OT:RR:CTF:VS H329045 AMW
Sandra Tovar
CST, Inc.
500 Westpark Drive
Suite 230
Peachtree City, GA 30269
RE: Tariff Classification and DR-CAFTA Preference Eligibility of Waterproof Rubber Boots for Children
Dear Ms. Tovar:
This is in response to your correspondence, dated November 21, 2022, in which you request a ruling on the tariff classification of Hunter-brand rubber children’s boots and the eligibility of the product for preferential tariff treatment under the Dominican Republic-Central America-United States Free Trade Agreement (“DR-CAFTA”). You indicate the merchandise will be imported through the Port of Chicago. Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division for response.
FACTS:
The facts are based on your November 21, 2022, ruling request as well as follow-up information submitted to this office on February 19, 2023, March 15, 2023, March 27, 2023, and April 5, 2023. The product at issue, style KFT5094RMA, referred to as the “Pink Fizz” model of child’s waterproof boot, is composed of a rubber sole and rubber upper. The merchandise is a closed-toe boot that extends to the mid-calf, covering the ankle but falling below the knee. The boot is constructed from a molded upper and outer sole made from rubber and is lined with a polyester textile. You assert that the boots should be classified under subheading 6401.92.9060, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes: other footwear: covering the ankle but not covering the knee: other: other: other.”
You state that the boot will be manufactured at an unrelated facility in the Dominican Republic and imported through the Port of Chicago. In support of your request, you have provided a bill of materials, which lists each of the inputs and components involved in the manufacture of the subject merchandise as well as the country of origin, tariff classification, and per-unit cost for such components.
Material
Classification
Country of Origin
Cost per unit
Rubber – used for quarter and vamp
4002.99.00
Guatemala
$1.297
Cement
3506.99.00
Dominican Republic
$0.373
Thread
5401.10.00
China
$0.103
Vamp lining – polyester knit
6006.32.00
China
$0.577
Vamp reinforcement – rubber
4002.99.00
Guatemala
$0.015
Quarter reinforcement – rubber
4002.99.00
Guatemala
$0.017
Backstay reinforcement – rubber
4002.99.00
Guatemala
$0.019
Insole
6406.90.30
China
$0.258
Outsole – rubber
4002.99.00
Dominican Republic
$1.792
Midsole – rubber
4002.99.00
Dominican Republic
$0.210
Waterproof midsole
4002.99.00
Dominican Republic
$0.297
Lacquer
Not provided
Dominican Republic
$0.231
Latex glue
3505.00.00
Guatemala
$0.254
Shalf logo
4016.99.60
Dominican Republic
$0.187
Outsole logo
4016.99.60
Dominican Republic
$0.062
Sock logo
4908.10.00
China
$0.072
Lining label
4908.10.00
China
$0.052
Oil
2710.19.90
Dominican Republic
$0.495
Inner Box (packaging)`
4819.20.90
China
$0.309
Carton (packaging)
4819.20.90
Dominican Republic
$0.626
UCC Label
4908.90.00
China
$0.124
Packing tissue paper
4823.20.00
Dominican Republic
$0.189
Box label
4911.99.80
China
$0.062
UPC label
4911.99.80
China
$0.003
Hang tag
4821.10.40
China
$0.078
Seal tape
5806.20.00
Dominican Republic
$0.011
Micro-Pak
3812.20.00
Dominican Republic
$0.053
Outsole Size Marking Sticker
Not provided
Dominican Republic
$0.012
Clapboard
Not provided
Dominican Republic
$0.042
Cardboard
4819.20.90
Dominican Republic
$0.042
Based on the information provided, you report that the total value of materials, per unit, produced within DR-CAFTA countries is $6.224. The amount of materials, per unit, produced outside of DR-CAFTA is $1.636. You report that the total adjusted value of each unit is $11.35.
You describe the manufacturing process as follows:
The rubber base, consisting of rubber block, is imported to the Dominican Republic from Guatemala;
The rubber is mixed with other chemicals purchased from China or locally in the Dominican Republic, to prepare the rubber for further processing;
The rubber material is processed through several calendaring machines of varying sizes. The machines utilize hard pressure rollers to smooth the rubber into sheets as well as to obtain the desired texture and finish;
Rubber sheets are cut into pieces by an operated press cutting machine;
Rubber outsoles are pressed and formed in a heated mold;
Chinese-origin polyester fabric is cut and stitched to create the sock lining;
The sock lining is mounted in a last and cement glue is applied;
Rubber pieces are mounted and cemented in the last with the lining on a rotary assembly line. The following rubber pieces are applied in the line: quarter or vamp reinforcement, backstay or heel reinforcement, midsole, vamp, outer sole, back shaft strip, top edge, lower foxing edge, and logo;
Lacquer finish oil is sprayed on the boot;
The boot is placed in an oven to be vulcanized;
The boot is removed from the last after vulcanization;
The boot is placed in the finishing and packing line. The following components are added at this point: heat transfer labels, insole, tags, cardboards, wrapping papers, size labels, adhesive labels, shoe box, and carton box;
The boots, now complete and packaged, are stored and ready to be shipped.
