Avenues in Leather, Inc. v. United States , 28 Ct. Int'l Trade 565 ( 2004 )

Slip Op. 04 - 41
UNITED STATES COURT OF INTERNATIONAL TRADE
:
AVENUES IN LEATHER, INC., :
:
Plaintiff, :
:
v. : Before: MUSGRAVE, JUDGE
:
THE UNITED STATES, : Court No. 99-09-00603
:
Defendant. :
:
[On challenge seeking classification of “Presentation Calcu-Folios” as “binders” or “memorandum
pads” under heading 4820 of the Harmonized Tariff Schedule of the United States, initially classified
upon entry as “similar to” listed exemplars of heading 4202, HTSUS (“trunks, suitcases, vanity
cases, attache cases, briefcases, school satchels, and similar containers”), judgment for the plaintiff.]
Decided: April 26, 2004
Fitch, King and Caffentzis, New York, New York (James Caffentzis), for the plaintiff.
Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney-in-Charge,
International Trade Field Office, Commercial Litigation Branch, Civil Division, United States
Department of Justice, (Amy M. Rubin); Karen P. Binder, Assistant Chief Counsel, International
Trade Litigation, U.S. Bureau of Customs and Border Protection, of counsel, for the defendant.
OPINION
The plaintiff, Avenues in Leather (Avenues), invoked this Court’s jurisdiction under 28
U.S.C. § 1581(a) to contest denial of its protest on the classification of certain entries of
“Presentation Calcu-Folios”1 under the Harmonized Tariff Schedule of the United States (HTSUS).
1
Entered in 1997, these are vinyl- or plastic-covered paperboard and plastic foam, zippered
on three sides, and measure 11 1/2" x 13 1/2" x 1 1/2" when closed. Each has one exterior open flat
pocket, a padded carrying handle affixed to the exterior spine via two loops of the same exterior
material, a three-ring metal binder permanently affixed to the interior spine, a horizontal sleeve in
the interior right side into which has been placed the cardboard backing of an included 3-hole lined
(continued...)
Court No. 99-09-00603 Page 2
The government classified the merchandise under heading 4202, specifically under the provision for
“trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, and similar containers,”
subheading 4202.12.20 (“[w]ith outer surface of plastics), which bears customs duties of 20% ad
valorem. Avenues argues for classification as either “binders” under subheading 4820.30.002
(“binders (other than book covers), folders and file covers”) or alternatively “memorandum pads”
under subheading 4820.10.2020 (“memorandum pads, letter pads and similar articles”), which bear
customs duties of 3.7% and 2.8% ad valorem, respectively. In accordance with the trial ordered by
the appellate opinion on the matter, Avenues in Leather, Inc. v. United States, 317 F.3d 1399 (2003),3
familiarity with which is presumed, judgment enters in favor of Avenues for the following reasons.
I
The imported article in question, a “pad folio,” is apparently now recognized in the business
jargon. See, e.g., Pl.’s Ex. 8 at 4-17, Pl.’s Ex. 10 at 8-15 & 17-18. As the plaintiff’s exhibits
indicate, pad folios vary in size and features. They also lack specific eo nomine classification in the
HTSUS. The Bureau of Customs and Border Protection and predecessor U.S. Customs Service
1
(...continued)
pad of paper measuring 8 1/2" x 11", and a flap pocket in the interior left side (which opens parallel
to the spine) on top of which are a zippered pocket, one large slot approximately 4 1/4" x 11 3/4",
two smaller slots sized to hold computer disks, two loops for writing instruments, and a permanently
attached solar-powered calculator measuring 3" x 5 1/2" in height. See Pl.’s Ex. 4; Def.’s Ex. A.
2
Heading 4820 covers “registers, account books, notebooks, order books, receipt books,
letter pads, memorandum pads, diaries and similar articles, exercise books, blotting pads, binders
(looseleaf and other), folders, file covers, manifold business forms, interleaved carbon sets and other
articles of stationary, of paper or paperboard, albums for samples or for collections, and book covers
(including cover boards and book jackets) of paper or paperboard.”
3
Cf. Avenues in Leather v. United States, 22 CIT 404, 11 F. Supp. 2d 719 (1998), aff’d 178
F.3d 1241 (Fed. Cir. 1999) (“Avenues I”).
