MEMORANDUM
FOR: |
Joseph
A. Spetrini
Deputy Assistant Secretary
Enforcement Group III |
FROM: |
Barbara
Tillman
Director
Enforcement Group III, Office 7 |
SUBJECT: |
Final
Scope Ruling - Antidumping Duty Order on Petroleum Wax Candles From the
People’s Republic of China (A-570-504); DJP Design, Inc. ("DJP") |
SUMMARY
On April 30, 1999, DJP Design,
Inc. ("DJP") requested that the Department of Commerce ("the Department") issue
a scope ruling on whether its metal canister containing a scented candle ("gold
metal canister with accompanying candles") is covered by the antidumping duty
order on petroleum wax candles from the People’s Republic of China ("PRC").
The National Candle Association filed comments on DJP’s request on May 25, 1999.
In accordance with 19 CFR 351.225(k)(l), we recommend that the Department determine
that DJP’s gold metal canister with accompanying candles is not covered by the
scope of the antidumping duty order.
BACKGROUND
The regulations governing
the Department’s antidumping scope determinations are found at 19 CFR § 351.225.
On matters concerning the scope of an antidumping duty order, the Department
first examines the descriptions of the merchandise contained in the petition,
the determinations of the Secretary and the International Trade Commission ("ITC"),
the initial investigation, and the antidumping duty order. This determination
may take place with or without a formal inquiry. If the Department determines
that these descriptions are dispositive of the matter, the Department will issue
a final scope ruling as to whether or not the subject merchandise is covered
by the order. See 19 CFR § 351.225(d).
Conversely, where the descriptions
of the merchandise are not dispositive, the Department will consider the five
additional factors set forth at 19 CFR § 351.225(k)(2). These criteria are:
i) the physical characteristics of the merchandise; ii) the expectations of
the ultimate purchasers; iii)the ultimate use of the product; iv) the channels
of trade in which the product is sold; and v) the manner in which the product
is advertised and displayed. The Department applies these criteria when it is
unclear whether the product which is the subject of the scope ruling fits within
the product descriptions contained in the petition, the determinations of the
Secretary and the ITC, the investigation, and the order. The determination as
to which analytical framework is most appropriate in any given scope inquiry
is made on a case-by-case basis after consideration of all evidence before the
Department.
In the instant case, the
Department has evaluated DJP’s request in accordance with 19 CFR §351.225(k)(l),
because the descriptions of the products contained in the petition, the final
determinations of the Secretary and the ITC, the initial investigation, and
the antidumping duty order are, in fact, dispositive.
Documents and parts thereof
from the underlying investigation deemed relevant by the Department to this
scope ruling were made part of the record of this determination and are referenced
herein. Documents that were not presented to the Department, or placed by it
on the record, do not constitute part of the administrative record for this
scope determination.
In its petition of September
4, 1985, the National Candle Association requested that the investigation cover:
[C]andles [which] are
made from petroleum wax and contain fiber or paper-cored wicks. They are sold
in the following shapes: tapers, spirals, and straight-sided dinner candles;
rounds, columns, pillars; votives; and various wax-filled containers. These
candles may be scented or unscented ... and are generally used by retail consumers
in the home or yard for decorative or lighting purposes.
Antidumping Petition, September
4, 1985 at 7.
The Department defined the
scope of the investigation in its notice of initiation. This scope language
carried forward without change through the preliminary and final determinations
of sales at less than fair value and the eventual antidumping duty order:
[C]ertain scented or unscented
petroleum wax candles made from petroleum wax and having fiber or paper-cored
wicks. They are sold in the following shapes: tapers, spirals, and straight-sided
dinner candles; rounds, columns, pillars, votives; and various wax-filled
containers.
Petroleum Wax Candles from
the People‘s Republic of China: Initiation of Antidumping Duty Investigation,
50 FR 39743 (September 30, 1985); see also Preliminary Determination of Sales
at Less Than Fair Value, 51 FR 6016 (February 19, 1986), Final Determination,
51 FR 25085 (July 10, 1986), and Antidumping Duty Order: Petroleum Wax Candles
from the People ‘s Republic of China 51 FR 30686 (August 28, 1986). The ITC
adopted a similar definition of the "like product’ subject to its determinations,
noting that the investigations did not include "birthday, birthday numeral and
figurine type candles." See Determinations of the Commission (Final), USITC
Publication 1888, August 1986, at 4, note 5, and A-2 ("ITC Determination").