ISSUE:
Whether the rubber children’s boots are properly classified under subheading 6401.92.9060, Harmonized Tariff Schedule of the United States (“HTSUS”).
Whether the rubber children’s boots are eligible for preferential tariff treatment under DR-CAFTA.
LAW AND ANALYSIS:
Classification
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 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 GRIs may then be applied. Chapter 64, HTSUS, covers footwear, gaiters, and the like, and parts of such articles. Classification of footwear is essentially based upon the composition of the outer soles and uppers. The composition of the outer sole and upper is determined in accordance with note 4(a) and (b), Chapter 64, which provides that:
Subject to note 3 to this Chapter:
The material of the upper shall be taken to be the constituent material having the greatest external surface area, no account being taken of accessories or reinforcements such as ankle patches, edging, ornamentation, buckles, tabs, eyelet stays or similar attachments;
The constituent material of the outer sole shall be taken to be the material having the greatest surface area in contact with the ground, no account being taken of accessories or reinforcements such as spikes, bars, nails, protectors or similar attachments.
Here, the shoe is a waterproof rubber boot for children that extends to the mid-calf. The greatest external surface area of the upper is composed of rubber. Likewise, the outer sole is composed of rubber. Based on the information provided, we agree that the boots are properly classified under subheading 6401.92.9060, HTSUS, which provides for “waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes: other footwear: covering the ankle but not covering the knee: other: other: other.”
Eligibility for DR-CAFTA Preferential Tariff Treatment
DR-CAFTA was signed on August 5, 2004, and includes as parties the United States, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica. The provisions of DR-CAFTA were adopted by the U.S. in the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, Public Law 109-53 (2005). The regulations for DR-CAFTA are set forth in 19 C.F.R. § 10.581 et seq.
General Note 29, HTSUS, sets forth the rules of origin for DR-CAFTA. General Note 29(b), HTSUS, states, in pertinent part:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if—
(i) the good is a good wholly obtained or produced entirely in the territory of one or more of the parties to the Agreement;
(ii) the good was produced entirely in the territory of one or more of the parties to the Agreement, and—
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or
(B) the good otherwise satisfies any applicable regional value content or other requirements specified in subdivision (n) of this note;
and the good satisfies all other applicable requirements of this note; or
(iii) the good was produced entirely in the territory of one or more of the parties to the Agreement exclusively from originating materials.
The subject boots are not wholly obtained or produced entirely in the territory of one or more DR-CAFTA countries, and are therefore not eligible for treatment as an originating good pursuant to General Note 29(b)(i). Instead, pursuant to General Note 29(b)(ii), we look to the applicable tariff shift rule set forth in General Note 29(n). Accordingly, the applicable chapter rule for the subject boots, which are classified under subheading 6401.92.9060, HTSUS, stipulates:
Chapter rule 1: Notwithstanding the tariff classification rules for goods of chapter 64 set forth below, with respect to goods of chapter 64 falling in the following tariff provisions enumerated in this rule for which a rate of duty followed by the symbol “P” in parentheses appears in the “Special” subcolumn of rate of duty column 1, an importer may claim preferential tariff treatment under this note for a good of chapter 64 that meets any tariff classification rule for such good set forth in general note 12, 17, 25, 26 or 28 of the tariff schedule:
tariff items 6401.92.30, 6401.92.60, 6401.99.80,6402.91.05, inclusive, 6402.91.16, 6402.91.30, 6402.91.40, 6402.91.60, 6402.91.70, 6402.99.04, 6402.99.12, 6402.99.21, 6402.99.23 through 6402.99.31, inclusive and 6402.99.41 through 6402.99.79, inclusive; heading 6403; tariff items 6404.11.20 through 6404.19.15, inclusive, and 6404.19.25 through 6404.20.60, inclusive; and headings 6405 and 6406.
A change to subheading 6401.10, or tariff items 6401.92.90, 6401.99.10, 6401.99.30, 6401.99.60, 6401.99.90, 6402.91.10, 6402.91.20, 6402.91.26, 6402.91.50, 6402.91.70, 6402.91.80, 6402.91.90, 6402.99.08, 6402.99.16, 6402.99.19, 6402.99.33, 6402.99.80, 6402.99.90, 6404.11.90 or 6404.19.20 from any other heading outside headings 6401 through 6405, except from subheading 6406.10, provided that there is a regional value content of not less than 55 percent under the build-up method.
