CLA-2 CO:R:C:M 950718
Peter T. Mangione, President
Footwear Distributors and Retailers of America
1319 F Street, NW
Washington, D.C. 20004
RE: Footwear, band; foxing or foxing-like; Substantial
encirclement; T.D. 83-116
Dear Mr. Mangione:
In a letter dated November 18, 1991, you assert that Customs
interpretation of the term "substantially encircle" as it relates
to "foxing and foxing-like bands" on imported footwear is not in
accord with the plain meaning of the term and the intent of T.D.
83-116. Further, you oppose the imposition of the so-called "40-
60" rule and also express concern with the application of this
rule by Customs Import Specialists at the various ports.
FACTS:
A foxing may be described as a band, i.e., a strip serving
to join, hold together or integrate the sole and the upper of
footwear. It may be a thin flat encircling strip, strap, or flat
belted material serving chiefly to bind or contain the sole and
the upper. A foxing-like band has the same, or nearly the same
appearance, qualities, or characteristics as the foxing appearing
on the traditional sneaker or tennis shoe. Customs has taken the
position that foxing or foxing-like band must encircle or
substantially encircle the entire shoe in order to be considered
as such.
ISSUE:
Does an encirclement of over 40% of the perimeter of the
shoe upper by a band constitute "substantial encirclement"?
LAW AND ANALYSIS:
After careful consideration of numerous comments submitted
by footwear importers and the domestic shoe industry, by a
document published as T.D. 83-116 in the Federal Register of May
23, 1983 [48 FR 22904, 17 Cust. Bull. 229 (1983)], the Customs
Service set forth:
(1) Customs position regarding the proper interpretation
of the provision in the Tariff Schedules of the United
States (TSUS) pertaining to imported footwear having
foxing or a foxing-like band applied or molded at the
sole and overlapping the upper, and (2) guidelines
relating to the characteristics of foxing and a
foxing-like band.
Even though the TSUS was superseded by the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA), effective
January 1, 1989, the guidelines of T.D. 83-116 are still followed
by Customs with regard to the classification of footwear.
T.D. 83-116 set forth guidelines relating to the
characteristics of foxing or a foxing-like band. The relevant
guidelines pertaining to encirclement read as follows:
Characteristics of a Foxing
* * * * * *
5. A foxing must encircle or substantially
encircle the entire shoe.
Characteristics of a Foxing-like Band
* * * * * *
5. A foxing-like band must encircle or
substantially encircle the entire shoe.
The "40-60" rule, as it is referred to, is a guideline used
by Customs import specialists to assist in making a determination
pertaining to encirclement. Generally, under this rule, an
encirclement of less than 40% of the perimeter of the shoe by the
band does not constitute foxing or a foxing-like band. An
encirclement of between 40% to 60% of the perimeter of the shoe
by the band may or may not constitute a foxing or a foxing-like
band depending on whether the band functions or looks like a
foxing. An encirclement of over 60% of the perimeter of the shoe
by the band is always considered substantial encirclement.
You state that it was the trade's understanding from the
inception of T.D. 83-116 that the term "substantially encircle"
means a band that virtually goes all the way around the
circumference of the shoe. Further, the use of the modifier
"substantially" was to prevent avoidance of the high "foxing"
duties by a small interruption in a band's encirclement of a
shoe. The trade did not object to the phraseology, since it knew
that some "foxing-like bands," not being functional, could have
the appearance of a true "foxing" (which always encircles the
entire shoe) without total encirclement.
You point out that in light of this understanding of what
constitutes foxing or a foxing-like band, the trade was concerned
when the "40-60" rule was instituted. You insist that this rule
subverts the meaning of T.D. 83-116. Further, you contend that
the rule is unworkable for both the trade and the Customs Service
because it makes the analysis of coverage over 40% a purely
subjective exercise, one without national standards or uniform
application. You state that some Customs Import Specialists
take the same view and because of convenience substitute a
simplified rule, i.e., where coverage exceeds 40% of the shoe's
perimeter, "substantial encirclement" always exists. You believe
that this new development compounds the wrong of the "40-60" rule
and distorts the language and spirit of T.D. 83-116.
