CLA-2 RR:CR:TE 961940 SS
James C. McKelvey,
Senior Vice President & Chief Financial Officer
JIMWOONG, Inc., USA
3333 Yale Way
Freemont, CA 94538
Re: Portable, Soft-Sided, Insulated Cooler Bags; SGI, Incorporated
v. United States, 122 F.3d 1468 (Fed. Cir. 1997); Cooler bag with
an outer layer of a textile fabric combined with plastic
Dear Mr. McKelvey:
This letter is in response to your request of April 28, 1998, on
behalf of JIMWOONG, Inc., USA, concerning the classification under
the Harmonized Tariff Schedule of the United States Annotated
(HTSUSA) of three styles of portable, soft-sided, insulated cooler
bags identified by the trade name "Free Zone" which are to be
imported from China. A sample of Style LU 564 was submitted with
your request.
FACTS:
The cooler bags at issue are said to be designed chiefly for
preserving and carrying food and beverages. Your letter indicates
that this product will be imported in three sizes. Each of the
bags will be identical in use and construction and will vary only
as to the size of the bag. According to your letter, Style LU 564
will measure approximately 8.5" X 5.5" X 6.75"; Style LU 565 will
measure approximately 11" X 7.25" X 8" and Style LU 568 will
measure approximately 12.5" X 8" X 12.5". For the purposes of this
ruling we will assume Style LU 565 and Style LU 568 do not differ
in any way, other than size, from the sample submitted.
The submitted sample is a cooler bag, designated as Style LU 564,
which is constructed of three distinct layers of material. The
outer layer consists of a nylon woven fabric which has been coated,
covered or laminated with a layer of compact plastic which is said
to be polyvinyl chloride. The plastic surface of this material
faces outward and the plastic has been embossed to simulate the
look of a woven fabric. The middle layer of this product is a thin
layer of plastic foam (approximately 1/4 inch) which functions as
an insulating and cushioning material. The final layer, which
forms the interior lining of the cooler bag, is made from polyvinyl
chloride sheeting. The cooler bag has a woven nylon carrying strap
and an outer pocket of rachel knit mesh attached to the front of
the bag,
as well as, a rachel knit textile pocket sewn into the inside cover
of the bag. There is an extra layer of plastic sheeting directly
behind the outer pocket, between the lining and the foam
insulation. The bag is constructed with a zipper closure.
ISSUE:
What is the proper classification for a portable, soft-sided,
insulated cooler bag with an outer layer of a textile fabric
combined with plastic?
LAW AND ANALYSIS:
a. The outer layer is a textile fabric covered with plastic
classified under Chapter 59.
Classification of goods under the HTSUS is governed by the General
Rules of Interpretation ("GRIs"). GRI 1 provides that
classification shall be determined according to the terms of the
headings of the tariff schedule and any relative section or chapter
notes. Since the outer layer is composed of a textile and plastic
combination, we focus upon Chapter 39 which covers plastics and
articles thereof, and Chapter 59 which covers impregnated, coated,
covered or laminated textile fabrics.
We begin our analysis with a review of Section VII which
encompasses Chapter 39. Section VII deals with plastics and
articles thereof, rubber and articles thereof. There are no
applicable Section notes. Next we review Chapter 39 (plastics and
articles thereof). Chapter Note 2(m) states that the chapter does
not cover goods of Section XI (textiles and textile articles). The
Explanatory Notes to the Harmonized Commodity Description and
Coding System ("ENs"), which represent the official interpretation
of the tariff at the international level, facilitate the
classification under the HTSUS by offering guidance in
understanding the scope of the headings and GRI. The Explanatory
Notes to Chapter 39 state that the classification of plastic and
textile combinations is essentially governed by Note 1(h) to
Section XI, Note 3 to Chapter 56 and Note 2 to Chapter 59.
Note 1(h) to Section XI (textiles and textile articles) states that
the section does not cover woven fabrics coated or laminated with
plastics or articles thereof, of Chapter 39. Thus, it is necessary
to determine what plastic coated fabrics are covered by Chapter 39.
The ENs to Chapter 39 state that the following plastic and textile
combination products are covered by Chapter 39:
"(a) Felt impregnated, coated, covered or laminated with
plastics, containing 50% or less by weight of textile
material or felt completely embedded in plastics;
(b) Textile fabrics and nonwovens, either completely embedded
in plastics or entirely coated or covered on both sides
with such material, provided that such coating or
covering can be seen with the naked eye with no account
being taken of any resulting change of colour;
(c) Textile fabrics, impregnated, coated, covered or
laminated with plastics, which cannot, without
fracturing, be bent manually around a cylinder of a
diameter of 7 mm, at a temperature between 15øC and 30ø
C;
(d) Plates, sheets and strip of cellular plastics combined
with textile fabrics, felts or nonwovens, where the
textile is present merely for reinforcement purposes."
Since none of these descriptions apply to the material at issue,
the textile and plastic combination is not classified under Chapter
39. Accordingly, Note 1(h) does not preclude the classification of
the outer layer material in Section XI.
Next, the governing notes direct us to Note 3 to Chapter 56. Note
3 applies to nonwovens coated or laminated with plastics. Since
the subject fabric is woven, this note is not applicable to this
case. The governing notes next direct us to Note 2 to Chapter 59.
Note 2 to Chapter 59 states that Heading 5903, HTSUS, applies to
textile fabrics coated or laminated with plastics other than the
following six exceptions:
"(1) Fabrics in which the impregnation, coating or covering
cannot be seen with the naked eye (usually chapters 50 to
55, 58 or 60): for the purposes of this provision, no
account should be taken of any resulting change in color;
(2) Products which cannot, without fracturing, be bent
manually around a cylinder of a diameter of 7 mm, at a
temperature between 15øC and 30øC (usually chapter 39);
(3) Products in which the textile fabric is either completely
embedded in plastics or entirely coated or covered on
both sides with such material, provided that such coating
or covering can be seen with the naked eye with no
account being taken of any resulting change of color
(chapter 39);
(4) Fabrics partially coated or partially covered with
plastics and bearing designs resulting from these
treatments (usually chapters 50 to 55, 58 or 60);
(5) Plates, sheets or strip of cellular plastics, combined
with textile fabric, where the textile fabric is present
merely for reinforcing purposes (chapter 39); or
(6) Textile products of heading 5811."
Since the subject material is not excluded by the six exemptions it
is classified as a fabric of Heading 5903, HTSUS.
Additionally, the ENs to Heading 5903, HTSUS, specifically list
polyvinyl chloride as an example of plastic coating covered by the
heading. The ENs also state that the plastic material is usually
colored and forms a surface layer which may be embossed to simulate
other fabric just as the plastic on the instant cooler bag has been
embossed to simulate the look of a woven fabric. Lastly, the ENs
state that fabrics of this heading are used for a variety of
purposes including the manufacture of handbags and travel goods
which are similar to the cooler bag. Accordingly, the outer layer
material of the subject cooler bag is classified as a fabric under
Heading 5903, HTSUS.
b. The cooler bag is considered a textile good classified
under Chapter 63.
Having found that the outer layer material is a textile fabric
coated with plastic and classified under Heading 5903, HTSUS, the
next question is whether the cooler bag, which also contains a foam
plastic insulating layer and plastic sheeting lining should be
considered an article of textile or an article of plastic. The
GRIs direct 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 GRIs may then be applied. Since
Heading 3924, HTSUS, provides for certain articles of plastics and
Heading 6307, HTSUS, provides for certain articles of textiles, GRI
1 alone is not determinative of the article's classification
because the cooler bag falls under two or more headings. GRI 2(b)
mandates that the classification of goods consisting of more than
one material shall be determined according to the principles of GRI
3. Since the cooler bag consists of both textile and plastic, the
merchandise must be classified according to the principles of GRI
3.