Court No. 99-09-00603 Page 3
(Customs) apparently have tended to classify them as articles of stationary under heading 4820, but
more recently have taken the position that their features may qualify them as containers under
heading 4202. See Pl.’s Br. at 10-12. Cf. Avenues I.4
To prove that the articles at bar should be classified under heading 4820, Avenues submitted
at trial samples of various pad folios and business cases and presented the testimony of Otniel Shor,
Carol Ann Williamson and Sam Goldstein. Mr. Shor, Avenues main witness, has over 28 years’
experience with business cases and is the designer of the articles at bar. Ms. Williamson was the
Director of Replenishment, Planning and Supply Chain for Staples. Mr. Goldstein was Vice
4
Compare, e.g., HQ 964824 (Aug. 12, 2002) (relying on Avenues in Leather, supra, 22 CIT
404, 11 F. Supp. 2d 719, to classify under heading 4202 certain pad folios, each with zipper closure
around three sides, measuring 10 1/2" x 13 1/2" x 1 3/4" when closed, imported with 8 1/2" x 11"
note pad inserted into right hand interior pocket, and left interior side with full-size accordion folio
with two compartments and two gussets large enough to contain small books or newspapers, front
panel fitted with two pen/pencil holders, two pockets, with hook-and-loop flap closure designed for
3 1/2" computer disks or other small articles, a pocket for business cards, and a zippered utility
security pocket 10" x 5 1/2", with optional fixed or removable binders and exterior sides fitted with
open pocket measuring the full size, height and width of the side of the case, and “leather” padded
carrying handle fitted to the exterior spine) with HQ 965569 (Aug. 12, 2002) (classifying under
subheading 4820.10.2020 a zippered pad folio measuring 8 1/2" x 11" imported with note pad
inserted into an inside pocket on the right hand interior and left interior side containing various
pockets designed to hold pens, pencils, credit cards, loose papers and the like). See also HQ 956940
(Nov. 25, 1994) (reclassifying under subheading 4820.10.2020 two types of pad folios described as
“portfolios” 13 1/2" x 10" x 1", with outer surface of bonded leather or man-made vinyl coskin,
secured by zipper closure, with exterior full-wall flat pocket, containing 8 1/2" x 11" note pad in slot
of one interior wall, pen holder fixed at the spine, opposite interior wall including pocket with
tapered accordion style gusset, a zippered pocket, two open pockets, identification card holder, and
five slots for holding business cards); HQ 962030 (May 13, 1999) (leather bifold containers
measuring 13 1/2" x 10" x 1" in the closed position, zippered on three sides, exterior front featuring
one full-length flat pocket, containing a lined writing pad 11 3/4" x 8 1/2", with cardboard backing
slotted into right interior side, left interior side featuring a full-length gusset pocket with limited
expansion, a full-length zippered flat pocket, an 8" flat pocket, a 4" flat pocket, a 3" flat pocket, four
flat slots for business or credit cards, one pen holder sewn onto the interior spine, and one small solar
powered calculator placed in a fitted slot, reclassified under subheading 4820.10.2020).
Court No. 99-09-00603 Page 4
President and General Merchandise Manager for Office Depot. The government presented the
testimony of Customs National Import Specialists Carl Abramowitz and Kevin Gorman.
Mr. Shor stated that Avenues is in the business of designing, developing, and distributing
business articles and accessories (such as business cases), executive accessories (such as portfolios),
and technology-related accessories (such as notebook computer cases) which are contract-
manufactured overseas. Avenues sells primarily to U.S. national chain office supply stores such as
Office Depot, Staples and Office Max, with some sales to or through “warehouse clubs.” Tr. 9-11.
He explained that “pad folios” are not briefcases, which are cases designed to carry various business-
related as well as personal articles (Tr. 13-14, 70, 97, 133-134, 139), nor are they attache cases,
which are hard-sided rectangular cases (Tr. 17). He described them as “covers” and “carriers”
designed to hold and organize paper products and flats such as cards, envelopes, photographs, file
folders, thin catalogues, et cetera, capable of being fit within the pad folio’s pockets and sleeves.
He further explained that the various pad folio styles evolved to fit various presentation and business
interaction needs.
Mr. Shor also averred that the pad folio at bar was specifically designed as an organizational
aid for the taking of notes. More precisely, he stated that the article was designed to allow the user
to organize and interact with matter bound by the pad folio, e.g., catalogue sheets, price lists, et
cetera, by using the three ring binder which allows the user to bind, store, or hold paper from the
included three-hole memo pad and other three-holed presentations. Tr. 26-29. Mr. Shor explained
that the inside sleeve or pocket took six months of design testing to arrive at the desired size, i.e.,
one that could comfortably hold a standard office folder. Tr. 24, 28. He further stated that the outer
Court No. 99-09-00603 Page 5
material adds durability, protects the cardboard cover, is an important selling feature, and increases
the intended thickness of the article at bar to a maximum of only 1 1/2", but the inside capacity is
a maximum of 1". Tr. 33-34, 74-75. In view of its dimensions, Mr. Shor averred that pad folios may
be, and often are, placed inside briefcases, along with other business and personal items carried by
such cases. Tr. 18, 24-27, 39-40, 100-101, 109, 140. Further, Mr. Shor stated the presence of the
handle on the pad folio at bar is merely a “gimmick” and does not change its intended purpose or
use, although it imparts to the product the appearance of a light business case. Tr. 31-33, 96, 106.
