BOR-4-07:OT:RR:BSTC:CCI H117917 ALS
Mr. Arthur W. Bodek
Ms. Tracey Topper Gonzalez
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP
399 Park Avenue, 25th Floor
New York, New York 10022-4877
RE: Instruments of International Traffic; 19 U.S.C. § 1322(a); 19 CFR 10.41a; Harmonized Tariff Schedule of the United States Annotated (HTSUSA) subheading 9803.00.50; HTSUSA, U.S. Note 1(a), Chapter 98, Subchapter III; HTSUSA, General Rule of Interpretation [GRI] 5(b); Plastic Garment Hangers
Dear Mr. Bodek and Ms. Gonzalez:
This is in response to your correspondence, dated July 30, 2010, with accompanying samples, in which you requested a ruling on behalf of your client, Tommy Hilfiger USA, Inc, on whether certain plastic hangers may be entered under Harmonized Tariff Schedule of the United States Annotated (HTSUSA) subheading 9803.00.50 as substantial containers or holders, subject to the entry requirements pertaining thereto, and if so whether they are subject to the requirements of 19 CFR 10.41a. Our ruling is set forth below.
FACTS:
There are 14 different styles of plastic hangers at issue here. Hanger styles 484, 485, and 479 are “top” hangers made of clear plastic, with a metal swivel hook and indented groove on each side of the hangers to allow garments with straps to be placed inside them. Hanger styles 6212, 6214, 6012, 6014, and 7012 are “bottom” hangers made of clear plastic with a
metal swivel hook and spring-loaded metal grips attached. These hangers are designed to hold pants, shorts, or other bottom garments. Hanger styles 3316, 3320, 3328, 3329, and 3936 are “outerwear” hangers made of clear plastic with metal swivel hooks attached. Hanger style 584 is a “knitwear” hanger made of clear plastic with a metal swivel hook attached. You had previously stated that approximately 50 million to 250 million are in use on an annual basis.
Incidentally, you note that this office erroneously uploaded a document on the Customs Rulings Online Search System (CROSS) with the ruling number H071185, which is different from the actual ruling. We issued CBP Ruling HQ H071185 to you on April 28, 2010, which you acknowledge. HQ H071185 is related to the present case in that it discusses the same proposed transaction as the one discussed herein, but from a different perspective.
ISSUES:
(1) Whether the plastic garment hangers described above may be designated as instruments of international traffic pursuant to 19 U.S.C. § 1322(a) and 19 CFR 10.41a.
(2) Whether the plastic hangers described above may be imported as substantial containers or holders under HTSUSA subheading 9803.00.50, subject to the normally applicable merchandise entry requirements.
(3) Whether the plastic hangers described above are exempt from the requirements of 19 CFR 10.41a if found eligible for treatment under HTSUSA subheading 9803.00.50.
(4) Whether the erroneous uploading to CROSS of a document with the same ruling number as H071185 constitutes the issuance of a ruling, the removal of such from CROSS being subject to the notice and comment requirements of 19 U.S.C. § 1625(c)(1).
LAW AND ANALYSIS:
(1) Before we address the whether or not the subject hangers are eligible to be entered under subheading 9803.00.50, we must determine if they may be designated as instruments of international traffic. Pursuant to 19 U.S.C. § 1322(a), instruments of international traffic (also referred to herein as “IITs”) shall be excepted from the application of the Customs laws to the extent that such terms and conditions are prescribed in regulations or instructions. Pursuant to 19 CFR 10.41a(a)(1), the Commissioner of Customs and Border Protection (CBP) is authorized to designate as IITs such additional articles not specifically noted in that section. Once designated as such, the instruments may be released without entry or payment of duty.
To qualify as an IIT within the meaning of 19 U.S.C. § 1322(a) and 19 CFR 10.41a(a)(1), an article must be used as a container or holder. The article also must be substantial, suitable for and capable of repeated use, and used in significant numbers in international traffic. See Harmonized Tariff Schedule of the United States Annotated subheading 9803.00.50 and CBP Ruling HQ 112303 (August 14, 1992).
With regard to the plastic garment hangers at issue, we have ruled on articles of similar construction and purpose. In CBP Ruling H042107 (November 24, 2008), we held that plastic garment hangers made of molded plastic qualified as IITs. That ruling cited Holly Stores, Inc. v. United States, 697 F.2d 1387 (Fed. Cir. 1982), which held that the concept of reuse referred to in numerous CBP rulings means the article is used for commercial shipping and transportation purposes, not non-commercial or fugitive uses. We further defined the concept of reuse in CBP Ruling HQ 116032 (October 30, 2003), in which we held that “reuse” in this context means using more than twice. See also H042107, supra. In this case, you state that the plastic garment hangers will be collected from retail stores after shipment for reuse. We note that the subject hangers are of similar design and construction as those we ruled upon in H050604 (March 18, 2009), and we also note the following:
General Rule of Interpretation [GRI] 5(b), HTSUSA, provides:
Subject to the provisions of rule 5(a) above, packing materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.
