Application for Further Review of Protest No. 0411-10-100001; Plastic bags

HQ H095600 November 8, 2010 CLA-2 OT:RR:CTF:TCM H095600 PJG CATEGORY: Classification TARIFF NO.: 3923.29.00; 4202.92.45 Port of Hartford U.S. Customs and Border Protection FIS Building 85-568 Bradley International Airport Windsor Locks, Connecticut 06096 Re: Application for Further Review of Protest No.: 0411-10-100001; Plastic bags Dear Mr. Skidmore: This letter is in reference to the Application for Further Review (“AFR”) of Protest No. 0411-10-100001, timely filed on January 4, 2010, on behalf of Brazabra Corporation (“Brazabra”). The AFR concerns the classification of certain plastic bags under the Harmonized Tariff Schedule of the United States (“HTSUS”). FACTS: The merchandise at issue are three bags, identified as styles L-DB, S-DB, and Universal Bag, composed of polyvinyl chloride (“PVC”) sheeting. L-DB and S-DB measure more than 4 millimeters (mm) thick, and they have heat-sealed seams and permanently attached hanging display tabs for point-of-sale display. The Universal Bag measures more than 7 mm thick, has a carrying strap, a flap closure with one snap, and textile piping sewn on its seams. The bags are imported empty and later used by the importer to package its undergarments and a paper insert. The merchandise at issue was entered on October 24, 2008 under 3923.21.0019, HTSUS. A request for information, CBP Form 28, was issued on July 1, 2009, requesting a description of the products, “their composition, . . . and their use/function.” Brazabra replied on July 10, 2009. On August 21, 2009, a CBP Form 29 proposed rate advance was issued to reclassify the merchandise in 4202.92.4500, HTSUS. The merchandise was liquidated on September 25, 2009. The importer filed a protest on January 4, 2010, claiming that the correct classification for the plastic bags is under subheading 3923.21.0019, HTSUS. ISSUE: Are the bags classified under heading 3923, HTSUS as “Articles for the conveyance or packing of goods, of plastics” or under heading 4202, HTSUS as “similar containers, . . . of sheeting of plastics, of textile materials, . . . or wholly or mainly covered with such materials”? LAW AND ANALYSIS: The matter protested is protestable under 19 U.S.C. § 1514(a)(2), as a decision on classification. The protest was timely filed within 180 days of liquidation for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further Review of Protest No. 0411-10-100001 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because the decision against which the protest was filed is alleged to be inconsistent with other CBP rulings/decisions “with respect to the same or substantially similar merchandise.” Protestant specifically cites to Rulings HQ 962363, dated January 19, 2000, and N071081, dated August 31, 2009. Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (“GRIs”). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, 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 2 through 6 may then be applied in order. In addition, the Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”), while not binding law, are the “official interpretation” of the Harmonized System at the international level and “provide a commentary on the scope of each heading” of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989); see also, Len-Ron Mfg. Co. v. United States, 334 F.3d 1304, 1309 (Fed. Cir. 2003) (noting that Explanatory Notes are “intended to clarify the scope of HTSUS subheadings and to offer guidance in their interpretation”). The 2008 HTSUS provision under consideration are as follows: 3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: * * * Sacks and bags (including cones): 3923.21.00 Of polymers of ethylene Reclosable, with integral extruded closure: 3923.21.0019 Other 3923.29.00 Of other plastics * * * * * * * * * * * * 4202 Trunks, suitcases, vanity cases, attaché cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Travel, sports and similar bags: * * * Other Chapter 39, Note 2(m), HTSUS states that the chapter does not cover “handbags or other containers of heading 4202.” Similarly, the EN to heading 39.23 states that heading 3923 “covers all articles of plastics commonly used for the packing or conveyance of all kinds of products” including “sacks and bags,” but excludes “containers of heading 42.02.” According to Chapter 42, Note (2)(A)(a), HTSUS, “heading 4202 does not cover . . . [b]ags made of sheeting of plastics, whether or not printed, with handles, not designed for prolonged use.” Therefore, “[b]y implication, bags composed of plastic sheeting which are designed for prolonged use may be classified in Heading 4202” and are thereby not classifiable under heading 3923, HTSUS. See HQ 954715, dated Feb. 17, 1994. Accordingly, to determine whether an article is classified under heading 3923, HTSUS or heading 4202, HTSUS, we must consider whether the bag is “designed for prolonged use.” In prior rulings, CBP has determined whether an article is “designed for prolonged use” by considering whether the article is reusable. See HQ W968181, dated Oct. 3, 2006. The test used by CBP to determine whether a plastic bag is designed for prolonged use involves considering “whether or not the bag: (1) is of a kind sold at retail on its own merits; and (2) is of a kind normally sold as packaging with contents.” See HQ W968181. When both factors are satisfied, then the first factor is “the determining factor.” See HQ W968181 (citing to HQ 962363). In determining whether a bag “that [is] composed of clear, unembossed, PVC plastic sheeting” is designed for prolonged use, CBP also “consider[s] the thickness of . . . [the] plastic sheeting.” See HQ 962363. If the plastic sheeting measures 4 mils or greater, then that usually means the bag is durable and “is designed for prolonged use to carry personal effects (UNLESS the container is not of a kind normally sold at retail on its own merits; and ABSENT single use indicators such as hangers, cutouts, tabs, odd shapes, etc. . . . ).” See HQ 962363. If the plastic sheeting measures less than 4 mils, then that is generally indicative of a container that is “less durable and not designed for prolonged use.” See HQ 962363. Heading 4202, HTSUS contains a list of examples of items that should be classified under the heading. It also contains the general phrase “similar containers.” To “determine the scope of [a] general . . . phrase”, the United States Court of International Trade has used the rule of ejusdem generis. A.D. Sutton & Sons v. United States, 30 I.T.R.D. (BNA) 1949, 9-10 (Ct. Int’l Trade 2008) (citing Aves. In Leather, Inc. v. United States, 178 F.3d 1241, 1244 (Fed. Cir. 1999). Under the rule of ejusdem generis, “‘the general word or phrase is held to refer to things of the same kind as those specified.’” Id. at 9 (citing Sports Graphics, Inc. v. United States, 24 F.3d 1390, 1392 (Fed. Cir. 1994). The Court of International Trade has noted that “[i]t is established that the exemplars in heading 4202 possess ‘the essential characteristics of organizing, storing, protecting, and carrying various items.’” Id. at 10 (citing Totes, Inc. v. United States, 69 F.3d 495, 498 (Fed. Cir. 1995). The Universal Bag’s carrying strap, flap closure with one snap, and textile piping on the sewn seams, make it possible to store and carry items. Therefore, the subject merchandise does “possess ‘the essential characteristics’” of the “exemplars in heading 4202.” Id. (citing Totes, Inc. v. United States, 69 F.3d 495, 498 (Fed. Cir. 1995). After having established the bags as prima facie classifiable in heading 4202, HTSUS, we must consider whether the subject merchandise may be “sold at retail on its own merits.” See HQ W968181. Although you assert that the three bags were “imported solely for use as packaging[,]” we find that the carrying strap on the Universal Bag allows the consumer to reuse the carrying case for carrying personal effects, such as toiletry. Further, we have found similar empty bags for sale on consumer websites. For example, Amazon.com (http://www.amazon.com/Toiletries-Cosmetic-Storage-Sarah-Michaels/dp/B002DOKMUO/ref=sr_1_64?ie=UTF8&s=beauty&qid=1283266003&sr=1-64) sells the “Travel Toiletries & Cosmetic Storage Bag”, which is a clear bag, with snap closure, but no handle. Second, we must consider whether the subject merchandise is “normally sold as packaging with contents.” See HQ W968181. We find that such bags are normally sold with contents as well. For example, Toys “R” Us, Inc. (http://www.toysrus.com/product/index.jsp?productId=2729190) sells a product called “The First Years Take & Toss 28 pc Variety Bag” that is packaged in a bag similar to the subject merchandise. Since both factors are met, the first factor is the “determining factor”, and we therefore consider the Universal Bag salable on its own. See HQ W968181 (citing to HQ 962363). Another factor supporting the prolonged usability of the Universal Bag is the thickness of its plastic sheeting and the absence of single use indicators. See HQ 962363. The Universal Bag is designed for prolonged use, in part, because it is “composed of clear, unembossed, PVC plastic sheeting” that measures more than 7 mils, and it does not have “single use indicators” such as hangers or cutouts. See HQ 962363. In your AFR you cite to two prior rulings to support your argument that the subject merchandise should be classified under 3923.21.0019, HTSUS. These rulings are distinguishable from the Universal Bag for the following reasons. Bag one in HQ 962363 (referred to as “item number one” in the ruling) had two single use indicators; specifically, it had a cutout and a flimsy plastic hanger. Similarly, the pouch in NY N071081 had a single use indicator; specifically, a “plastic tab with a cut-out slot” that was permanently sewn onto the pouch and that would damage the pouch if removed. In applying the tests indicated above, we have determined that the Universal Bag is designed for prolonged use and therefore is classifiable under heading 4202, HTSUS. On the other hand, we agree with Protestant that bags L-DB and S-DB should be classified under heading 3923, HTSUS. First, the bags are not of a “kind sold at retail” on their own because they have a plastic tab designed to hang the bag for retail display purposes. See HQ W968181. Although the two bags are each more than 4 mils thick, they have a single-use indicator in the form of an attached hanging display tab, and therefore are not necessarily “designed for prolonged use.” See HQ 962363; Chapter 42, Note (2)(A)(a), HTSUS. For the same reason, the bags are of a “kind normally sold as packaging with contents.” See HQ W968181. All factors considered, the L-DB and S-DB bags are classified under heading 3923, HTSUS. Given that the bags are composed of PVC, they are classified under heading 3923.29.00, HTSUS rather than 3923.21.19, HTSUS. HOLDING: By application of GRI 1, the Universal Bag is classified under heading 4202, HTSUS, and specifically, provided for under subheading 4202.92.45, HTSUS, as: “similar containers, . . . of sheeting of plastics, of textile materials, . . . or wholly or mainly covered with such materials . . . : Other: With outer surface of sheeting of plastic or of textile materials: Travel, sports and similar bags: Other.” The 2008 general, column one rate of duty was 20% ad valorem. By application of GRI 1, the L-DB and S-DB bags are classified under heading 3923, HTSUS, and specifically, provided for under subheading 3923.29.00, HTSUS, as: “[a]rticles for the conveyance or packing of goods, of plastics; . . . Sacks and bags . . . : Of other plastics.” The 2008 general, column one rate of duty was 3% ad valorem. You are instructed to GRANT the protest in part, and DENY the protest in part. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page on the internet at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division