CLA-2 CO:R:C:G 085178 DFC
Mr. P.F. Wegener
M.G. Maher & Company, Inc.
442 Canal Street
New Orleans, La. 70130
RE: Footwear parts manufactured in Korea
Dear Mr. Wegener:
Your letter dated June 22, 1989, addressed to our New
Orleans office on behalf of NASCO-American Shoe Company Inc.,
concerning the tariff classification of certain footwear parts,
has been referred to this office for a direct reply to you.
Samples of the parts involved were submitted for examination.
FACTS:
The sample designated as NASCO N-702-4 can be easily
separated into three components, i.e., a partial boot shaft made
of PU plastic (backed with a woven textile), the braided shoelace
going around the top of the shaft (most of it hidden between the
exterior and interior layers of the shaft and emerging only from
two eyelets near the front), and a liner with three laminated
layers, i.e., nylon tricot, nylex (the flannel-like pink fabric),
and rubber or plastic foam (between the two layers of fabric).
ISSUE:
Should these components be considered a set for tariff
purposes?
If not considered a set, can the components be considered
"composite goods?"
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LAW AND ANALYSIS:
It is to be noted that if each of these three components
were imported separately, they would be classified differently.
The shaft under subheading 6406.10.60, Harmonized Tariff Schedule
of the United States Annotated (HTSUSA), as parts of footwear,
uppers and parts thereof, other, of rubber or plastics; the liner
under subheading 6406.10.8040 HTSUSA, as parts of footwear,
uppers and parts thereof, other, other, of textile materials
other than cotton, of man made fibers; and the shoelace under
subheading 6307.9050, HTSUSA, as footwear lacings.
In applying the HTSUSA, the Customs Service must follow the
terms of the statute. Classification of goods under the HTSUSA
is governed by the General Rules of Interpretation (GRI's). GRI
1 provides that "classification shall be determined according to
the terms of the headings and any relative section or chapter
notes, and, provided such headings or notes do not otherwise
require, according to [the remaining GRI's taken in order]." In
other words, classification is governed first by the terms of the
headings of the tariff and any relative section or chapter notes.
GRI 2(b), HTSUSA, provides in part that "[t]he
classification of goods consisting of more than one material or
substance shall be according to the principles of Rule 3."
GRI 3, HTSUSA, is relevant here in determining whether the
components can be considered a set or composite goods. It reads
in pertinent part as follows:
3. When by application of Rule 2(b) or for any other
reason, goods are prima facie classifiable under two
or more headings, classification shall be effected as
follows:
(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.
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(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.
GRI 3(b), HTSUSA is relevant here because GRI 3(a), HTSUSA,
cannot be used in determining classification. The Explanatory
Notes for GRI 3, HTSUSA, state that the term "goods put up in
sets for retail sale" means goods that:
(a) consist of at least two different articles prima
facie classifiable in different headings (or, by GRI
6, subheadings);
(b) consist of products or articles put together to meet
a particular need or carry out a specific activity;
and
(c) are put up in a manner suitable for sale directly to
users without repacking (e.g., in boxes or cases or
on boards).
The components do not qualify as "goods put up in sets for
retail sale" because they are not put up in a manner suitable for
sale directly to users without repacking. Specifically, in their
condition as imported the components must be sold to a footwear
maker because they are useless to the wearer until a rubber foot
portion is added.
Explanatory Note IX to GRI 3(b), HTSUSA, reads in pertinent
part as follows:
(IX For the purposes of this Rule, composite goods made
up of different components shall be taken to mean not
only those in which the components are attached to
each other to form a practically inseparable whole
but also those with separable components, provided
these components are adapted one to the other and are
mutually complementary and that together they form a
whole which would not normally be offered for sale in
separate parts.
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It is our view that the components do not qualify as
"composite goods" because it is doubtful that the shaft,
shoelace, and liner "form a whole which would not normally be
offered for sale in separate parts."
Liners for "moon boots" are often imported separately and
many similar boot liners are sold separately to consumers as
replacements for liners that have worn out and it is very easy to
place a liner inside a shaft of the appropriate size. For these
reasons the liner should be classified separately.
With respect to the shoelace, it is true that many
shoelaces are bought in the United States or imported separately
by shoe manufacturers and many others are bought by consumers as
replacements. However, it is our observation that this is true
generally only to laces used in oxfords and other shoes and boots
which have the shoelaces crisscrossing through flat eyelet stays.
Those laces are usually flatter than the ones here, and it is
certainly far easier for the consumer to replace a broken lace or
a maker to insert a lace in those shoes than it would be in this
item. It would take at least several minutes of patient toil to
worm a lace through the twelve inch long passage around the
topline of the boot because there is no way to maintain a grip on
the lace to pull it through. Therefore, although we consider
shoelaces crisscrossed laced into oxford uppers to be separately
classifiable, it is our position that the PU shaft and the fabric
lace constitute a "composite good." It is evident that the
essential character of this "composite good" is derived from the
far larger, more prominent, and necessary shaft, not from the
textile lace.
It should be noted that Legal Note 2 to Chapter 64, HTSUSA,
provides that "[t]he expression 'parts' does not include . . .
laces . . . ." However, we interpret this exclusion as clearly
limited to laces (and the other items listed, e.g., eyelets) when
imported separately.
Section 134.1(b), Customs Regulations (19 CFR 134.1(b),
defines "country of origin" as the country of manufacture,
production or growth of any article of foreign origin entering
the United States. Further work or material added to an article
in another country must effect a substantial transformation in
order to render such other country the "country of origin" within
the meaning of marking laws and regulations. The case of U.S v.
Gibson-Thompsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940), stands
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for the principle that an article used in manufacture which
results in an article having a name, character or use differing
from that of the constituent article will be substantially
transformed.
The components are not marked to indicate the country of
origin. However, it is our opinion that they will be
substantially transformed so that marking of the cartons will
be sufficient assuming the importer or record establishes to the
port of entry that the "manufacturer or producer" will receive
them in those cartons.
HOLDING:
The liner is separately classifiable under subheading
6406.10.8040, HTSUSA, with duty at the rate of 9 percent ad
valorem. The applicable textile category is 669.
The shaft including the lace is classifiable under
subheading 6406.10.6000, HTSUSA, with duty at the rate of 5.3
percent ad valorem.
Due to the changeable nature of the statistical annotation
(the ninth and tenth digits of the classification) and the
restraint (quota/visa) categories, you should contact your local
Customs office prior to importation of this merchandise to
determine the current status of any import restraints or
requirements.
The designated textile and apparel category may be
subdivided into parts. If so, visa and quota requirements
applicable to the subject merchandise may be affected. Since
part categories are the result of international bilateral
agreements which are subject to frequent renegotiations and
changes, to obtain the most current information available, we
suggest that you check, close to the time of shipment, the
Status Report On Current Import Quotas (Restraint Levels), an
issuance of the U.S. Customs Service, which is updated weekly and
is available at your local Customs office.
Sincerely,
John Durant, Director
Commercial Rulings Division
6cc NY Seaport
1cc James Sheridan
D. Cahill library/peh
085178 DFC