CLA-2 CO:R:C:G: 085376 DPS

Mr. John Maser
Total Port Clearance, Inc.
10 Fifth Street
Valley Stream, N.Y. 11581

RE: Croquet Sets from Malaysia and Taiwan; Classification, GSP Eligibility, Marking and Quota/Visa Requirements

Dear Mr. Maser:

This is in response to your letter of July 17, 1989, on behalf of Regents Sports Corp., in which you requested a ruling on the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), GSP status and marking requirements for croquet sets comprised of components made in Taiwan and Malaysia. Ms. Vergona of your office provided further information in a communication dated January 9, 1990, concerning revised country of origins for some of the croquet set components, as well as value information for each component. You also requested information about quota/visa requirements, and their effect upon the nylon carry bags which accompany the croquet sets your client plans to import. One sample of the subject croquet set was provided with your ruling request.

FACTS:

The submitted sample is a six player croquet set. The retail box lists the contents as follows:

1. 6 hardwood mallets with white caps, the mallet measures 7" in length; and 6 handles which measure 24" in length (the 6 mallets are disassembled in the box); the handles and mallets are stated to be from Malaysia; the plastic caps which are marked "made in Taiwan" are stated to be from Malaysia by the inquirer.

2. 2 stakes which measure 16" in length and are stated to originate in Malaysia.

3. 6 thermo-press enamel finish croquet balls which measure 3 inches in diameter; pursuant to the inquirer's July 17,1989 submission, the balls originate from Malaysia; pursuant to the inquirer's January 9, 1990, submission, the country of origin of the balls has changed from Malaysia to Taiwan.

4. 9 galvanized wire wickets which are said to originate in Taiwan.

5. A woven nylon carry bag from Taiwan designed to hold the assembled components of the croquet set.

ISSUES:

(1) What is the proper classification and rate of duty for the subject croquet set.

(2) Whether the nylon carry bag is subject to visa/quota requirements, and, if so, how they apply to the set.

(3) Whether the croquet set is eligible for GSP treatment as a product of Malaysia.

(4) Whether marking the box in which the set is packaged, indicating the country of origin of each article, and attaching stickers that indicate the country of origin on the polybag of each packed component, satisfies the country of origin marking requirements.

LAW & ANALYSIS:

Classification

The General Rules for the Interpretation of the Harmonized System (GRI's) govern classification under the Harmonized Tariff Schedule. According to GRI 1, the primary consideration in determining whether merchandise should be classified in a heading should be given to the language of the heading and any relevant chapter or section notes, and, provided such headings or notes do not otherwise require, according to the remaining GRI's, taken in order.

The merchandise at issue is a croquet set, which contains various components. Because there is no specific provision covering "croquet sets," the question of whether the merchandise should be considered a set for tariff purposes arises. The Explanatory Notes to the HTSUSA constitute the official interpretation of the tariff at the international level. The Explanatory Notes to GRI 3(b) provide further guidance in determining what constitutes a "set." The relevant note states, in pertinent part:

(X) For the purposes of this Rule, the term "goods put up in sets for retail sale" shall be taken to mean goods which:

(a) consist of at least two different articles which are, prima facie, classifiable in different headings;

(b) consist of products or articles put up 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).

In this case, it is our view that the above "set" criteria are met. First, the subject merchandise consists of at least two different articles which are prima facie classifiable in different headings (ie., the nylon carry bag, which is classifiable under 4202.92.3030, HTSUSA, which covers sports bags with outer surface of textile materials, and the croquet mallets, which are classifiable under 9506.99.6080, the provision for articles and equipment for outdoor games, not specified or included elsewhere in the chapter). Secondly, the items are put up in a manner suitable for sale directly to consumers without repacking. The third criterion, that the goods consist of articles put up together to meet a particular need or carry out a specific activity, is also satisfied. Therefore, the subject merchandise qualifies for treatment as a set.

Pursuant to GRI 3(b), sets are classified according to the component that imparts the essential character to the set. The Explanatory Notes for GRI 3(b), at VIII, state in pertinent part:

The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.

In applying the Explanatory Note, we believe that the croquet mallets and stakes impart the essential character to the set. The mallets and stakes are dedicated to the specific activity for which the set was designed, to play croquet.

Consequently, this set is classifiable under subheading 9506.99.6080, HTSUSA, as articles and equipment for gymnastics, athletics, other sorts (including table-tennis) or outdoor games, not specified or included elsewhere in this chapter...: other: other: other. Items classified under this provision are subject to a duty rate of 4.64 percent ad valorem.

Quota/Visa Requirements

Merchandise which is classifiable per se under Chapter 95, HTSUSA, is not subject to visa requirements or quota restraints. However, the nylon bag is not classifiable per se under that chapter. It is only classifiable there by virtue of its being a component of the set. Thus, consistent with Headquarters Ruling Letter (HRL) 084935, dated August 23, 1989, the nylon bag which is part of the croquet set, is subject to visa requirements and quota restraints under subheading 4202.92.3030, HTSUSA. The textile category is 670. The duty rate on the nylon bag corresponds to the classification of the set. 4202.92.3030, HTSUSA, only applies in this case for visa requirements and quota restraints.