Also of relevance to the
present scope inquiry is a notice issued to the United States Customs Service
in connection with a July 1987 scope determination, which states:
The Department of Commerce
has determined that certain novelty candles, such as Christmas novelty candles,
are not within the scope of the antidumping duty order on petroleum-wax candles
from the People’s Republic of China (PRC). Christmas novelty candies are candles
specially designed for use only in connection with the Christmas holiday season.
This use is clearly indicated by Christmas scenes and symbols depicted in
the candle design. Other novelty candles not within the scope of the order
include candies having scenes or symbols of other occasions (e.g., religious
holidays or special evens) depicted in their designs, figurine candies, and
candles shaped in the form of identifiable objects (e.g., animals or numerals).
CIE N-212/85, September
21, 1987; Letter from the Director, Office of Compliance, to Burditt, Bowles
& Radzius, Ltd., July 13, 1987.
Physical Characteristics
of the Product in Question
DJP described its gold metal
canister with accompanying candle as "a metal canister, measuring 2x2x1" with
a vanilla scented candle, packaged as a gratuitous item to complement retail
sales." The lid is embossed with the design of a ribbon so that the canister
with its lid on resembles a gift-wrapped box. The product is described in a
package insert as a "candle holder" that "is beautifully hand-crafted in 18k
gold plate and is packaged with a vanilla scented candle." This insert also
states that the container can be "easily converted to a beautiful keepsake by
carefully removing the wax remains with soap and hot water." A brochure contained
in the package indicates that the subject product is part of a collection of
"18k gold-dipped cosmetic accessories" which include compacts, pill cases, and
atomizers.
Comments of the Parties
DJP asserts that the gold
metal canister with accompanying candles should be excluded from the order because:
1) it is a "novelty" item that is "not intended for primary use as a candle;"
and 2) it is an "identifiable object." DJP argues that "novelty candles" are
excluded from the scope of the order, as a result of a decision issued by Court
of International Trade on September 25, 1996. Thus, DJP implies that its candle
is excluded from the order as a "novelty" item. DJP further argues that "identifiable
objects" were excluded from the scope of the order on October 30, 1996.
The National Candle Association
responded to DJP’s request, asserting that the product falls within the scope
of the order because: (I) exemptions from the scope of the order "should be
narrowly construed;" (2) the candle does not qualify as a "novelty candle" because
it is not designed for "use only in connection with a specific holiday;" (3)
it is a "wax-filled" container as defined by the scope of the order, or alternatively
the wax-portion included within the container is a four-sided pillar candle
as defined by the scope of the order. Additionally, the National Candle Association
stresses that there is no need for a formal inquiry or to review the factors
set forth at 1 9 CFR § 35] .225(k)(2), since the current record is dispositive
that the product falls within the scope.
ANALYSIS
The scope of the order specifically
covers "various wax-filled containers." See Antidumping Duty Order: Petroleum
Wax Candles from the People’s Republic of China 51 FR 30686 (August 28, 1986);
CIE N-212/85. As stated above, the enclosed candle can be easily separated from
the metal canister. The petroleum wax is not melted into the container, and
in fact, a replacement candle is packaged outside of the container. In each
case involving wax-filled containers examined by the Department to date, the
product has consisted of a container made of metal, glass, ceramic, terra-cotta,
or other material into which molten wax has been poured, such that the wax conforms
to the interior contours of the container. In many of these cases, the containers
are designed so that they may be re-used after the constituent candle has burned
See e.g., Morris Friedman & Co, ("Morris Friedman") (June 24, 1996). In
that case, the importer argued that its wax-filled container should be outside
the scope as a novelty item because "the glass container is functional when
the candle has lost its use or is removed." Id. at 1. The Department disagreed,
and determined that the product was a wax-filled container, in part because
the importer had "introduced no evidence which would indicate that its products
should properly be classified as anything other than candles in metal or glass
containers – i.e., ‘wax-filled containers’ - from the PRC." Id. at 5.