Thus, Avenues contends the articles are akin to “portfolios,” i.e., flat cases designed and intended
to hold papers. Tr. 74-75, 194-195.
The government introduced the following lexicographic definitions of the term “briefcase”
at trial: (1) “A portable rectangular case used for carrying books or papers,” American Heritage
Dictionary of the English Language (2nd col. ed 1982); (2) “A flat, flexible case for carrying papers
or books,” Webster’s Ninth New Collegiate Dictionary (1984); (3) “A flat rectangular case for
carrying documents,” The Oxford Modern English Dictionary (2d ed. 1999). The government argues
that imported articles satisfy the lexicographic definitions of “briefcase,” are a form of briefcase, and
are ejusdem generis with the heading 4202 items “trunks, suitcases, vanity cases, attache cases, and
school satchels.” The government therefore argues that the articles are prima facie classifiable in
heading 4202 and are expressly provided for under subheading 4202.12.20 because they have an
outer surface of plastic.
Emphasizing the “container” aspects of the pad folios at bar, the government introduced
evidence on the marketing of pad folios as business travel goods. Staples’ website identifies a
Court No. 99-09-00603 Page 6
number of subcategories within the general class of goods referred to as “office supplies.” These
include “briefcases and travel” and “binders and binder accessories,” for which Staples uses different
buyers. Staples’ binders-and-binder-accessories buyer also purchases paper report covers, indexes
and sheet protectors. At the time of trial, the government submitted the fact that pad folios are found
on Staples’ website under “briefcases and travel,” whereas “binders and binder accessories” lists
inter alia “presentation binders,” “reference binders,” storage binders,” and “binder
accessories/specialty binders” but not pad folios. Similarly, the government noted, Office Depot’s
website lists pad folios under the subcategory of “business cases” and it, too, does not list pad folios
in its “binders & accessories” subcategory.5
Regarding the pad folio’s use, Avenues argues that the designer’s intention controls
classification, whereas the government’s position is that consumers in fact use them however they
wish. At trial, counsel for the government removed a variety of personal objects from a pad folio
similar to the articles at bar in order to demonstrate that they are capable of containing and in fact
are used to carry non-paper personal and business objects. Avenues describes the government’s
demonstration as merely theatric and not indicative of what the article was intended for.
II
On a challenge to Customs’ classification of imported merchandise, 28 U.S.C. § 2639presumes the correctness of the government’s classification. A plaintiff must therefore overcome
such presumption as part of its prima facie classification claim, although that may be achieved if it
5
Office Depot identifies “business cases” and “binders & accessories” within the general
class of “office supplies” and internally refers to pad folios among the “leather goods” (whether or
not they are made of or covered with leather) that include luggage, briefcases, and travel accessories.
A single buyer is responsible for Office Depot’s leather goods.
Court No. 99-09-00603 Page 7
persuades that its own alternative is the “better classification.” See Jarvis Clark Co. v. United States,
733 F.2d 873, 878 (Fed. Cir. 1984) (“whether the court remands, conducts its own hearing, or simply
examines the law and tariff schedules on its own initiative, it is required to reach a correct result”).
Determining the proper customs classification involves, first, determining the parameters of
any disputed tariff terms in the relevant tariff provisions, and then determining whether the
merchandise comes within the description of relevant tariff terms, as properly construed. See Sports
Graphics, Inc. v. United States, 24 F.3d 1390, 1391 (Fed. Cir. 1994). The first inquiry is a question
of law; the second, a question of fact. Id.The legal text of the HTSUS includes the General Rules of Interpretation (GRI), additional
U.S. rules of interpretation, general notes, and section and chapter notes. These are codified by 19
U.S.C. § 1202. See Libas, Ltd. v. United States, 193 F.3d 1361, 1364 (Fed. Cir. 1999). The GRI
must be applied in numerical order. See, e.g., General Electric Co. v. United States, 247 F.3d 1231,
1234 (Fed. Cir. 2001); North Am. Processing Co. v. United States, 236 F.3d 695, 698 (Fed. Cir.
2001). If the proper classification is achieved through application of a particular GRI, the Court need
not consider successive GRIs. In contrast, the explanatory notes accompanying the HTSUS6 are not
binding, but they may be consulted for guidance and are generally indicative of the proper
interpretation of the various HTSUS provisions. See JVC Co. of America v. United States, 234 F.3d
1348, 1352 (Fed. Cir. 2000).
GRI 1 states that in order to determine a product’s proper classification, one must first look
to the heading and section or chapter notes, and then inquire as to the relevant subheading. See
6
See Harmonized Commodities Description and Coding System Explanatory Notes (3rd ed.,
World Customs Organization 2002) (“EN”).
Court No. 99-09-00603 Page 8
Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed. Cir. 1998). Towards that end,
terms used in the tariff provisions are given their “common and popular meaning.” Medline Indus.
Inc. v. United States, 62 F.3d. 1407, 1409 (Fed. Cir. 1995). A court may therefore rely upon its “own
understanding, dictionaries and other reliable sources” in order to understand terms used. Id.GRI 2(b) states that reference to a material or substance is to be interpreted to include
reference to goods consisting wholly or partly of such material or substance.
GRI 3 governs the classification of goods, including composite goods, which are arguably
classifiable under two or more headings.7 GRI 3(a) codifies the judicial doctrine of relative
specificity, GRI 3(b) reflects the “essential character” test, and GRI 3(c), the default rule, provides
for classification by “numerical order.” The explanatory note reiterates that GRI 3’s subsections
“operate in the order in which they are set out in the Rule,” such that “Rule 3(b) operates only if Rule
3(a) fails in classification, and if both Rules 3(a) and (b) fail, Rule 3(c) will apply.” EN, vol. 1, GR
7
GRI 3 provides:
(a) The heading which provides the most specific description shall be
preferred to headings providing a more general description. However, when
two or more headings each refer to part only of the materials or substances
contained in mixed or composite goods[,] . . . those headings are to be
regarded as equally specific in relation to those goods, even if one of them
gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or
made up of different components, and goods put up in sets for retail sale,
which cannot be classified by reference to 3(a), shall be classified as if they
consisted of the material or component which gives them their essential
character, insofar as this criterion is applicable.
(c) When goods cannot be classified by reference to 3(a) or 3(b), they
shall be classified under the heading which occurs last in numerical order
among those which equally merit consideration.
Court No. 99-09-00603 Page 9
3 (I), p. 3. If resort to GRI 3(a) is necessary, then an imported article is to be classified under “the
provision with requirements that are more difficult to satisfy and that describe the article with the
greatest degree of accuracy and certainty.” Orlando Food Corp., supra, 140 F.3d at 1441. As with
all interpretive notes, the application of GRI 3(a) is subservient to any relevant section or prior
chapter notes. See GRI 1; Park B. Smith, Ltd. v. United States, 347 F.3d 922, 928 (Fed. Cir. 2003)
(referencing Baxter Healthcare Corp. of Puerto Rico v. United States, 182 F.3d 1333, 1337 (Fed.
Cir. 1999) and Orlando Food, supra, 140 F.3d at 1440).
In this matter, reference to GRI 1 alone does not resolve the question posed, since both of the
disputed headings, 4202 and 4820, are eo nomine provisions and their interpretation and application
to the article at bar is disputed. Eo nomine classification includes all forms of the named article. See
JVC Co. of America, Div. of JVC Corp. v. United States, 234 F.3d 1348 (Fed. Cir. 2000). Further,
since each heading follows a list of particular items with words of general inclusion, i.e., “similar
containers” and “similar articles”, it is necessary to consider classification ejusdem generis , which
is appropriate “if the imported merchandise shares the characteristics or purpose and does not have
a more specific primary purpose that is inconsistent with the listed exemplars.” Avenues in Leather,
supra, 178 F.3d 1241 (referencing Totes, Inc. v. United States, 69 F.3d 494, 498 (Fed. Cir. 1995).
Ejusdem generis requires consideration of the “specific primary purpose of the imported
merchandise” in light of the “common characteristics or unifying purpose of the listed exemplars in
a heading[.]” Avenues in Leather, supra, 178 F.3d at 1244-45. The “specific primary purpose”
equates to the predominant use of the imported merchandise. Len-Ron Mfg. Co. v. United States,
24 CIT 948, 118 F. Supp. 2d 1266 (2000). Although additional but not inconsistent characteristics
Court No. 99-09-00603 Page 10
or purposes do not defeat classification under ejusdem generis,8 an article’s possible use is
insufficient to decide its predominate use. Cf. Len-Ron Mfg., supra, 24 CIT at 965, 118 F. Supp.2d
at 1282 (referencing Additional U.S. Rule of Interpretation 1). Thus, to determine an article’s
specific primary purpose, the Court must look to all the pertinent circumstances including the general
physical characteristics of the merchandise, the expectation of the ultimate purchasers, the channels,
class or kind of trade in which the merchandise moves, the environment of the sale, and the use of
the article. United States v. Carborundum Co., 536 F.2d 373, 377 (CCPA 1976).
As the appellate decision on the instant matter observed, the essential characteristics of the
listed exemplars in heading 4202 are to organize, store, protect, and carry (and are stare decisis).