GSP Eligibility

Under the Generalized System of Preferences (GSP) (19 U.S.C. 2461-2466), eligible articles which are imported directly from a designated beneficiary developing country (BDC) into the U.S. qualify for duty-free treatment if the sum of the cost or value of the materials produced in the BDC plus the direct costs involved in processing the eligible article in the BDC is at least 35% of the article's appraised value at the time it is entered in the U.S. 19 U.S.C. 2463. Direct costs of processing operations mean those costs either directly incurred in, or which can be reasonably allocated to, the growth, production, manufacture, or assembly of the specific merchandise under consideration. See 19 CFR 10.178.

Malaysia is a BDC, see General Note 3 (c)(ii)(A), HTSUSA, and, according to the above analysis, the samples at issue will be classified under subheading 9506.99.6080, HTSUSA, a GSP-eligible provision. Accordingly, the articles may be entered without payment of duty under the GSP if the sum of the cost of those components produced in Malaysia plus the direct costs of the Malaysian processing operation is not less than 35 percent of the appraised value of the croquet sets at the time of their entry into the U.S. Although cost information was provided, it appears inconsistent. Therefore, we are unable to determine from the information provided whether this 35% value-content requirement will be satisfied.

Country of Origin/Marking Requirements

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides, in general, that all articles of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the country or origin marking requirements and exceptions of 19 U.S.C. 1304.

Pursuant to 19 U.S.C. 1304(a)(3)(D) and section 134.32(d), Customs Regulations (19 CFR 134.32(d)), an exception from individual marking is applicable where the marking of the container of an imported article will reasonably indicate the origin of the article. This exception is normally applied in cases where the imported article(s) is imported in a properly marked container and Customs officials at the port of entry are satisfied that the ultimate purchaser in the U.S. will receive it in its original marked container.

In addition, section 134.46, Customs Regulations (19 CFR 134.46), requires that when the name of any city or locality in the U.S., or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced, appear on an imported article or its container, there shall appear legibly and permanently, in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning.

In this case, the components of the croquet set are products of two different countries. The mallets and the stakes are products of Malaysia; the wickets, the balls and the nylon carrying bag are products of Taiwan. The set is imported and sold in a retail carton which bears a picture of and information about the product. You have submitted an actual-size copy of the marking to be used on the retail carton. The copy shows that the Canadian distributor's name and address appear directly above the words "Made in Malaysia Except Bag and Wickets Made in Taiwan," all in lettering 1/8 inch in size. In an April 17, 1990 telephone conversation with a member of my staff, you indicated that the marking will be changed to reflect Taiwan as the country of origin of the balls and that the Canadian distributor's name and address appear on only one panel of the retail carton.

Based on the submitted retail carton sample and information provided to my staff in writing and by telephone, it is our opinion that the marking is sufficiently conspicuous to satisfy the requirements of 19 CFR 134.46. So long as the subject croquet sets continue to be sold in the described retail cartons, and Customs officials at the port of entry are satisfied that the ultimate purchaser will receive them in this fashion, we are of the opinion that marking the retail cartons in lieu of marking the individual components of the set, satisfies the statutory requirements.

HOLDING:

The subject croquet set is classifiable as equipment for outdoor games, not elsewhere specified or included in Chapter 95, under subheading 9506.99.6080, HTSUSA. Articles classified under this provision are subject to a duty rate of 4.64 percent ad valorem.

Consistent with HRL 084935, dated August 23, 1989, the nylon bag which is part of the croquet set at issue, is subject to visa requirements and quota restraints applicable to merchandise classifiable under subheading 4202.92.3030, HTSUSA. The textile category is 670. The bag remains part of the set for rate of duty purposes.

Pursuant to General Note 3 (c)(ii)(A), HTSUSA, Malaysia is a beneficiary developing country. In accordance with the classification of the set under subheading 9506.99.6080, HTSUSA, a GSP-eligible provision, the articles may be entered without payment of duty under the GSP if Customs officials at the port of entry are satisfied that the sum of the costs of those components produced in Malaysia plus the direct costs of the Malaysian processing operation is not less than 35 percent of the appraised value of the croquet sets at the time of entry into the U.S.

Based upon the information supplied by the inquirer, it is our opinion that marking the retail carton to indicate the country of origin of all components of the set, as described above, is sufficiently conspicuous to satisfy the requirements of 19 CFR 134.46. So long as Customs officials at the port of entry are satisfied that the ultimate purchaser will receive the subject croquet set in the described retail cartons, marking the retail cartons in lieu of marking the individual components of the set, satisfies the statutory requirements.

With regard to the quota/visa requirement, please be advised that 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.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the textile restraint (quota/visa) categories, you should contact your local Customs office prior to importing the merchandise to determine the current applicability of any import restraints or requirements.

Sincerely,

John Durant, Director
Commercial Rulings Division