CLA-2 CO:R:C:G: 081431 DSN

Mr. Jack Alsup
Alsup & Associates
P.O. Box 1251
Del Rio, Texas 78841

RE: Classification and GSP eligibility for knee pads and pool floats

Dear Mr. Alsup:

This is in response to your inquiry of November 28, 1987, in which you requested GSP eligibility and tariff classification under the Tariff Schedules of the United States Annotated (TSUSA), and the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), for two products from Brazil on behalf of Fabrionics Inc. As you are aware the HTSUSA became effective on January 1, 1989. Therefore, this ruling is for HTSUSA only. A sample was provided for one product, while only a picture was submitted of the other.


The first product is called a "knee ease" which is a pad designed to cushion the knees when kneeling during gardening or while performing household chores. The pad is constructed of foamed polyvinyl chloride (PVC) plastic and is coated with vinyl plastic and measures approximately 18 inches by 7-1/2 inches by 1 inch. The pad has scalloped sides with rounded edges and a cut- out section which forms a built-in handle. The company logo and other information is silk screened on the front of the "knee ease".

The second product is a pool float which is made of the identical materials as the knee pad but is substantially larger. The pool float features a closed pillow design which creates a comfortable head rest. It also comes with scalloped sides or without scallops.


For the production of the knee pads, your client exports PVC foam blanks to Mexico where they will be die cut, cut to size and shaped into 14 pieces. Your client also ships vinyl coating dry blend and solvent which is mixed in Mexico to produce a vinyl liquid mixture. Each piece of foam will be dipped in the liquid a total of three times.

The manufacture of the pool floats involves similar processing, but with the addition of one step. Each blank is cut into two pieces having scalloped sides and curved edges. A 45- degree cut out is made approximately one foot from the head of the blank. The head is folded over at the cut and is then glued to itself, forming a pillow. The dipping process follows.


1. What is the classification of the merchandise at issue under the HTSUSA?

2. Whether the operations performed on the foam blanks result in a double substantial transformation, thereby enabling the cost or value of the PVC constituent material to be counted toward the 35 percent value-content requirement for purposes of the GSP.



Classification of merchandise under the HTSUSA is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI (1) provides that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes. With regard to the knee pads, heading 3924, HTSUSA, provides for tableware, kitchenware, other household articles and toilet articles, of plastics. The Explanatory Notes constitute the official interpretation of the tariff at the international level. The Explanatory Notes to heading 3924 state that the heading covers other household articles such as dustbins, buckets, watering cans, etc. It is our opinion that the heading covers knee pads designed to be used while performing tasks around the home.

We do not consider the pool floats as household articles because their use is not confined to the home as they can be used either in backyard pools, community pools, the ocean or even as mats to sunbathe. Since pool floats can be used in other places besides the home, it appears inappropriate to include these articles under the provision for other household articles.


Heading 3926, HTSUSA, provides for other articles of plastics and articles of other materials of headings 3901 to 3914. The Explanatory Notes for heading 3926, state that the heading covers articles not elsewhere specified or included, of plastics. Since there is no specific heading providing for pool floats, heading 3926, HTSUSA, is applicable.


Under the Generalized System of Preferences (GSP), eligible products of a designated beneficiary country (BDC) which are imported directly into the U.S. qualify for duty-free treatment if the sum of the cost or value of the constituent materials produced in the BDC plus the direct costs involved in processing the eligible article in the BDC is at least 35 percent of the article's appraised value at the time of its entry into the U.S. See 19 U.S.C. 2463. The cost or value of materials which are imported into the BDC to be used in the production of the article, as here, may be included in the 35 percent value-content computation only if the imported materials undergo a double substantial transformation in the BDC. That is, the materials imported into Mexico from the U.S. to produce the knee pads and pool floats must first be substantially transformed into a new and different intermediate article of commerce, which is then used in Mexico in the production of the final imported article. See Section 10.177(a), Customs Regulations (19 CFR 10.177(a)).

The test for determining whether a substantial transformation has occurred is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to the processing. See Texas Instruments Inc. v. United States, 69 CCPA 152, 681 F.2d 778 (1982).

Customs application of the double substantial transformation requirement in the context of the GSP received judicial approval in The Torrington Company v. United States, 8 CIT 150, 596 F.Supp. 1083 (1984), aff'd 764 F.2d 1563 (1985). The Court of International Trade, after affirming Customs application of the double substantial transformation concept, said:

Regulations promulgated by Customs define the term "materials produced" to include materials from third countries that are substantially transformed in the BDC into a new and different article of commerce. 19 CFR 10.177(a)(2). It is not enough to transform substantially the non-BDC constituent materials into the final article, as the material utilized to


produce the final article would remain a non-BDC material. There must first be a substantial transformation of the non-BDC material into a new and different article of commerce which becomes "material produced," and these materials produced in the BDC must then be substantially transformed into the new and different article of commerce. It is noted that 19 CFR 10.177(a) distinguishes between "merchandise produced in the BDC" and the cost or value of the "materials produced in the BDC" which demonstrates the contemplation of a dual substantial transformation requirement.

Id. at 1086.

We have previously held that cutting material to shape is sufficient to result in a substantial transformation. See Ruling 554929, dated November 3, 1988. In the present case, we find that the die-cutting of the foam blanks constitutes a substantial transformation of these U.S. materials.

However, we do not find that the second set of processes result in a second substantial transformation. The character of the foam shapes will not be significantly changed by the coating with the vinyl liquid mixture. In a ruling dated August 1, 1988 (HQ 081888), we held that coating of fencing material by galvanizing was merely a finishing operation and that the addition of a corrosion-resistant feature to the fencing did not constitute a manufacture that resulted in a change in name, character or use. We noted that while the coating may have been necessary for the effective, long-term use of the fencing, it did not change the fact that the uncoated article had but one use, namely, fencing.

In the present case, the coating provides a surface which is easy to clean, and the coated pads and floats are advertised as providing "an extra thick, stain-resistant outer shell." However, the uncoated pads and floats provide the essential character of the finished product which is its buoyancy and cushioning. The vinyl coating does not change these characteristics nor does it alter the use of the uncoated pads and floats.



The knee pads are classified under subheading 3924.90.5000, HTSUSA, which provides for tableware, kitchenware, other household articles and toilet articles, of plastics, other, other, and dutiable at the rate of 3.4 percent ad valorem.


The pool floats are classified under subheading 3926.90.9050, HTSUSA, which provides for other articles of plastics and articles of other materials of heading 3901 to 3914, other, other, other, and dutiable at the rate of 5.3 percent ad valorem.


On the basis of the information submitted, it is our opinion that the foam blanks and vinyl coating solvents to be exported to Mexico will not be substantially transformed into constituent materials of the finished knee pads and pool floats to be imported into the U.S. Therefore, the cost or value of the foam blanks and vinyl coating solvents may not be counted for the purposes of satisfying the 35 percent requirement.


John Durant, Director
Commercial Rulings Division