Totes, Inc. v. United States, 18 CIT 919, 865 F. Supp. 867 (1994), aff’d 69 F.3d 495 (Fed. Cir. 1995).
See Avenues in Leather, supra, 317 F.3d at 1404. According to the government’s line of reasoning,
all containers with heading 4202 characteristics are classifiable ejusdem generis with the named
exemplars of heading 4202 even if not expressly named, because the only limitation in the case law
on any such article being classifiable prima facie under heading 4202 is that it be a “container”
either expressly identified or “similar” to the expressly identified containers. See, e.g., Totes, Inc.
v. United States, 18 CIT 919, 865 F. Supp. 867 (1994), aff’d, 69 F.3d 494 (1995). But, all cases or
containers may be said to have the 4202 characteristics of organizing, storing, protecting, and
carrying. And yet, not all cases or containers which possess 4202 characteristics are classifiable
under heading 4202. For example, a “portfolio”9 may be said to serve organizing, storing, protecting,
8
See Avenues in Leather, supra, 178 F.3d at 1244-45 (referencing Totes, 69 F.3d at 498).
9
The Court takes judicial notice of the following definitions of “portfolio”: (1) “A portable
(continued...)
Court No. 99-09-00603 Page 11
and porting purposes, thus exhibiting heading 4202 characteristics or functions, but “portfolio” is
mentioned as classifiable under heading 4820, according to the explanatory note to that chapter.10
Hence, the government overstates the claim for heading 4202 classification.
In SGI Inc. v. United States, 122 F.3d 1468, 1472 (Fed. Cir. 1997), for example, the appellate
panel found that certain portable soft-sided vinyl insulated coolers for storing food or beverages were
more appropriately classified as “other household articles” under 3924.1050, HTSUS
notwithstanding that the articles unquestionably possessed the 4202 characteristics of “organizing,
storing, protecting, and carrying.” The case of Dolly, Inc. v. United States, 27 CIT __ n.2, 293 F.
Supp. 1340 n.2 (2003) noted that Presidential Proclamation 7515, 66 Fed. Reg. 66,549, 66,619 (Dec.
18, 2001) added the term “insulated food and beverage bags” to the text of Heading 4202. The
change does not affect the analysis undertaken in SGI, however, and Dolly considered insulated
“mini bags” intended for storing food and beverage to possess a “different purpose” than merely
“organizing, storing, protecting, and carrying” various items.
In determining that those articles were properly classified under heading 3924, Dolly
confronted Note 2(ij) to Chapter 39, which chapter does not cover “. . . trunks, suitcases, handbags
9
(...continued)
case for holding material, such as loose papers, photographs, or drawings[,]” The American Heritage
Dictionary of the English Language, (4th ed. 2000); (2) “A receptacle or case for keeping loose
sheets of paper, prints, drawings, maps, music, or the like; usually in the form of a large book-cover,
and sometimes having sheets of paper fixed in it, between which specimens are placed[,]” The
Oxford Modern English Dictionary (2d ed. 1999); (3) “A portable case for keeping, usually without
folding, loose papers, sheets, drawings, or the like[,]” Webster’s New International Dictionary (2d
ed. 1956). Quite literally, then, a portfolio is a “looseleaf carrier.”
10
Subpart (3) thereof states that heading 4820 covers binders designed for holding loose
sheets, magazines or the like (e.g. clip binders, spring binders, ring binders), folders, file covers, files
(other than box files) and, significantly, portfolios. See EN, vol. 2, sec. X, p. 895.
Court No. 99-09-00603 Page 12
or other containers of heading 4202.” This Court confronts a similar situation in note 1(h) to chapter
48, which states that chapter 48 does not cover “[a]rticles of heading 4202 (for example, travel
goods).”11 In light of the language of that note, the government argues that classification under
chapter 48 is precluded by operation of law.
The government’s interpretation is incorrect for at least two reasons. First, the argument does
not address the various Customs rulings which describe pad folios similar to the pad folios at bar and
which Customs classified under heading 4820 and not heading 4202. See, e.g., note 4, supra.
Second, the explanatory note to heading 4202 parallels the exclusionary language of chapter 48’s
note 1(h) by explaining that heading 4202 does not cover
[a]rticles which, although they may have the character of containers, are not
similar to those enumerated in the heading, for example, book covers and
reading jackets, file-covers, document-jackets, . . . etc., and which are wholly
or mainly covered with leather, sheeting of plastics, etc. Such articles fall in
heading 42.05 if made of (or covered with) leather or composition leather,
and in other Chapters if made of (or covered with) other materials.
EN, vol. 2, sec. VIII, p. 792 (italics added). Since file covers, document jackets and the like are
specifically “not similar to” the exemplars listed under heading 4202 but instead are covered under
heading 4820,12 the parties propound inapposite classifications. The article at bar is classifiable
under either heading 4202 or heading 4820, but it is not classifiable prima facie under both.
Therefore, consideration of relative specificity pursuant to GRI 3(a) is illogical. Cf E.T. Horn v.
United States, 945 F.2d 1540 (1991) (relative specificity inapplicable in inapposite TSUS contest
between provision for chemicals and provision for waste). Else, the claimed headings must be
11
Note 1(h) was numbered 1(g) at the time it was considered in Avenues I.
12
See supra, note 10.
Court No. 99-09-00603 Page 13
regarded as equally specific, since neither may be said, facially, to provide the “most specific
description” of the article at bar. See GRI 3(a). Hence, determining which of the two headings most
accurately describes the article at bar requires consideration of GRI 3(b), which inquires whether
articles are classifiable as mixtures or composite goods. If so, GRI 3(b) requires that articles “be
classified as if they consisted of the material or component which gives them their essential
character, insofar as this criterion is applicable.”
The government argues that heading 4820 articles must, at a minimum, constitute “articles
of stationary, of paper or paperboard” in accordance with chapter 48. It contends that there was
insufficient testimony by Avenues on this issue, since Mr. Shor was unable to break down the
Presentation Calcu-Folio’s constituent materials on a cost, weight, or surface area basis in order to
establish that the article is “of paper or paperboard” or to offer testimony that such material
provide(s) the article with its “essential character.” Rather, the government argues, Mr. Shor
confirmed that the non-paper materials, particularly the vinyl, served durability (protective) and
marketability (aesthetic) purposes which dominate whatever “of paper or paperboard” may be
embodied in the pad folio. The government further argues that the binder mechanism does not
provide the imported articles with their essential character or evince the article’s primary purpose
because it is only one of many physical attributes which include five different-size pockets (not
including the memo pad slot), a zipper closure, pen loops, a handle and a calculator. The
government points out that Avenues’ witnesses all agreed that business cases such as briefcases and
attache cases are used to hold a variety of paper and non-paper items, and it emphasizes that the
article at bar was designed to carry a variety of non-paper items including a calculator, CDs,
Court No. 99-09-00603 Page 14
computer diskettes, and pens. The government contends that the product is in fact versatile and
capable of and used by consumers for simultaneously organizing, storing, protecting and carrying
any item that fits within it including but not limited to paper matter and the like.13 The government
further argues that Otniel Shor conceded at trial that the articles in issue are not “binders” and it
points out that several of Avenues’ witnesses conceded that a consumer may use the product in
whatever manner they choose. Thus, the government argues, the essential character or primary
purpose or of the pad folios at bar is not different from the named exemplars of heading 4202.
In considering GRI 3(b), some support for the government’s position is found in explanatory
note VIII thereto, which provides that the relevant article’s “bulk, quantity, weight or value” is a
factor in essential character analysis. See EN, vol. 1, GR 3, p. 4. However, “essential character” is
not determined solely by reference to the material’s or component’s constituent size, amount, weight,
or monetary value in the composition of the product, it is imparted from the context of the imported
article taken as a whole. See id. Cf. Pomeroy Collection Ltd. v. United States, 336 F.3d 1370, 1372-
73 (Fed. Cir. 2003) (observing that “essential character” does not differ from the “whole character”
analysis of heading 7013 or the explanatory note thereto; see EN, vol. 3, sec. XIII, pp. 1167-68).
Indeed, the government’s arguments implicitly acknowledge that such consideration, in turn, must
depend upon the article’s specific primary purpose, or use. See Avenues I, supra, 178 F.2d at 1245;
SGI, supra, 122 F.3d at 1471-1472; Sports Graphics Inc., supra, 24 F.3d at 1393 & 1394. Cf. Len-
13
As above indicated, the government demonstrated its point at trial by producing from one
pad folio similar to the one at bar a magazine, two compact discs (in their cases), a CD player,
several pens, a portable digital assistant, an address book, a wallet, a cell phone, keys, employee
identification, a business card holder, a subway/bus card, breathmints, trial exhibits, and aspirin
(albeit without offering any to the sitting judge). See Tr. at 84-87. Otniel Shor confirmed that a
business person would normally carry any or all of these items in a business case.
Court No. 99-09-00603 Page 15
Ron Mfg., supra, 24 CIT 948, 118 F. Supp. 2d 1266 (specific primary purpose is the predominant
use of the imported merchandise); Orlando Food Corp., supra, 140 F.3d at 1441 (“a product
described by both a use provision and an eo nomine provision is generally more specifically provided
for under the use provision”).14
When asked how he distinguished between pad folios for purposes of classification under
either heading 4202 or heading 4820, the government’s witness stated that he looked to see if the
article “appeared to be a travel good.” This is consistent with the description of chapter 42, which
states that it covers “travel goods.” On the other hand, notwithstanding the government’s evidence
on the marketing of pad folios on office supply companies’ internet websites, Avenues’ industry
witnesses all agreed that the articles in issue were not of a type of product similar to travel bags,
cases or carriers. Rather, in their experience, the subject articles are sold and marketed within a class
or kind of goods marketed, simply, as “pad folios.” Further, Additional U.S. Note 1 to chapter 42
states: “For the purpose of heading 4202, the expression ‘travel, sports and similar bags’ means
goods, other than those falling in subheading 4202.11 through 4202.39, of a kind designed for
carrying clothing and other personal effects during travel, including backpacks and shopping bags
of this heading, but does not include binocular cases, camera cases, musical instrument cases, bottle
cases and similar containers.” (Original highlighting omitted.)
Mr. Shor indicated at trial that the pad folio at bar was designed only to accommodate
interactive interoffice “travel.” See Tr. 33. It is, however, readily apparent that the articles at bar
14
Avenues further avers that classification of the metal three-ring binder mechanism itself
is governed by heading 4820. If that is so, then in this instance “of paper or paperboard” is to be
interpreted as “pertaining to” paper or paperboard, not merely “manufactured of” paper or
paperboard.
Court No. 99-09-00603 Page 16
arguably evince certain heading 4202 characteristics due to the articles’ organizational features, e.g.,
the interior and exterior pockets, which are features commonly found on or in briefcases and attache
cases. Indeed, Avenues’ core contention is that the specific primary purpose of the imported
merchandise is to function as “an organizational aid.” Avenues argues, nonetheless, that
classification under heading 4202 is inappropriate because such organizational purpose is limited
to paper and similarly flat visual matter, and it emphasizes that, in accordance with Totes, Avenues
I, SGI and Dolly, in order for articles to be classifiable in heading 4202 the relevant articles must
“serve[ ] the essential purposes of ‘organization, holding, storage and protection of articles[,]’” and
it contends that the essential purpose of the pad folios at bar should be obvious. Pl’s Br. at 7
Considering the evidence, the Court finds as follows. The parties appear to agree that the
imported article’s calculator is merely incidental to its primary purpose and therefore does not impact
classification. Because the article’s pockets are essentially flat, the article is suitable only for holding
loose papers, files and other flat items such as business cards, floppy discs, et cetera. Its three ring
binder is obviously for binding and organizing three-hole flat items such as paper from the included
three-hole memo pad and other three-holed presentations, and the article comfortably closes if the
metal binder is fully packed, or if the left-side pocket is fully packed, but not if both are fully packed
at the same time. See Pl.’s Ex. 4; Tr. 33-34. In addition to a few business cards, a few standard #10
(9.5" x 4.35") or smaller envelopes, one 3" x 5" computer floppy disk, and one standard 8.5" x 11"
cardboard-backed pad of paper, the pad folio at bar is capable of organizing, protecting, storing and
carrying at most either about a third of a ream of standard 8.5" x 11" three-hole punched paper or
up to 1" of flat items such as standard 9.5" x 11.75" file folders in the interior left-side pocket. Thus,
in view of the article’s pockets and limited storage space, the article’s interior is not sufficiently large
Court No. 99-09-00603 Page 17
or durable enough to hold books, thick newspapers or other personal items for any extended period
without damaging itself (or them). Moreover, the presence of the metal binder at the spine impedes
the organization, protection, storage and carrying of non-flat items which are not capable of being
affixed to it. The Court also notes that the interior pocket of one of the samples deformed over time
from placement of pens in the enclosed pen loops, which the Court takes as some confirmation of
Mr. Shor’s testimony and indication of the article’s protection and storage capabilities. See id.
Mr. Shor essentially testified that the design of the merchandise was with office or business
interactivity in mind, i.e., the pad folio lays flat when unzipped, assists the presentment or
organization of flat items such as three-hole punched paper, catalogues, transparent sleeves, et
cetera, and was not designed to accommodate various personal objects. See, e.g., Tr. 26-29. The
Court finds Mr. Shor’s testimony credible. Although the government defends its classification on
the basis of “actual” (albeit perceived anecdotal) use, the Court considers that the testimony of the
product’s designer of its intended use is more persuasive in this instance. See Mast Industries, Inc.
v. United States, 9 CIT 549 (1985); Novelty Import Co. v. United States, C.D. 3462, 60 Cust. Ct. 574,
285 F. Supp. 160 (1968). Cf. Primal Lite, Inc. v. United States, 182 F.3d 1362 (Fed. Cir. 1999)
(discussing principle use versus actual use in the context of Additional U.S. Rule of Interpretation
1). Avenues puts it succinctly:
The test of design is not what the article CAN hold, but what it is intended to
hold. A family automobile is designed to hold five passengers. The fact that
you may squeeze nine persons into it does not turn it into an automobile for
nine passengers.
Pl.’s Br. at 11 (uppercase in original).
The earlier opinion of this Court on the classification of substantially similar articles
considered the significance of the binder mechanism and the memo pad to the articles’ classification
Court No. 99-09-00603 Page 18
but concluded that the articles’ “other significant attributes” made them “appear to be similar in use
to a briefcase.” See Avenues, supra, 11 F. Supp. 2d at 724. The Court observed that “persons using
briefcases commonly carry a memo pad inside[,]” that the three ring binder assembly is capable of
being used for any purpose, and that the binder mechanism “in no way prevents or impedes other
papers or articles from being carried in the space remaining in the main part of the case without
being fastened in the binder.” Id. On appeal, the CAFC picked up the refrain, and “readily
concur[red]” with the lower decision’s conclusion “that the folios’ large size, numerous and sizable
pockets, and external handles speak strongly of the ‘organizing, storing, protecting, and carrying’
characteristics of the imported merchandise . . . .” 178 F.3d at 1245. Although Avenues argued that
the proper consideration should have been the articles’ internal features (the three-ring binder and
the notepad), the CAFC was unpersuaded, concluding that the “‘organizational aid’ purpose that
Avenues asserts, as well as the physical characteristics of the internal binder and notepad, are not
inconsistent with the essential characteristics of the listed exemplars in Heading 4202.” Id.As noted in the earlier decision on the instant matter, Avenues argues that those opinions
relied upon findings of fact that were not in evidence on the motion for summary judgment. Whether
that is an accurate characterization of the result, in view of those courts’ independent consideration
of available evidence thereat, Avenues correctly points out that JVC Co. of America v. United States,
234 F.3d 1348, 1352 (Fed. Cir. 2000) clarified that judicial doctrine is subservient to the statutory
rules of interpretation in the HTSUS. Therefore, to the extent Avenues I relied on the “more than”
doctrine to decide the case, the decisions are distinguishable from the instant matter. And, since the
earlier appellate decision on this matter declared that the only matter of law from Avenues I with
stare decisis impact is that the essential characteristics of the listed exemplars in heading 4202 are
Court No. 99-09-00603 Page 19
to “organize, store, protect, and carry” (albeit as a result of Totes, Inc. v. United States, 69 F.3d 495(Fed. Cir. 1995)), 317 F.3d at 1404,15 this Court is free to observe that the presence of the
memorandum pad, the three-ring binder, and the paperboard core and spine clearly support finding
that the essential character of the pad folio at bar is a heading 4820 article of stationary, “of paper
or paperboard.”
Based upon the evidence and testimony, the article’s specific primary purpose is to facilitate
the taking of notes as well as aid the organization of print and other visual flat materials capable of
being bound by the article’s metal binder or fit within its pockets, as illustrated by Plaintiff’s Exhibit
5. See Tr. 36. The article therefore has the essential character of a binder or a memorandum pad
under heading 4820, HTSUS, in accordance with GRI 3(b). The article’s “4202” features do not
impart the essential characteristics of a “4202” container. Rather, such features assist or complement
the article’s predominant purpose as an article of stationary. They are therefore subservient to the
article’s essential character.
The Court further agrees with Avenues that either subheading (binders or memorandum pads)
accurately describes the article, and that the testimony of the witnesses appears to favor the role of
the memorandum pad. Classification of the article is therefore to be in accordance with Customs’
apparent policy of not classifying folios imported with memorandum pads under the provision for
binders, 4820.30.00, HTSUS.
15
Cf. also Totes, Inc. v. United States, 18 CIT 919, 865 F. Supp. 867 (1994). At least, the
applicability of stare decisis to customs classification matters was reasonably clear following United
States v. Stone & Downer Co., 274 U.S. 225, 47 S. Ct. 616 (1927). Whether that is still the case,
cf. Avenues in Leather, supra, 317 F.3d 1399, with Schott Optical Glass, Inc. v. United States, 468
F. Supp. 1318 (Cust. Ct. 1979), aff'd, 612 F.2d 1283 (CCPA 1979), Schott Optical Glass, Inc. v.
United States, 7 CIT 36, 587 F. Supp. 69, 71 (1984), rev’d and remanded, 750 F.2d 62 (Fed. Cir.
1984), and decision on remand, 11 CIT 899 678 F. Supp. 882 (1987), aff’d 862 F.2d 866 (1989).
Court No. 99-09-00603 Page 20
CONCLUSION
For the foregoing reasons, the plaintiff’s importations of Presentation Calcu-Folios are to be
classified under subheading 4820.10.2020, HTSUS. Judgment will enter accordingly.
/s/ R. Kenton Musgrave
R. KENTON MUSGRAVE, JUDGE
Dated: April 26, 2004
New York, New York