A change to any other tariff item of chapter 64 from any other subheading
Emphasis added.
General Note 29(b)(ii) contains both a tariff shift and regional value content requirement. In this case, each of the non-originating components or materials used in the production of the children’s boot undergoes a tariff shift from their respective headings, as listed in the FACTS above, to the applicable heading for the childrens’ boot, 6401.92.90. As such we must determine whether the regional value content requirement is satisfied.
With regard to the build-up regional value content requirement outlined in Chapter Rule 1 for Chapter 64, General Note 29(f)(i)(B) stipulates:
For the build-up method, the regional value content of a good may be calculated on the basis of the formula
RVC = ((VOM)/AV) x 100
where RVC is the regional value content of the good, expressed as a percentage; AV is the adjusted value of the good; and VOM is the value of originating materials that are acquired or self-produced, and used by the producer in the production of the good.
General Note 29(f)(ii)(A) provides further context on what costs may be factored in to the “value of materials” as it is used in the RVC calculation. Specifically, the note states, in relevant part:
For the purpose of calculating the regional value content of a good under this note, and for the purposes of applying the de minimis rules under subdivision (e) of this note, the value of a material is—
In the case of a material that is imported by the producer of the good, the adjusted value of the material;
In the case of a material acquired in the territory in which the good is produced, the value, determined in accordance with Articles 1 through 8, Article 15, and the corresponding interpretive notes of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in Section 101(d)(8) of the Uruguay Round Agreements Act, as set forth in regulations promulgated by the Secretary of the Treasury providing for the application of such Articles in the absence of an implementation; or
In the case of a material that is self-produced, the sum of—
All expenses incurred in the production of the material, including general expenses; and
An amount for profit equivalent to the profit added in the normal course of trade.
Furthermore, in calculating the value of originating materials, GN 29(f)(ii)(B) outlines additional expenses that may be added to the value of an originating material:
The following expenses, if not included in the value of an originating material calculated under subdivision (f)(ii)(A) above, may be added to the value of the originating material:
the costs of freight, insurance, packing and all other costs incurred in transporting the material within or between the territory of one or more of the parties to the Agreement to the location of the producer;
duties, taxes and customs brokerage fees on the material paid in the territory of one or more of the parties to the Agreement, other than duties or taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duty or tax paid or payable;
the cost of waste or spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or byproducts.
As outlined in GN 29(c)(ii)(G), furthermore, “the term ‘adjusted value’ means the value determined in accordance with Articles 1 through 8, Article 15 and the corresponding interpretive notes of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in section 101(d)(8) of the Uruguay Round Agreements Act, adjusted, if necessary, to exclude any costs, charges or other expenses incurred for transportation, insurance and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation.”
Per your follow-up communications, we understand that Hunter is not claiming any of the components are “self-produced.” As such, we understand that the reported value of each material is based on GN 29(f)(ii)(A)(1) for material imported by the producer and GN 29(f)(ii)(A)(2) for material acquired in the territory in which the good is produced, in this case the Dominican Republic. The revised bill of materials indicates that the total value of originating materials is $6.224 per unit. For each originating material, the bill of materials also indicates the amount of additional expenses added pursuant to GN 29(f)(ii)(B) (e.g., freight, insurance, packing). The adjusted value per unit, meanwhile, is $11.35. Based on the relevant build-up formula, RVC = ((VOM)/AV) x 100, in this cased RVC = (6.224/11.35) x 100, the regional value content of the subject merchandise is 54.837%, which is below the required 55% requirement provided for in GN 29(n) for goods classified under subheading 6401.92.9060, HTSUS.
Based on the foregoing, the RVC of 54.837% is below the 55% regional value content required for subheading 6401.92.9060, HTSUS, in the tariff shift rule set forth in GN 29(n). As such, we determine the subject pink fizz boot, style KFT5094RMA, does not qualify for preferential treatment under the rules of DR-CAFTA.
HOLDING:
With respect to the tariff classification of the subject merchandise, based on the information provided, we agree that the boots are properly classified under subheading 6401.92.9060, HTSUS, which provides for “waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes: other footwear: covering the ankle but not covering the knee: other: other: other.”
With respect to the eligibility of the subject merchandise for preferential treatment under the DR-CAFTA agreement, based on the facts set forth above, the merchandise at issue, children’s rubber boots, will not qualify as originating goods under DR-CAFTA.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach 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. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
Sincerely,
Monika Brenner, Chief Valuation and Special Programs Branch