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HQ 967529

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April 4, 2005

CLA-2 RR:CR:GC 967529 KBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 4819.20.0040, 3926.90.9880

Liza V. Schaeffer
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 399 Park Avenue, 25th Floor
New York, NY 10022-4877

RE: Watch Boxes and Plastic Display Case

Dear Ms. Schaeffer:

This is in reference to your letter on behalf of Casio, Inc., dated October 22, 2004, to the Bureau of Customs and Border Protection, Director, National Commodity Specialist Division, New York, in which you requested a binding ruling concerning the classification of a paperboard watch box and plastic “S-ring” and plastic base for displaying a watch, item number K-33R-1, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). This request was returned to you requesting additional information by letter dated November 18, 2004. You submitted additional information in another letter requesting a binding ruling in this matter, dated December 7, 2004. You also provided samples for our review. The binding ruling request was referred to this office for reply.

FACTS:

The articles involved are: 1) paperboard boxes printed with the name “CASIO” on the top and side and which when assembled has an opening so that you can view the contents of the box, 2) clear plastic “S-rings”, 3) clear plastic bases into which the S-ring is inserted and 4) cardboard spacers designed to fit into the box to hold the S-ring in place. After importation, the S-ring will be snapped into the base to stand upright. A watch will be attached around the S-ring to display the watch as if it were worn on a wrist. A paper instruction manual will also be inserted into the “cubby hole” in the plastic base. The paperboard box when unfolded to its usable condition measures 4 ½ inches in height, 2 ½ inches in depth and 2 ¼ inches in width.

You propose two scenarios for importing the articles. In scenario 1, all the components will be imported in a single shipment, in equal quantities, but in different cartons. After importation they will be in storage until a retail order is received. The order is picked and box is built on the production line. Each watch will be shipped packaged for retail sale in the individual cardboard box or some other packaging, displayed on the plastic S-ring and base, and then placed inside the cardboard box after the watch is selected by a retail customer. In scenario 2, the S-ring is imported separately.

ISSUE:

What is the classification of the paperboard watch box, the paperboard insert, the plastic S-ring and the plastic base under the HTSUSA?

LAW AND ANALYSIS:

Classification of merchandise under the HTSUSA is in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRIs 2 through 6.

The HTSUSA provisions under consideration are as follows:

3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics:

3923.90.00 Other:

3923.90.0080 Other

3926 Other articles of plastics and articles of other materials of headings 3901 to 3914:

3926.90 Other:

3926.90.98 Other:

3926.90.9880 Other

4819 Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibers; box files, letter trays and similar articles, of paper or paperboard of a kind used in offices, shops or the like:

4819.20.00 Folding cartons, boxes and cases, of non-corrugated paper or paperboard:

4819.20.0040 Other

4823 Other paper, paperboard, cellulose wadding and webs of cellulose fibers, cut to size or shape; other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibers:

4823.90 Other:

Other:

Other:

Of coated paper or paperboard:

4823.90.6600 Other

In understanding the language of the HTSUSA, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUSA, and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

Under Scenario 1, you state that you intend to import equal numbers of all the components in one shipment but in separate containers. After importation, the components in their individual containers will just be sitting in a warehouse waiting for retail orders at which point a certain number of the components will be assembled to match the individual order. The plastic S-ring will be assembled to the plastic base. A watch will be placed on the S-ring. However, the watch and plastic components may be shipped to the retailer along with, but not necessarily inside of, the paperboard carton and the paperboard insert. Generally, the watches are put on display at the retailer on the plastic S-ring outside of the paperboard carton. The paperboard carton stays behind the retailer’s counter. The watch and plastic holder are only placed inside the paperboard carton after the ultimate consumer purchases the watch. You believe the components, as imported, should be classified as an incomplete or unfinished good under GRI 2(a). You believe that as a GRI 2(a) incomplete or unfinished good the components then qualify as a GRI 3(b) set or composite good.

GRI 2(a) states:

[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. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.

Explanatory Note 2(a)(V) (p. 2) states that:

[t]he second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport.

In part, Explanatory Note 2(a)(VII) (p. 2) states that:

[f]or the purposes of this Rule, "articles presented unassembled or disassembled" means articles the components of which are to be assembled either by means of simple fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only simple assembly operations are involved.

If no single heading describes all of the components in the watch box and plastic display case, the components must either be considered as a set or composite good under GRI 3(b), or the components must be classified individually.

Composite goods are described in EN (IX) to GRI 3(b) which states:

For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.

If the components are to constitute “goods put up in sets for retail sale,” they must satisfy the following criteria set forth in EN (X) to GRI 3(b). Goods are classified as sets put up for retail sale if they:

(a) consist of at least two different articles which are, prima facie, classifiable in different headings. Therefore, for example, six fondue forks cannot be regarded as a set within the meaning of this Rule;

(b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and

(c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).

CBP has consistently held that, in general, items imported in bulk for later assembly do not qualify under GRI 2(a) as an incomplete or unfinished good for classification purposes. There must be evidence that the articles will definitely be assembled after importation, and that the articles are not being imported simply for inventory purposes. There must be evidence that the articles are presented for reasons such as requirements or convenience of packing, handling or transport. See HQ 088891, (June 21, 1991), HQ 954420 (August 12, 1993), HQ 953860 (June 23, 1993). For unassembled goods to be considered a set, all the articles for the assembly must be entered in the same importation; however, they need not be in the same container, box, crate, kit, etc. See HQ 958215 (July 9, 1996) and HQ 953313 (May 10, 1993).

