the protestant provided documentation demonstrating that the freight costs were properly deductible from the invoice price. In HQ 953481, dated May 14, 1993, Customs found that the incorrect classification of imported goods by the protestant was a legal error and granted the protest.

Classification under the HTSUSA 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, the remaining GRIs may then be applied.

The Harmonized Commodity Description and Coding System, Explanatory Notes (ENs), represent the official interpretation of the Harmonized System at the international level (for the 4 digit headings and the 6 digit subheadings) and facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI. The ENs, although not dispositive or legally binding, 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, 35128 (August 23, 1989).

GRI 5 (a) provides as follows:

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.

The cartons under consideration are plain ordinary cartons, and can be used to hold any number of items. The importer states that the cartons were specially manufactured to contain three packages of stockings/pantyhose. The cartons are not suitable for long-term use, as is required. Accordingly, classification pursuant to GRI 5(a) is not appropriate.

The Protestant also argues that the cartons are packing materials/containers as provided for in GRI 5 (b), HTSUSA. GRI 5 (b), HTSUSA, governs when containers constitute packing containers and therefore are classified with the goods with which they are shipped. GRI 5 (b), HTSUSA, states:

Subject to the provisions of rule 5(a), . . . 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 material or packing containers are clearly suitable for repetitive use.

GRI 5 (b), HTSUSA, lists three criteria that, if met, require that the packing containers be classified with the goods with which they are shipped. (1) The container must be entered with the goods inside of it. (2) The container must be of a kind that is normally used for packing the goods that are being imported. (3) Generally, the container is not suitable for repetitive use. It is undisputed that (1) the cartons in question are of the kind normally used for packing the imported goods, and (2) the cardboard cartons are not suitable for repetitive use. The remaining question, whether the cartons contained the goods with which they were shipped, has been resolved affirmatively.

Because the cartons are packing materials and are therefore classified as stockings/pantyhose, the 100% retaliatory duty against paperboard cartons from the European Union does not apply.

HOLDING:

The paperboard cartons are classified under subheading 6115.11.0020, HTSUSA, which provides for: “Panty hose, tights, stockings, . . , knitted or crocheted: Panty hose and tights: Of synthetic fibers, measuring per single yarn less than 67 decitex.” The general one column rate of duty is 16.3%.

The protest is GRANTED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with Customs Form 19, should be mailed by your office to the protestant no later than sixty (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 this decision. Sixty (60) days from the date of this 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, the World Wide Web at www.customs.treas.gov, and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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