Bottle Toppers, Assemble!

Under any circumstances, if the Court of International Trade mentions Iron Man and Thor in a decision, it has my attention. Even more so as I sit here today, working from home, wearing a Captain America t-shirt and a quarantine beard. For those who care, the Court also mentioned Care Bears, Ariel, and Sponge Bob. Pick your own fandom.

The cause for all this pop culture excitement is the decision in In Zone Brands, Inc. and Good2Grow, Inc. v. United States, which involves the classification of plastic bottle toppers molded into the forms of licensed characters and sold connected to a bottle of juice. In life, the products look like this:


The plaintiffs claimed that the toppers, imported separate from the bottles of juice, should be classified as toys in Heading 9503. Customs & Border Protection classified the merchandise in Heading 3923 as stoppers, lids and other closures of plastic.

Those of you who have been around for a while might think this question was resolved in 2000 in a case called Minnetonka Brands, Inc. v. U.S. I discussed that case and a related ruling here. Times change, statutes change, and (as you will see) results change.

The legal text, as always matters. Plaintiffs point to Chapter 39, Note 2(y), which excludes from that chapter "articles of chapter 95 (for example, toys . . . .)." So, if the bottle toppers are toys, they cannot be classified in Chapter 39. On the other hand, Chapter 95 includes Note 1(v) which excludes from Chapter 95:
Tableware, kitchenware, toilet articles, carpets and other textile floor coverings, apparel, bed linen, table linen, toilet linen, kitchen linen and similar articles having a utilitarian function (classified according to their constituent material).
Thus, if the toppers are kitchenware or a similar item with a utilitarian function, they cannot be classified in Chapter 95 and they drop back into Chapter 39.

The history of Note 1(v), which is now Note 1(w), is relevant.  It was added to the HTSUS to deal with the fallout of the litigation surrounding the classification of festive items. When that tariff was amended to confirm that utilitarian items with festive motifs were nevertheless classified based on their material, the result would have been that products that had been duty free under Chapter 95 would become dutiable in other chapters. That violates the rule of rate neutrality. To fix that, two items were added to Chapter 98 to maintain duty-free status for these goods while still having them classified in their proper headings. Those items are 9817.95.01 and 9817.95.05 and both make reference to use in connection with religious or cultural holidays and celebrations. According to the plaintiffs, that indicates that Chapter 95, Note 1(v) only excludes festive articles. The Court did not agree. Rather, it found the language of the Note includes no such limitation. Instead, it simply clarifies the understanding that primarily utilitarian merchandise is not classifiable in Chapter 95. Because the Note applies, the question becomes whether the bottle toppers have a utilitarian function. If the function is principally "amusement, diversion, or play," then the toppers remain in Chapter 95.

To sort that out, the Court undertook a thorough application of the "Carborundum factors" to determine the principal use of the merchandise. I am not going to go through all of that here. I will, however, point to a few facts that seem to be most salient.

  • There is evidence that children collect and play with the bottle toppers
  • The bottle toppers are generally sold at retail with the juice-filled bottles and usually along side other juices
  • The toppers have a unique thread and valve system designed specifically to match the bottles
  • The toppers meet ASTM choking risk standards for toys
  • The toppers meet FDA standards for beverage packaging
  • The molded character design adds costs not related to the utilitarian function
  • The circumstances of the sale indicate the topper is designed to appeal to children to encourage the purchase of juice by adults
Looking at these factors, the Court found that the toppers are not primarily for for amusement and, therefore, are not classifiable in Chapter 95.

But, there is the issue of Minnetonka in which the the opposite result was reached. Several points distinguish that case. First, Note 1(v) had not been added to Chapter 95. That means the applicable law has changed. Also, the facts were different, In Minnetonka, the bottles themselves were formed like the character represented by the topper. This added amusement value to the entire item. Also, the Minnetonka toppers were simple caps that sat on top of a traditional screw cap for a bottle. In contrast, the juice bottle toppers include a valve and straw. The Court, therefore, was not persuaded to follow Minnetonka.

Having eliminated Chapter 95 as a possible classification, the Court held that the bottle topper are properly classified in 3923.50.00.

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