HQ 952850 (April 14, 1993), concerned the classification of seven individually imported plastic parts of ball point pens available in various color combinations drawn from nine different colors. Even though the importer intended to convert all pens parts of a particular shipment into complete pens, some color combinations were created from other shipments causing intermingling of parts from separate shipments. CBP determined that a main reason the goods were entered unassembled was not for requirements or convenience of packing, handling, or transport, but because all the parts required for the assembled pens may not be included in the same shipment. CBP concluded that these parts were considered bulk inventory and classified the parts separately on the basis of GRI 1. In reaching this conclusion, CBP examined the number of parts which make-up a completed good versus the number of unmatched parts, how the merchandise was treated after importation (e.g., put into bins for later use in manufacturing, commingling with earlier shipments or domestic products), and how it was presented (e.g., convenience of packing). See HQ 958215 (July 9, 1996). See also HQ 966797 (August 25, 2004).

In the instant case, we find that the components for the watch paperboard carton, paperboard insert, plastic S-ring and plastic base are imported for bulk purposes. Even though the components are shipped in equal numbers this alone does not make it an unassembled good under GRI 2(a). See HQ 088891 et.al supra. The components just sit unassembled in bulk until retail orders for a varied number of watch boxes arrives. The paperboard components may not even be used until after the retail sale is completed. Therefore, there is no “assembly”. Therefore, the components do not qualify under GRI 2(a) and must be classified as individual articles pursuant to GRI 1 in their respective headings 3923, 3926, 4819, and 4823.

You cite HQ 965223, supra, involving a cardboard box for holding a plastic CD case and CD and argue that in that case the cardboard box determined the essential character of a set for classifying the article in heading 4819 as a paperboard box. However, first, you misconstrue the facts in that case. In HQ 965223, the cardboard box was imported alone, without the plastic CD holder or CD. Therefore, there are not multiple components for consideration as a set. Further, since we have decided that the watch box and plastic display case are not a set and must be classified as individual components, we never reach the question of what provides the essential character of a proposed set.

The paperboard carton is classifiable in subheading 4819.20.0040, HTSUSA, which provides for: “[c]artons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibers; : [f]olding cartons, boxes and cases, of non-corrugated paper or paperboard: [o]ther.” See HQ 965223 (April 21, 2003). The paperboard insert is classifiable in subheading 4823.90.6600, HTSUSA, which provides for: “[o]ther paper, paperboard, cellulose wadding and webs of cellulose fibers, cut to size or shape; other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibers: [o]ther: [o]ther: [o]ther: [o]f coated paper or paperboard: [o]ther.”

CBP must classify articles in the condition as imported. See ABB, Inc. v. United States, 346 F. Supp. 1357, 1366 (CIT 2004).

It is well settled law that merchandise is classified according to its condition when imported. United States v. Citroen, 223 U.S. 407, 414-15, 56 L. Ed. 486, 32 S. Ct. 259, Treas. Dec. 32298 (1911). If the rule were otherwise, not only could the same product be subject to different duty rates depending on its intended end use, but Customs would be flooded with affidavits or other evidence of differing intended uses. Moreover, Customs would have no way of determining whether the merchandise was actually used for its alleged intended purpose after importation. Mita Copystar America v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994)

As imported, the plastic base arrives without being attached to an S-ring. By itself it does not secure or hold a watch in any way. Therefore, as imported, we do not find it to be an article for shipping or packaging under heading 3923. The plastic base is classifiable in subheading 3926.90.9880, HTSUSA, which provides for: “[o]ther articles of plastics and articles of other materials of headings 3901 to 3914: [o]ther: [o]ther: [o]ther.”

Under either Scenario 1 or Scenario 2, a watch will be attached to the S-ring to ship the watch from the warehouse to the retailer. Therefore, the S-ring is classifiable in subheading 3923.90.0080, HTSUSA, which provides for: “[a]rticles for the conveyance of goods: of plastics; : [o]ther: [o]ther.”

HOLDING:

The paperboard carton is classifiable in subheading 4819.20.0040, HTSUSA, which provides for: “[c]artons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibers; : [f]olding cartons, boxes and cases, of non-corrugated paper or paperboard: [o]ther.” The 2005 column one general rate of duty is free.

The paperboard insert is classifiable in subheading 4823.90.6600, HTSUSA, which provides for: “[o]ther paper, paperboard, cellulose wadding and webs of cellulose fibers, cut to size or shape; other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibers: [o]ther: [o]ther: [o]ther: [o]f coated paper or paperboard: [o]ther.” The 2005 column one general rate of duty is free.

The plastic base is classifiable in subheading 3926.90.9880, HTSUSA, which provides for: “[o]ther articles of plastics and articles of other materials of headings 3901 to 3914: [o]ther: [o]ther: [o]ther.” The 2005 column one general rate of duty is 5.3% ad valorum.

The S-ring is classifiable in subheading 3923.90.0080, HTSUSA, which provides for: “[a]rticles for the conveyance of goods: of plastics; : [o]ther: [o]ther.” The 2005 column one general rate of duty is 3% ad valorum.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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See also:

• Tariff No.: 3923.90.00 - Articles nesoi, for the conveyance or packing of goods, of plastics
• Tariff No.: 3926.90.98 - Other articles of plastic, nesoi
• Tariff No.: 4819.20.00 - Folding cartons, boxes and cases of noncorrugated paper or paperboard
• Tariff No.: 4823.90.66 - Articles of coated paper or paperboard, nesoi