CLA-2 RR:CR:TE 961944 SS
Stacy Richards, Import Account Representative
American Shipping Company, Inc.
140 Sylvan Avenue
Englewood Cliffs, NJ 07632
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 Ms. Richards:
This letter is in response to your request of April 9, 1998, on behalf of your client The Ohio Bag Co., concerning the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) of a portable, soft-sided, insulated cooler bag imported from China. A sample was submitted with your request.
FACTS:
The submitted sample is a cooler bag, designated as style H854, which is constructed of three distinct layers of material. The outer layer consists of a man-made fiber woven fabric which has been coated, covered or laminated with a layer of plastic which is said to be polyvinyl chloride. The plastic has been determined to be noncellular. 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 3/16 inch) which functions as an insulating and cushioning material. The final layer, which forms the interior of the cooler bag, is made from polyvinyl chloride sheet. The cooler bag measures 11 inches high by 6 1/2 inches wide by 4 3/4 inches deep and features a woven nylon carrying strap. The bag is constructed with two insulated compartments. The upper compartment encompasses 2/3 of the volume of the bag and features a Velcro® closure. The bottom compartment has a zipper closure. Marketing data indicates that the cooler bag is designed to keep food hot or cold while transporting food for use on a picnic.
ISSUE:
What is the proper classification for the 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 15?C and 30? 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, HTS, 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 15?C and 30?C (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, HTS.
Additionally, the ENs to Heading 5903, HTS, 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 of the subject cooler bag is classified as a fabric under Heading 5903, HTS.
b. The cooler bag is considered a textile good classified under Chapter 63.
Having found that the outer layer is a textile fabric coated with plastic classified under Heading 5903, HTS, 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, HTS, provides for certain articles of plastics and Heading 6307, HTS, 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 component constitutes a majority of the weight and bulk of the cooler bag. 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 and lining 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. With regard to the lining material; it should be noted that marketing materials state that although the bag is designed to be water/leakproof, ice should be packed in a separate leakproof container. 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, HTS, 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, HTS. 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, HTS. 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, HTS, 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, HTS, 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, HTS, 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, HTS, 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, HTS, 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 would be 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, HTS. 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 place left to classify the cooler bag would be under subheading 6307.90.9989, HTSUS, the provision 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, HTS. 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, classification of the cooler bag is 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 H854 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, HTS. The general column one duty rate is seven percent ad valorem.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division