CIT Finds for Importer in Dispute Over Classification of Bottles Used for Diffuser Air Fresheners
In a case on the tariff classification of Latitudes International Fragrance’s diffuser bottles, the Court of International Trade ruled July 17 that the product is a bottle for the conveyance of scented oil, rather than decorative glassware. Latitudes, a U.S. importer doing business as Maesa Home, argued the bottles are simple vessels bought for the scented oil and reeds they contain. The court agreed, finding the bottles’ decorative function was secondary.
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The diffuser bottles were imported empty, but were later assembled by Latitudes into diffuser kits, which included the bottle filled with fragranced diffuser oil, a stopper inserted in the bottle’s top, diffuser reeds, instructions, and retail packaging. Latitudes sold the kits to retailers like Target, which in turn marketed them to consumers as “scented diffusers.” Consumers use the product by opening the oil-filled bottle and inserting the diffuser reeds, which allows the oil to be drawn up through the reeds and the scent to be diffused. Target sold Latitudes’ diffuser kits under the “Smith & Hawken” label for $18. Latitudes does not sell oil refills or replacement diffuser reeds.
CBP liquidated the reeds under Harmonized Tariff Schedule subheading 7013.99.50 as glassware for indoor decoration (“glassware of a kind use for table, kitchen, toilet, office, indoor decoration or similar purposes (other than that of heading 7010 or 7018): Other glassware: Other: Other: Other: Valued over $0.30 but not over $3 each”), dutiable at 30 percent. Latitudes argued that the diffuser bottles are instead classifiable under subheading 7010.90.50 as bottles for the conveyance of oils (“bottles … and other containers, of glass, of a kind used for the conveyance or packing of goods; preserving bottles of glass; stoppers, lids, and other closures, of glass … other containers (with or without their closures)”, which is a duty free provision.
The court, Latitudes, and CBP agreed that both of the proposed classifications are principal use provisions. So the correct subheading is determined by the “principal use” of the “class or kind of merchandise” that includes the diffuser bottles. CIT also noted the explanatory notes to headings 7010 and 7013. The examples in the explanatory notes for CBP’s preferred heading 7010 include vases, ornalmenal fruit bowls, statuettes, aquaria, and incense burnders. The explanatory notes for heading 7013, on the other hand, reference bottles used as containers for oils and perfurmery preparations, and say that such containers remain under heading 7013 even if decorated.
Latituides argued that the principal use of the diffuser bottles is to convey the fragranced oil, so they should be classified under heading 7010. Consumers buy the product for the fragranced oil in the bottle, and not the bottle itself, Latitudes said. And the bottle is normally discarded after use, and is not marketed for reuse. CBP said that the diffuser bottle does more than convey oil, though. Instead, the bottle’s pleasing design and use as an attractive way to make a space smell good means the bottles are similar to vases, and classifiable under heading 7013.
For the court, the decisive factor was the bottle's stopper. "Where an article is designed with a finish capable of closure, that fact is probative as to the article's principal use as a container for the conveyance or packing of goods," said the court, citing its February Dependable Products decision (see 13022104). Another factor that pointed towards the principal use of the bottles being conveyance of oil was the price, CIT said. While the set costs $18 at retail, the value of the bottle is only $0.30 to $0.50. That means the customer is likely purchasing the bottles to consume the oil inside, rather than to display the bottles as an indoor decoration.
(Latitudes Int'l Fragrance, Inc. v. United States, Slip Op. 13-88, dated 07/17/13, Judge Gordon)
(Attorneys: Michael Grace of Grace & Grace for plaintiff Latitudes International Fragrance, Inc.; Edward Kenny for defendant U.S. government)