CLA-2 RR:CR:TE 961820 GGD
Mr. William M. Stringfield
249 East Ocean Boulevard, Suite 1008
Long Beach, California 90802
RE: “California Beach Roll;” Towel with Foam Tube Container;
Composite Good; GRI 3(c)
Dear Mr. Stringfield:
This letter is in response to your request of March 27, 1998, on behalf of your client, Novaco Enterprises, concerning the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) of merchandise consisting of a towel made in China and a plastic foam container that is assembled in China from components manufactured in China and the U.S. A sample was submitted with the request.
FACTS:
The sample merchandise is identified as a “California Beach Roll” and is described as a combination cotton towel and plastic tote. The tote component essentially consists of a foam plastic cylinder or tube which measures approximately 34 inches in length by 3-3/4 inches in outside diameter and 2-1/2 inches in inside diameter. A round plastic insert is fitted by force into the center of the tube, forming a divider so that one section may store, and maintain the temperature of, canned or bottled beverages and the other section may hold personal effects such as keys, wallet, comb, etc., or various other combinations. The ends of the tube have molded plastic covers or caps, each with a metal “D” ring. An adjustable carrying strap of woven textile
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material is attached to the “D” rings by means of a plastic clip at each end. Five strips of a hook fabric fastener material (two glued to each of the plastic covers and one glued to the middle of the tube’s exterior) correspond to five strips of a loop fabric fastener material attached to the upper sides and top end of the towel component.
The towel component consists of a 100 percent cotton terry towel which measures approximately 55 inches in length by 35 inches in width, the latter dimension corresponding to the length of the tube with its end caps. The towel’s fabric fasteners and four metal snaps (one placed at each of the towel’s lower corners and one placed approximately 17 inches above each of the lower corners) allow the towel to be attached to, and rolled around, the cylinder, then snapped onto itself, forming a roll that is convenient to carry. When the towel is unsnapped and unfurled, the result is a type of beach blanket with a headrest - one capable of storing beverages and/or personal effects. The merchandise is imported suitable for direct retail sale without repacking.
The merchandise will be assembled in China. The towel, plastic end caps, metal “D” rings, textile carry strap, metal snaps, plastic buckle, plastic clips, fabric fasteners, and glue, are all manufactured in China. The center plastic insert will be manufactured in either China or the U.S. but, if made in the U.S., it will be force-fit into the cylinder as part of the assembly process in China. The foam plastic cylinder is made in the U.S. and exported in a condition ready for assembly.
ISSUES:
1) Whether the merchandise is classified as a composite article or as separately classified components.
2) Whether the U.S.-origin plastic insert and/or cylinder are entitled to duty exemptions under subheading 9802.00.80, HTSUSA.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative
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Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied. The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRI.
The merchandise cannot be classified by reference to GRI 1 because it essentially consists of two individual components that are classifiable in different headings, i.e., heading 6302 which covers the towel, and either heading 4202 or heading 3924, one of which covers the container.
In pertinent part, GRI 2(b) states 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(a) directs that the headings are regarded as equally specific when they each refer to part only of the materials contained in composite goods, or of the items in a set put up for retail sale. Whether the separate headings in this case are regarded as equally specific depends upon whether the towel and the container constitute a composite good or a set put up for retail sale.
We look to GRI 3(b), which states in part that:
goods...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.
As with GRI 3(a) above, the applicability of GRI 3(b) is dependent upon whether the complete article is deemed to comprise a composite good or a set. In pertinent part, Explanatory Note IX to GRI 3(b) indicates that:
For 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
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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.
In this instance, the towel and container are separable. The towel and the exterior of the cylinder are adapted to each other for sunbathing (with a headrest), and for convenient carrying purposes (with the towel wrapped around the cylinder). The towel’s width is approximately equal to the cylinder’s length, and the placement of fabric fasteners on one component corresponds to fasteners placed on the other component. Although the cylinder’s interior compartments are designed and adapted for uses not related to the towel (i.e., for storing and carrying beverages and various small personal items), the EN does not specifically state that each component must be adapted to the other in all respects.
