Latitudes International Fragrance, Inc. v. United States
2013 WL 3801951
Ct. Intl. Trade2013Background
- Plaintiff Latitudes imported empty wavy glass diffuser bottles (≈9.67 cm × 6.96 cm) and assembled them in the U.S. into finished diffuser kits (bottle + fragranced oil + reeds + stopper + retail packaging) sold to retailers (e.g., Target) for about $18 per kit.
- Customs classified the imported bottles as decorative glassware under HTSUS 7013.99.50 (30% duty); Latitudes protested, arguing they are bottles/containers for conveyance of goods (fragranced oil) and duty-free under HTSUS 7010.90.50.
- The bottles were imported empty, not sold empty at retail, designed to take a stopper, and intended to dispense fragranced oil for 60–90 days; Latitudes did not market refills.
- The court applied the General Rules of Interpretation (GRIs), the Additional U.S. Rules of Interpretation (ARI 1(a) — principal use), and the seven Carborundum factors to determine the class or kind (commercial fungibility) and principal use.
- After examining the physical samples and record evidence (price breakdown, channels of trade, packaging/emphasis on oil), the court found the bottles fit EN 70.10(A) (bottles designed for closure and conveyance of oils) and ruled for Plaintiff.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper HTSUS classification — 7010 (containers for conveyance) vs 7013 (decorative glassware) | Bottles are commercially fungible with containers used to convey oils; principal use is to convey fragranced oil (oil — the valuable component); bottles designed for a stopper; sold only as filled kits | Bottles are decorative, used to fragrance/display in homes/offices for extended periods; similar to vases previously classified under 7013 | Held for Plaintiff: bottles are classifiable under HTSUS 7010.90.50 as containers for conveyance of fragranced oil (principal use conveys oil) |
| Principal-use / commercial fungibility analysis (ARI 1(a) & Carborundum factors) | Carborundum factors (physical characteristics, purchaser expectations, channels, environment of sale, economic practicality) show principal use is conveyance of oil | Counters that pleasing design, possible refills, and some market reuse indicate decorative principal use | Court applied factors: physical characteristics (designed for closure) and low bottle value relative to kit supported 7010; other factors (channels, environment, economic practicality) favored conveyance use |
| Deference to Customs' HQ ruling (Skidmore/Mead) | Customs' rulings not controlling if not persuasive; plaintiff urged independent interpretation | Government argued HQ H097637 was thorough and persuasive, warranting Skidmore deference | Court found the HQ ruling unpersuasive and not entitled to deference; Customs focused improperly on "jars" and relied on nonanalogue rulings |
| Role of packaging/retail presentation in classification | Packaging and retail emphasis on fragranced oil (not bottle) shows bottle is a conveyance container, not principally decorative | Government relied on marketplace examples (refill kits) to argue reuse and decorative use | Court found packaging, channels, and price allocation showed the oil, not the bottle, drove consumer purchase; thus packaging supported 7010 classification |
Key Cases Cited
- Mead Corp. v. United States, 533 U.S. 218 (agency interpretations entitled to respect under Skidmore when persuasive)
- Skidmore v. Swift & Co., 323 U.S. 134 (weight of agency interpretation depends on persuasiveness)
- Warner-Lambert Co. v. United States, 407 F.3d 1207 (court independently construes HTSUS terms)
- Len-Ron Mfg. Co. v. United States, 334 F.3d 1304 (use of lexicographic/scientific authorities to construe tariff terms)
- E.T. Horn Co. v. United States, 367 F.3d 1326 (Explanatory Notes provide interpretive guidance though not controlling)
- CamelBak Prods., LLC v. United States, 649 F.3d 1361 (application of GRI 1 / classification by description)
- United States v. Carborundum Co., 536 F.2d 373 (Carborundum factors for commercial fungibility)
- Aromont USA Inc. v. United States, 671 F.3d 1310 (principal use is the use that exceeds any other use)