You maintain that to constitute foxing or a foxing-like
band a feature "must encircle or substantially encircle the
entire shoe." To "encircle" is to form a circle about or to
surround. Something is "substantial" when it is "specified to a
large degree or in the main." Thus, a feature, which covers 60%
of the perimeter of a shoe does not surround it "in the main."
You suggest that a proper interpretation of T.D. 83-116
means that an encirclement by the band of less than 75% of the
perimeter of the shoe is not a "substantial encirclement."
Further, a band which covers less than 75% of the outside of a
shoe does not surround it "in the main."
As requested, we have carefully reviewed this issue.
However, we do not agree that the rule is unworkable. To the
contrary, we believe that Customs and the footwear trade are
uniformly applying the guidelines in T.D. 83-116 and have been
doing so since 1983 when they were published.
Webster's New Collegiate Dictionary (1974) defines the word
"substantial" as follows:
1c: important, essential 2: ample to satisfy and nourish
3b: considerable in quantity: significantly large 5: being
largely, but not wholly that which is specified.
The unabridged version of the Random House Dictionary of the
English Language defines the same word in the following terms:
1. of ample or considerable amount, quantity, size,
etc. 2. of a corporal or material nature; real or
actual. 7. pertaining to the substance, matter, or
material of a thing. 8. of or pertaining to the
essence of a thing; essential, material, or important.
One of the definitions for the term in Black's Law
Dictionary, Fourth Edition, is "Belonging to substance; actually
existing; real; not seeming or imaginary; not illusive; solid;
true; veritable.
It is noted that none of definitions actually quantify
"substantial". It is always expressed in other terms which
clearly convey the meaning.
It is our position that no definition of the word
"substantial" requires a determination by Customs that the band
encircle 75% of the perimeter of the shoe to be considered foxing
or a foxing-like band. Certainly, a 40% encirclement is a
substantial encirclement of the perimeter of the shoe in that it
conforms exactly to the Webster's Dictionary definition of
"substantial" by being ample, considerable in quantity,
significantly large and largely, but not wholly that which is
specified. A 40% encirclement also meets the terms used in both
the Random House and the Blacks Law Dictionaries.
In the case of Ways & Means, Inc. v. Ivac Corp., 506 F.
Supp. 697 (1979), the court stated at page 699 as follows:
Indeed, plaintiffs concede that defendant has never
refused to sell thermometers outside the TSP program.
And it is clear that since 1971, a substantial
percentage-perhaps 25%-of defendant's sales have been
through the direct sale of units to hospitals, outside
the TSP program.
Inasmuch as the court considered 25% of sales of
thermometers to be a "substantial" percentage of sales, our
calling a 40% encirclement of the perimeter of the shoe a
"substantial" encirclement does not stretch the definition of
"substantial" encirclement.
It should be noted that the 40% rule does not mean that
encirclement of over 40% of the perimeter of the shoe mandates a
finding that foxing or a foxing-like band exists. As you are
aware a shoe may have a 60% encirclement of the perimeter by the
band and still not be foxing or a foxing-like band due to the
fact that it may not function or look like a foxing.
It is true that a large number of Customs rulings are
finding foxing-like bands on shoes where the 1/4 inch or more
overlap encircles only slightly more than 40% of the perimeter of
the upper. The reason for this is that most of these shoes have
the appearance of foxing when all or most of the 1/4 inch overlap
is visible because it is at the front, the outside, or the back
of the shoe.
It is our opinion that application of the "40-60" rule by
the various ports is being uniformly applied inasmuch as it is
subject to review by the National Import Specialist for footwear.
HOLDING:
An encirclement of over 40% of the perimeter of the shoe
upper by a foxing or foxing-like band may constitute
"substantial" encirclement within the intendment of T.D. 83-116.
Sincerely,
Harvey B. Fox, Director
Office of Regulations & Rulings
6cc AD NY Seaport
1cc Eric Francke NY Seaport
1cc John Durant