The use of a towel with metal snaps and fabric fasteners could cause discomfort and such a towel would therefore not likely be offered for sale on its own. Although the presence of fabric fastener material on the insulated container is not a significant drawback, the component is not designed with a size and shape that is conducive to conveniently carrying ice, a desirable feature for making and keeping canned/bottled beverages colder. Further, without the towel’s fasteners secured to the ends, the caps/covers are easily dislodged, which would hinder the retention of water from melting ice. It is not likely that the container component would normally be sold separately from the towel. In light of the above, we find that the towel and foam plastic container constitute a composite good. (See also Headquarters Ruling Letters (HQ) 960880, dated April 5, 1999, and HQ 089833, dated October 2, 1991.)
In order to determine the essential character of the composite article, we look to Explanatory Note VIII to GRI 3(b), which provides the following guidance:
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 or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
We previously found that the towel and the container are mutually complementary and adapted to each other. Distinctions based on the bulk, weight or value of the individual components
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would not be helpful in determining the essential character of this particular article, since each component plays an equally important role in relation to how the complete article is used for comfortable sunbathing and for carrying items related to that pastime.
We therefore look next to GRI 3(c), which states:
When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
As noted above, the towel is classifiable under heading 6302, HTSUSA, and the container is classifiable either under heading 3924 or heading 4202. Since the heading which occurs last in numerical order among these is heading 6302, it is not necessary to determine under which of the two remaining headings the foam plastic container would be classified in order to classify the composite article. The “California Beach Roll” is classified under heading 6302, specifically in subheading 6302.60.0020, HTSUSA, textile category 363.
With respect to whether the merchandise is entitled to a duty exemption under subheading 9802.00.80, HTSUSA, we note that the provision allows a partial duty exemption for:
articles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.
An article entered under subheading 9802.00.80, HTSUSA, is subject to duty upon the full value of the imported assembled article, less the cost or value of such U.S. components, upon compliance with the documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24).
Section 10.16(a), Customs Regulations (19 CFR 10.16(a)), provides that the assembly operation performed abroad may consist of any method used to join or fit together solid components, such as welding, soldering, riveting, force fitting, gluing, laminating, sewing, or the use of fasteners.
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Operations incidental to the assembly process are not considered further fabrication operations, as they are of a minor nature and cannot always be provided for in advance of the assembly operations. However, any significant process, operation or treatment whose primary purpose is the fabrication, completion, physical or chemical improvement of a component precludes the application of the exemption under HTSUSA subheading 9802.00.80 to that component. See, 19 CFR 10.16(c).
We understand that the center plastic insert and/or the foam plastic cylinder will be exported to China in a condition ready for the foreign assembly process, and that their physical identity will not be lost by any change in form, shape, or otherwise. We find that the method by which the foreign-origin components will be joined to the U.S.-origin component(s), i.e., the force fitting of the center insert and/or the gluing of the fabric fasteners, constitute acceptable processes of assembly for purposes of duty-free treatment under subheading 9802.00.80, HTSUSA.
HOLDING:
The composite article identified as the “California Beach Roll” is classified in subheading 6302.60.0020, HTSUSA, textile category 363, the provision for “Bed linen, table linen, toilet linen and kitchen linen: Toilet linen and kitchen linen, of terry toweling or similar terry fabrics, of cotton, Towels: Other.” The general column one duty rate is 9.7 percent ad valorem.
The U.S.-origin foam plastic cylinder is entitled to a duty allowance under subheading 9802.00.8000, HTSUSA, assuming compliance with the documentation requirements set forth in 19 CFR 10.24.
If upon importation it is determined that the center plastic insert is of U.S.-origin, it is entitled to a duty allowance under subheading 9802.00.80, HTSUSA, assuming compliance with the documentation requirements set forth in 19 CFR 10.24.
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
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suggest that you check, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.
Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories applicable to textile
merchandise, you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.
Sincerely,
John Durant, Director
Commercial Rulings Division