You note that CBP has previously ruled that the subject hangers are suitable for repetitive use as contemplated by GRI 5(b). CBP has in fact ruled such for most of the hangers at issue. See CBP Ruling NY J88945 (October 29, 2003) [style 479]; CBP Ruling NY J88934 (October 31, 2003) [styles 484 and 3328]; CBP Ruling NY J88944 (October 31, 2003) [styles 6012, 6212, and 484]; CBP Ruling NY J88936 (October 31, 2003) [style 3329]; and CBP Ruling NY J88943 (October 31, 2003) [styles 6014, 6214, 479, and 484] (confirming your statement with regard to the specifically noted styles). While a style that might be identified as “485” has been mentioned in at least three CBP rulings, those rulings did not make a determination on that particular style. See, e.g., CBP Ruling NY J88934, supra. CBP has not ruled upon styles 7012, 3316, 3320, 3936, and 584 in this context.
Given that CBP has previously ruled that styles 479, 484, 6012, 6212, 6014, and 6214 are suitable for repetitive use as contemplated by GRI 5(b), we find that those hangers are physically capable of, and suitable for, reuse or repetitive use. Upon physical examination of styles 7012, 3316, 3320, 3936, and 584, we find that they are also of durable construction and are physically capable of, and suitable for, reuse or repetitive use.
Given such, we find that our analysis in H050604, H042107, and HQ 116032 applies to the subject plastic garment hangers as well. Consequently, we find that the subject plastic garment hangers are substantial, suitable for and capable of repeated use, and are used in significant numbers in international traffic. Therefore, the subject plastic garment hangers qualify as IITs pursuant to 19 U.S.C. § 1322(a) and 19 CFR 10.41a(a)(1).
(2) Subheading 9803.00.50 of the HTSUSA provides for the duty-free treatment of the following:
Substantial containers and holders, if products of the United States (including shooks and staves of United States production when returned as boxes or barrels containing merchandise), or if of foreign production and previously imported and duty (if any) thereon paid, or if of a class specified by the Secretary of the Treasury as instruments of international traffic, repair components for containers of foreign production which are instruments of international traffic, and accessories and equipment for such containers, whether the accessories and equipment
are imported with a container to be reexported separately or with another container, or imported separately to be reexported with a container…
Subheading 9803.00.50 is the only subheading in Subchapter III, Chapter 98, HTSUSA. U.S. Note 1(a) to Subchapter III, Chapter 98, provides, in pertinent part: This subchapter covers only the following:
(a) Substantial containers or holders which are subject to tariff treatment as imported articles and are:
Imported empty and not within the purview of a provision which specifically exempts them from duty; or
Imported containing or holding articles, and which are not of a kind normally sold therewith or are entered separately therefrom; ...
With regard to the subject hangers’ eligibility for duty-free entry under subheading 9803.00.50 as substantial containers or holders, we find the following. You cite CBP Ruling HQ 114360 (June 18, 1998) to support your contention that CBP has previously ruled that clear plastic garment hangers of similar construction are substantial holders within the meaning of subheading 9803.00.50 and therefore are eligible to be entered under 9803.00.50. We find your reading of HQ 114630 to be correct; our findings in 114630 are applicable in this case. Thus, the subject hangers are eligible for entry under HTSUSA subheading 9803.00.50.
(3) You also cite CBP Ruling HQ 116481 (July 26, 2005) to support your contention that the subject hangers should not be subject to the administrative requirements of 19 CFR 10.41a by virtue of their eligibility under 9803.00.50, but instead would be subject to “the ordinarily applicable entry requirements (i.e., not the additional bonding and other administrative requirements applicable to “non-entered” instruments of international traffic).” (Emphasis in original.) You also note the absence of any additional administrative requirements under the Notes to Chapter 98, Subchapter III with regard to goods eligible to be entered thereunder as supporting your claim.
In our ruling HQ 116481, we concluded the following:
[An importer] may handle the scenario presented in three different manners.
If [an importer] makes entry (duty-free) of the containers under subheading 8609.00.00, HTSUS, the containers are deemed exported when they leave the U.S. and are subject to entry upon each subsequent importation into the U.S. [The importer] may continue to make duty-free entry under subheading 8609.00.00, HTSUS. Thus, in this method, [the importer] must "keep track of" these containers and file the necessary entries. Normal manifesting requirements apply. As a second option, [an importer] may make the first entry of the containers duty-free under subheading 8609.00.00, HTSUS, or subheading 9803.00.50, HTSUS. For subsequent importations of the containers, [the importer] may use 19 CFR 10.41b, under which the containers may be released without entry or the payment of duty (subject to the terms of section 10.41b), and request free clearance under subheading 9803.00.50, HTSUS, pursuant to section 10.41b(d)(1). Under this alternative, the containers must be serially numbered as provided in section 10.41b(d) and records must be kept pursuant to section 10.41b(f).