Unlike the facts in Morris
Friedman, evidence on the record of this inquiry indicates that this product
as packaged should not be classified as either a candle or a wax-filled container
as defined by the scope of the order. The metal canister subject to this inquiry
is easily separated from its accompanying candle; the candles are wholly separate
from the metal canister, and do not conform to the interior of the canister.
By lifting the candle out of the canister, the canister becomes fully functional
as a keepsake box, and the packaging includes instructions for cleaning and
re-use after use as a candle holder. A brochure contained in the package indicates
that the subject product is part of a collection of "l8k gold-dipped cosmetic
accessories" which include compacts, pill cases, and atomizers. The product
also contains a separate warranty included within the packaging in which DJP
agrees to replace or repair a defective canister. As explained by DSP, the vanilla-scented
candle is "packaged as a gratuitous item to complement retail sales." Finally,
the gold box and accompanying candles are packaged in a durable and decorative
gift box.
The container was not filled
with molten wax, and while it may be used as a candle holder, based on the accompanying
literature, this is clearly not the only intended use for this container--either
before or after the candle is burned. Additionally, as explained above, the
facts on the record distinguish DJP’s product from previous products that were
determined to be "wax-filled containers" as delineated in the scope of the order.
Finally, our review of the descriptions of this product indicates that the product
should properly be classified as something other than a wax-filled container
as defined by the scope of the order.
Notwithstanding the fact
that DJP’s product does not constitute a wax-filled container, it should also
not be viewed as two separate items (i.e., a metal canister and a wax candle),
because its components are packaged together and sold as one unit. The Department
considered a similar issue in a previous scope review. In the Department’s scope
ruling for Polardreams, the Department considered whether a kit consisting of
powdered wax, an empty glass container, wicks and other smaller items, was within
the scope of this order. We found that:
[i]n determining whether
the product in question is a candle, the Customs doctrine of "entireties"
is instructive. The Court of International Trade (CIT) stated in Sears, Roebuck
& Co. v. United States, 13 C.I.T. 772 (1989) that "under the doctrine
of entireties, when an importer imports a set of components designed to form
a saleable unit, the merchandise is classifiable as that unit." Id. at 777
citing Nissio-Iwai American Corp. v. United States, 10 C.I.T. 154, 158 (1986).
The Court of Appeals for
the Federal Circuit, in applying the doctrine of entireties noted that this
doctrine is a corollary to another theory of customs jurisprudence that "an
imported article should be classified according to its true commercial character."
The Court noted that "[t]he doctrine states that, if an entry consists of
parts which, although unjoined, when assembled form an article different from
any of the parts, the proper classification is the one for the whole article
and not for the parts separately." Computime, Inc. v. United States, 772 F.2d
874, 877 (Fed. C.I.T. 1985) citing Donalds, Ltd. v. United States, 32 Cust.
Ct. 310, 314-15 (1954).
Polardreams at 4.
The commercial reality of
DJP’s "bow candle" is that its three components, a gold metal box and two wax
candles, are imported together in one package and marketed as a decorative box/candle
holder with candles. Thus, we find that, even if we found that the candle, on
its own, would be within the scope of the order, because the commercial reality
is that the candle is incorporated into DJP’s product as one saleable unit,
it is not appropriate to assess duties on the candle component of this product.
Therefore, we find that DJP’s product is not covered by the scope of the antidumping
duty order on petroleum wax candles from the People’s Republic of China.
DJP’s gold metal canister
with accompanying candles are marketed together as a single product. DJP does
not claim that it ever sells the various components that make up this product
independently of each other. However, if in the future the Department is able
to establish that DJP sells the metal containers separately and/or the containers
are valued separately from the petroleum wax candles, we may at that time consider
whether alternative assessment procedures should be established with the U.S.
Customs Service.
RECOMMENDATION
We recommend the Department
finding that DJP’s "gold metal canister with accompanying candles" is not a
candle within the scope of the antidumping duty order on petroleum wax candles
from the PRC.
_____√_____ Agree
___________Disagree
If you agree, we will send
the attached letter to the interested parties, and will notify the U.S. Customs
Service of our determination.
Joseph A. Spetrini
Deputy Assistant Secretary
Enforcement Group III
7/1/99
Date
Attachment