GRI 3 describes a hierarchy of methods of classifying goods which
fall under two or more headings. The first method of
classification is provided in GRI 3(a), under which the heading
which provides the most specific description is to be preferred to
a heading which provides a more general description. Explanatory
Note III to Rule 3(a). When two headings each refer to a part of
materials in the composite goods, however, 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 than the
other. Explanatory Note V to Rule 3(a). In such circumstances,
the classification of such goods shall be determined by GRI 3(b) or
(c). Accordingly, we first apply GRI 3(b) to the present case.
GRI 3(b) provides that composite goods consisting of different
materials are to be classified as if they consisted of the material
which gives them their "essential character". Explanatory Note
VIII to Rule 3(b). Thus, the question is whether the textile
component or plastic component gives the cooler bag its essential
character. Essential character may be determined by the nature of
the material, its bulk, quantity, weight, value or by the role of
a material in relation to the use of the goods. Explanatory Note
VII to Rule 3(b).
Customs has taken the position that a textile outer layer imparts
the essential character to a cooler bag. No distinction has been
made between a bag with an outer layer of purely textile material
and an outer layer of a textile fabric combined with plastic. It
is Customs position that the plastic covered fabric outer layer of
the present cooler bag also imparts its essential character.
First we considered the importance of the outer layer of the cooler
bag. Inspection of the cooler bag reveals that the plastic covered
fabric provides the bag with its shape, form and identity. The
plastic covered fabric provides durability and strength to the
container. This factor enhances the container's usefulness, i.e.,
it can carry heavier loads, withstand rougher handling, and have a
longer life expectancy than either pure textile or plastic alone.
The plastic covered fabric also makes the bag more expensive. The
outer layer of the cooler bag provides the aesthetic appeal of the
article. The bright colors and sharp designs of the outer layer
provide an initial visual impact and create a desire to either
examine a bag more closely or dismiss it as incompatible with a
consumer's aesthetic values. The outer layer's plastic coating
which is embossed to look like woven fabric makes the cooler bag
more marketable since it gives the appearance of a more expensive,
better quality material and is easier to clean than a pure textile
material.
Consideration was also given to the importance of the insulation
material. The plastic insulation does increase the usefulness of
a cooler bag. However, insulation may be added as much for its
cushioning effects as for its ability to retain contents at a
certain temperature. Whether a cooler bag contains a substantial
or barely significant amount of insulation, for cushioning or for
temperature retention, the bag maintains the shape and form which
the textile component imparts. Your letter indicates that both the
nylon backing and foam core are specifically designed to insure
that items carried in the bag are kept cool. After reviewing all
these factors, it is Customs' position that the plastic covered
fabric component gives the cooler bag its essential character.
We note that Customs has previously ruled that those fabrics that
have been impregnated, coated, covered or laminated with plastics,
and which meet the requirements of Chapter 59 Note (2) for
classification under Heading 5903, HTSUS, and articles which are
made from those fabrics, are goods of Section XI (textile and
textile articles). See Headquarters Ruling Letter HQ 088539 dated
June 6, 1991.
In Headquarters Ruling 088539, Customs considered a glove made in
part of a knit material coated with plastic that had been embossed
to simulate the look of suede leather. The textile and plastic
combination was determined to be a fabric under Heading 5903,
HTSUS. In comparing that material to other materials in the glove,
it was found that the imitation suede supplied the essential
character. The individual components of the imitation suede were
not considered separately. The glove was classified as a textile
glove under Heading 6116, HTSUS. Applying this rationale to the
present case, the individual components of the outer layer should
not be considered separately in the essential character analysis.
Furthermore, the cooler bag should be classified in Chapter 63 as
a textile article. The fabric classified under Heading 5903,
HTSUS, falls within Section XI (textiles and textile articles), and
is thus precluded from classification in Chapter 39 (plastics and
articles thereof) by Chapter 39 Note 2(m) which excludes goods of
Section XI. Accordingly, the instant cooler bag is classifiable in
Heading 6307, HTSUS, which provides for other made up articles.
c. The cooler bag has an "outer surface" of plastic.
Having found that the cooler bag is classified under Heading 6307,
HTSUS, the next question is whether the cooler bag has an "outer
surface" of textile material. New statistical breakouts were
created as subheadings of 6307.90.99, HTSUS, to provide for cooler
bags with an outer surface of textile materials. They were also
created to capture and continue the quota treatment of cooler bags
which have migrated from Heading 4202, HTSUS, as the result of
litigation in SGI, Incorporated v. United States, 122 F.3d 1468
(Fed. Cir. 1997).
Since there is no definition of the meaning "with an outer surface
of textile material" in Section XI or Chapter 63, it is appropriate
to look to how that phrase was defined in Chapter 42, the place
where the cooler bags were formerly classified. Additional U.S.
Note 2 to Chapter 42 states that for the purposes of classifying
articles under 4202.12, 4202.22, 4202.32 and 4202.92 articles of
textile fabric impregnated, coated, covered or laminated with
plastics (whether compact or cellular) shall be regarded as having
an outer surface of textile material or of plastic sheeting,
depending upon whether and the extent to which the textile
constituent or the plastic constituent makes up the exterior
surface of the article.
Applying this analysis, the outer surface would be of plastic since
the plastic constituent makes up the entire exterior surface of the
cooler bag at issue. Thus, the bag would be excluded from
classification in the subheading for cooler bags with an outer
surface of textile material. SGI stands for the proposition that
a cooler bag of plastics is classified under Heading 3924, HTSUS.
Chapter 39 Note 2(m), however, excludes goods of Section XI from
that chapter. Since the cooler bag has already been determined to
be a good of Section XI, it is precluded from classification in
Chapter 39. Accordingly, the only remaining provision applicable
to the subject goods is subheading 6307.90.9989, HTSUS, which
provides for "Other made up articles, including dress patterns:
Other: Other: Other."
This case does not fit within either of the two categories
established by SGI and the new statistical breakouts. The outer
surface is of plastic and thus the cooler bag cannot be classified
under 6307.90.9905, .9907, or .9909, the new statistical breakouts
for cooler bags with an outer surface of textile material. SGI
specifically held that cooler bags of plastics are classified under
Heading 3924, HTSUS. Chapter 39 Note 2(m), however, excludes goods
of Section XI from that chapter. Since the cooler bag has already
been determined to be a good of Section XI, it is precluded from
classification in Chapter 39. According, classification of the
cooler bag would be under subheading 6307.90.9989, HTSUS, the
provision for "Other made up articles, including dress patterns:
Other: Other: Other."
HOLDING:
The portable soft-sided, insulated cooler bag identified as Style
LU 564 is classified in subheading 6307.90.9989, HTSUSA, the
provision for "Other made up articles, including dress patterns:
Other: Other: Other: ." This subheading is not currently subject
to quota, which will continue the quota treatment that textile
cooler bags with an outer surface of plastic were afforded before
SGI forced their migration to 6307.90.99, HTSUS. The general
column one duty rate is seven percent ad valorem.
Assuming that Style LU 565 and Style 568 are identical to Style LU
564 in their component material composition and only vary in size,
the same classification applies.
The holding set forth above applies only to the specific
merchandise identified in the ruling request. This position is
clearly set forth in section 19 C.F.R. 177.9(b)(1). This section
states that a ruling letter is issued on the assumption that all of
the information furnished in connection with the ruling request and
incorporated in the ruling letter, either directly, by reference,
or by implication, is
accurate and complete in every material respect. Should it be
subsequently determined that the information furnished is not
complete and does not comply with 19 C.F.R. 177.9(b)(1), the ruling
will be subject to modification or revocation.
Sincerely,
John Durant, Director
Commercial Rulings Division