As a third option, [an importer] may treat the containers as instruments of international traffic (IIT's) [sic] within the meaning of 19 U.S.C. 1322(a), 19 CFR 10.41a, and Note 4 to Subchapter III, Chapter 98, HTSUS. As such, they are exempt from entry and the payment of duty. Records must be maintained pursuant to 19 CFR 10.41a(g)(2), described above. Please note also the manifesting
requirements stated in Note 4, excerpted above. The IIT containers may be used between [the importer’s] domestic and international services provided [the importer] complies with the pertinent regulations, including 19 CFR 10.41a(g)(1), described above, which provides that such containers are deemed to remain in international traffic provided the container exits the U.S. within 365 days of the date of its admission.
We find nothing in our previous rulings on this matter that would suggest that goods entered under subheading 9803.00.50, as substantial holders that are of the class of goods specified as IITs, are exempt from the requirements of either 19 CFR 10.41, 10 CFR 10.41a, or 19 CFR 10.41b. In fact, HQ 116481 is clear in stating that 19 CFR 10.41b is applicable to articles entered under subheading 9803.00.50, while not exempting such entered articles from any other provisions normally applicable to IITs. Furthermore, we do not find the lack of specific mention under Subchapter III, Chapter 98, HTSUSA of the provisions of either 19 CFR 10.41, 10 CFR 10.41a, or 19 CFR 10.41b to be indicative of eligible articles’ exemption from any of those requirements. Our findings in HQ 116481 are applicable to the subject hangers as well. Therefore, the subject hangers are not exempt from any IIT requirements under 19 CFR 10.41, 10.41a, or 10.41b if entered under HTSUSA subheading 9803.00.50 as substantial containers or holders.
(4) Finally, with regard the fourth issue noted above, you contend that the erroneously-uploaded document is a ruling within the meaning on 19 CFR 177.1(d), and as such may not be deleted from CROSS without following the modification and revocation procedures provided for under 19 U.S.C. § 1625. Specifically, you contend that the erroneously-uploaded document is a ruling that CBP cannot delete from CROSS without first publishing a notice of such in the Customs Bulletin and providing the public with the opportunity to comment on such, as provided for under section 1625(c).
This office had erroneously uploaded a document to CROSS on which the ruling number H071185 appeared (as noted above, the actual ruling H071185 is related to the present case in that it involved the same proposed transaction). You brought this error to our attention, after which we promptly removed the erroneously uploaded document from CROSS. The erroneously uploaded document was never issued.
Under 19 CFR 177.1(d)(1), a “ruling” is defined as “a written statement issued by the Headquarters Office [of CBP] or the appropriate office of [CBP] as provided in [Part 177 of the CBP Regulations] that interprets and applies the provisions of [CBP] and related laws to a specific set of facts.” Under 19 U.S.C. § 1625(c)(1), a proposed interpretive ruling or decision which would modify (other than to correct a clerical error) or revoke a prior interpretive ruling or decision which has been in effect for at least 60 days shall be published in the Customs Bulletin.
We do not agree with your reading of section 1625(c) as it might apply to the present case. The definition of “ruling” as noted above includes the issuance of a written statement. CBP did not issue the erroneously-uploaded document to anyone. Its erroneous uploading does not constitute issuance, as no signed original exists and CBP did not send it to anyone as a response to a ruling request. The erroneous uploading was a clerical error within the meaning of section 1625(c)(1), as there was no intent to issue the document. Thus, the uploaded document was never in effect as a ruling. Therefore, section 1625(c)(1) does not apply to the publication of HQ H071185 as there is no prior ruling or decision to revoke.
HOLDING:
(1) The subject plastic garment hangers as described above are hereby designated as IITs pursuant to 19 U.S.C. § 1322(a) and 19 CFR 10.41a(a)(1).
(2) The subject plastic garment hangers as described above are eligible for entry under HTSUSA subheading 9803.00.50 to the extent that they are used repeatedly in accordance with GRI 5(b), HTSUSA, and pertinent CBP rulings.
(3) The subject plastic garment hangers are not exempt from the requirements of 19 CFR
10.41a if they are entered under HTSUSA subheading 9803.00.50 as substantial containers or holders.
(4) The notice and comment requirements of 19 U.S.C. § 1625(c)(1) are not applicable to the erroneous uploading of a document that was not and was never intended to be issued as a ruling, and was never in effect as a ruling.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Immigration Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection