Thursday, February 21, 2013

Dependable Classification Solutions

Dependable Packaging Solutions v. United States involves the tariff classification of inexpensive open top glass vessles imported from China. As with most classification cases, there was no dispute as to the nature of the merchandise.

The two headings in question here were 7010 and 7013, which cover:

Carboys, bottles, flasks, jars, pots, vials, ampoules and other containers, of glass, of a kind used for the conveyance or packing of goods; preserving jars of glass; stoppers, lids and other closures, of glass . . . .

Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or similar purposes (other than that of heading 7010 or 7018) . . . .
 Both of these headings require classification to be based on principal use. Plaintiff claimed that the goods, which were not imported with or designed for use with a secure closure, were "of a kind used for the conveyance or packing of goods." If that were correct, the vases would be classified in Heading 7010. This argument boils down to the clever argument that vases are used for the "wet transportation of flowers." Also relevant is the fact that the Explanatory Notes to 7013 specifically state that the heading covers vases. Of course, the Explanatory Notes are not binding, but are pursuasive interpretations of the scope of the headings.

Examining the products, the Court found no reason to question that they are what is commonly known as bud vases. The entry documents and marketing literature also referred to the merchandise as vases.

Despite the semantic conclusion that these are vases and, therefore, most likely classifiable in 7013, the Court did the right thing and completed the principal use analysis. That analysis requires applying the Carborundum Factors to the merchandise. Those factors are:
  • The physical characteristics of the merchdise
  • Expectations ofthe ultimate purchasers
  • Channels of trade
  • The environment of the sale
  • Use in the same manner which defines the class
  • The economic practicality of the specified use
The Court made a number of key findings regarding these factors. First, the vases are nearly identical to other products identified as "vases" that are used for decorative purposes. Next, consumers pay extra for flowers in the vases, meaning that the vases have value beyond mere transport. Related to this point, the vase can be resued, indicating that they have decorative value. When sold, these vases are often displayed with flowers, again indicating a decorative use. Finally, there was no evidence that the vases were practically and economically used as packing containers.

You may wonder, as I did, why this went to Court. I think it has to do with this last point. According to evidence from the plaintiff, these vases were used in a non-traditional way. Specifically, the flower was placed in the vase and the vase filled with liquid. At that point, the vase, liquid, and flower, was placed in a plastic sleeve and a partitioned box for shipment. In other words, these vases were used for transport and not just to the end customer. That makes for a plausible argument that these are containers for the packing of goods.

Unfortunately for Dependable, this case turns on the principal use of goods of the same class or kind, not on the particular use of these vases. Thus, the Court held the vases to be classified in 7013.

No comments: