CLA-2 RR:CR:TE 962030 SS
Port Director
U.S. Customs Service
4735 Oakland Street, Att: 325
Denver, Colorado 80329
Re: Protest No. 3307-98-100010, Classification of Leather “Padfolio”; Articles of Stationery, Memorandum Pads, Portfolios, Not Briefcases, Attache Cases, School Satchels; Heading 4820, HTSUS; Heading 4202, HTSUS; Avenues in Leather v. United States, Slip. Op. 98-54, Decided April 24, 1998; Other Articles of Leather; Heading 4205, HTSUS; Small Solar Powered Calculator; Heading 8470, HTSUS
Dear Sir:
This is in response to the Application for Further Review of Protest Number 3307-98-100010 filed by the importer, Monarch Luggage Co., Inc. (“Protestant”), contesting the classification of “padfolios” under subheading 4202.11.0030 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which you forwarded to our office for review on July 9, 1998. The Protestant also submitted a sample of the product in support of its Application for Further Review.
FACTS:
The articles under protest are “padfolios” entered into the United States in 1997, under six separate entries. The Protestant classified the “padfolios” under subheading 4820.10.2020, HTSUSA,which provides for memorandum pads, letter pads and other similar articles. Based upon a review of the merchandise, Customs determined that the article should have been classified under subheading 4202.11.0030, HTSUSA, which provides for attache cases, briefcases, school satchels, and similar containers with outer surface of leather. On February 12, 1998, Customs issued a CF 29 Notice of Action notifying Protestant of a reclassification and rate advance concerning the six entries at issue.
The goods covered by the subject entries are leather bifold containers identified by the Protestant as “padfolios”. The article measures approximately 13-1/2 inches in length by 10 inches in width by 1 inch in thickness in the closed position. The “padfolio” is zippered on three sides. The exterior front of the article features one full length flat pocket. A lined writing pad, measuring 11-3/4 inches in length by 8-1/2 inches in width, with cardboard backing slips into a slot in the right interior side of the “padfolio”. The left interior side features: a full length gusseted pocket which allows for some expansion, a full length zippered flat pocket, an 8 inch long flat pocket, a 4 inch long flat pocket, a 3 inch long flat pocket, four flat slots for business or credit cards, and one small solar powered calculator placed in a fitted slot. There is a pen holder sewn onto the interior spine.
ISSUE:
What is the proper classification of the “padfolios”?
LAW AND ANALYSIS:
Classification of goods under the Harmonized Tariff Schedule of the United States (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. 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 possible headings under consideration are: heading 4820, HTSUS, which covers memorandum pads and other articles of stationery; heading 4202, HTSUS, which covers attache cases, brief cases and similar containers; heading 4205, HTSUS, which covers other articles of leather; and heading 8470, HTSUS, which covers calculating machines.
Among other goods, heading 4820, HTSUS, specifically includes notebooks, letter pads, memorandum pads, diaries and similar articles, binders (looseleaf or other), folders, bookcovers (including cover boards and book jackets) and other articles of stationery. The EN to heading 4820, HTSUS, indicate that the heading covers various articles of stationery including note books of all kinds, diaries, letter pads, memorandum pads, binders, folders, file covers, files (other than box files), and portfolios. The EN also suggest that the goods of the heading may be bound with materials other than paper (e.g., leather, plastics or textile materials) and have reinforcements or fittings of metal, plastics, etc.. Additionally, Note 1(h) to chapter 48, HTSUS, states that “[t]his chapter does not cover: Articles of heading 4202 (for example, travel goods).”
Heading 4202, HTSUS, provides for, inter alia, attache cases, briefcases, and similar containers. The exemplars named in heading 4202, HTSUS, have in common the purpose of organizing, storing, protecting, and carrying various items. However, EN (c) to heading 4202, HTSUS, indicates that the heading does not cover articles which, although they may have the character of containers, are not similar to those enumerated in the heading and includes the following items as examples: book covers, reading jackets, file-covers, document-jackets, and blotting pads. EN (c) further states that such articles fall in heading 42.05 if made of (or covered with) leather or composition leather, and in other chapters if made of (or covered with) other materials.
Since the “padfolio” has both a writing pad and areas for the storage or organization of various items, it appears to have characteristics common to the enumerated exemplars of both headings 4202 and 4820, HTSUS. In several Headquarters Ruling Letters (HQ), Customs has considered the classification of goods featuring characteristics common to the enumerated exemplars of headings 4202 and 4820, HTSUS. In HQ 959791 and HQ 959792, dated February 11, 1997, this office found that competition between headings 4202, HTSUS, and 4820, HTSUS, was resolved by note 1(g) to chapter 48 (now note 1(h) to chapter 48), which excludes articles of heading 4202, HTSUS, from chapter 48. We noted the requirement of GRI 1, that “classification shall be determined according to the terms of the headings and any relative section or chapter notes,” and that other GRI may be used “provided such headings or notes do not otherwise require”. Since the exclusionary note to chapter 48, HTSUS, requires that other GRI not be used to determine classification, the fact that certain articles were prima facie classifiable in heading 4202, HTSUS, precluded classification of those goods under heading 4820, HTSUS. We held that analysis pursuant to any GRI other than GRI 1 was inappropriate. The above analysis was reiterated and fully supported in a decision by the Court of International Trade (CIT) in Avenues in Leather v. United States, Slip Op. 98-54, decided April 24, 1998. Accordingly, if an article has characteristics common to the exemplars of both headings 4202 and 4820, HTSUS, it must be determined whether the article is prima facie classifiable under heading 4202, HTSUS, in order to resolve the competition between the two headings.
In order to determine whether the “padfolio” is prima facie classifiable under heading 4202, HTSUS, we must decide whether the “padfolio” merely has the character of a container, or whether its purpose is to organize, store, protect, and carry various items and is thus similar to the articles enumerated in heading 4202, HTSUS. Several prior Headquarters Rulings Letters (HQ) support the position that the “padfolio” merely possesses the character of a container and since its purpose is to provide a convenient and organized method for taking notes, it is not similar to the containers enumerated in heading 4202, HTSUS.
In HQ 951076, dated March 18, 1992, Customs classified a “Presidential Writing Pad” as a memorandum pad covered by subheading 4820.10.2020, HTSUSA. Similar to the “padfolios” at issue, the “Presidential Writing Pad” consisted of a leather folder containing an 8 1/2 inches by 11 inches writing pad which slipped into an interior slot, a pen holder and an additional pocket for loose papers. The article was considered to be a memorandum pad which was defined as “an article featuring a block of blank pages attached at one end to facilitate note taking.” Stating that the design of the leather folder emphasized the distinctive functions of the article, we found that the role of the “Presidential Writing Pad” was to provide a convenient and organized method in which to take notes. See also HQ 955249, dated November 12, 1993.
In HQ 956940, dated November 25, 1994, Customs classified in subheading 4820.10.2020, HTSUSA, two portfolios whose dimensions (13-1/2 inches by 10 inches by 1 inch), features (zippered closure, pockets, slots, and pen holder), and contents (writing pad measuring 8-1/2 inches by 11 inches) were essentially the same as those of the “padfolio”. One portfolio possessed an outer surface of leather while the other possessed an outer surface of man-made vinyl coskin. Although those articles possessed some features that might be found to be in an attache case (e.g. gusseted pocket), it was noted that the exterior and interior pockets were essentially flat and suitable only for loose papers, business cards, and other small, flat items. We concluded that the items functioned primarily as organizational aids for note taking and that they retained the character of jackets and covers for the note pads. Since the items had the character of jackets and covers which are excluded by EN (c) from heading 4202, HTSUS, they were classified under heading 4820, HTSUS.
Two recent Headquarter Rulings have addressed almost identical merchandise. In HQ 961418, issued August 4, 1998, this office classified in subheading 4820.10.2020, HTSUSA, another “padfolio” whose dimensions (13 inches by 10-1/2 inches by 1 inch), features (zippered closure, pockets, slots, and pen holder), and contents (writing pad measuring 8-1/2 inches by 11-3/4 inches) were essentially the same as those of the “padfolio” at issue. In HQ 960989, issued July 20, 1998, this office classified in subheading 4820.10.2020, HTSUSA, a “Contractors Folio” whose dimensions (13-3/4 inches by 10-1/2 inches by 1-1/4 inches), features (zippered closure, pockets, slots, and pen holder), and contents (writing pad measuring 8-1/4 inches by 11 inches by 1/4 inch) were also essentially the same as those of the “padfolio”. Since heading 4820, HTSUS, covers letter pads, memorandum pads, and other articles of stationery with jackets or covers, we found that the pads and their cases, as a whole, constituted articles of stationery classified in subheading 4820.10.2020, HTSUSA.
Although the “padfolios” at issue have the character of a container, with perhaps more features than a simple jacket cover or cover, they do not have the requisite physical attributes Customs has found common to the containers of heading 4202, HTSUS, such as handles, straps or significant carrying capacity. The “padfolio” is designed to organize and perhaps protect small and/or flat items in addition to the writing pad. The case’s depth of only 1 inch and its lack of handles or straps, however, indicate that the article is not designed to easily store, protect, and carry additional items such as newspapers, books, small umbrella and/or other objects normally carried in an attache case or briefcase. The added features of the “padfolio” merely serve to enhance its primary purpose, which is to provide a convenient and organized method by which to take notes in various locations under a variety of circumstances. Accordingly, we find that the “padfolio” merely has the character of a container and is not similar to the exemplars listed in heading 4202, HTSUS. Since the “padfolio” is not prima facie classifiable in heading 4202,
HTSUS, the competition between headings 4202 and 4820, HTSUS, is resolved in favor of heading 4820, HTSUS.
Next, we consider the fact that the “padfolios” are made of leather and discuss the possible applicability of heading 4205, HTSUS, which covers other articles of leather. As stated above, EN (c) to heading 4202, HTSUS, states that articles that merely have the character of containers but that are not similar to the containers enumerated in the heading fall under heading 4205, HTSUS, if made of (or covered with) leather or composition leather. Although we find that the leather “padfolios” are not similar to the containers enumerated in the heading, we do not find that they are classified under heading 4205, HTSUS. The exemplars listed in EN (c) are empty jacket-type articles. If the “padfolios” were imported without the writing pads, heading 4205, HTSUS, would be appropriate. See HQ 955156, dated April 8, 1994; HQ 957276, dated April 6, 1995; and HQ 957943, dated November 22, 1995. However, in this case, the writing pad and the leather folder together form an article of stationery classified under heading 4820, HTSUS.
Additionally, the EN to heading 4205, HTSUS, state that the heading covers those articles of leather that do not fall in the preceding headings of the Chapter or in other Chapters of the Nomenclature. Since the “padfolio” is covered by heading 4820, HTSUS, it falls in another chapter of the Nomenclature and is thus excluded from heading 4205, HTSUS. In support of our position we note that HQ 955249, HQ 951076 and HQ 956940, discussed above, dealt with leather memorandum pads which were classified in heading 4820, HTSUS, with no mention of the possible applicability of heading 4205, HTSUS. We also note that the court in Avenues in Leather, Inc. v. The United States, did not address any possible application of heading 4205, HTSUS.
Next we consider the fact that the “padfolio” includes a small solar powered calculator and discuss the applicability of heading 8740, HTSUS. Calculators are classified in heading 8740, HTSUS, which provides for calculating machines. Since heading 4820, HTSUS, provides for memorandum pads and heading 8470, HTSUS provides for calculators, GRI 1 alone is not determinative of the article’s classification because the “padfolio” falls under more than one heading.
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 padfolio consists of both a memorandum pad and a calculator, it 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 part only of the materials contained in 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). Both headings 4820 and 8470, HTSUS, apply with equal specificity to the subject merchandise. Heading 4820, HTSUS, applies to the portfolio and Heading 8470, HTSUS, applies to the calculator, but neither heading provides for the article in its entirety. 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). 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). In HQ 950397, dated January 23, 1992, (modified by HQ 951218, dated July 28, 1992), we dealt with the classification of a similar article that featured various slots and pockets for a built-in calculator, 8 x 10 writing pad, monthly planner, and calendar cards. We held that the presence of a calculator did not establish the essential character of the item. Although the calculator was a valuable tool, we stated that it did not provide the main function of the article nor was its monetary value such that it was the most costly component. Finding that the essential character of the subject merchandise came from the paper products in the item, we classified the article under heading 4820, HTSUS. Applying this rationale to the present case, the essential character of the “padfolio” is imparted by the paper writing pad and classification is proper under heading 4820, HTSUS, which provides for articles of this nature.
HOLDING:
The leather “padfolio” is classified in subheading 4820.10.2020, HTSUSA, the provision for “Registers . . . memorandum pads, . . . and similar articles, . . : Registers, . . . memorandum pads, . . . and similar articles: Diaries, . . . memorandum pads, . . and similar articles, Memorandum pads, letter pads and similar articles.” The general column one duty rate is 2 percent ad valorem.
The protest should be ALLOWED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division