OT:RR:CTF:CPMM H305462 RRB
Amy J. Johannesen
Johannesen Associates, PC
Attorneys at Law
69 Charlton Street
New York, NY 10014
RE: Revocation of NY N297394; tariff classification of fashion show items from France
Dear Ms. Johannesen:
This letter is in reference to New York Ruling Letter (“NY”) N297394, dated June 11, 2018, regarding the classification of Chanel, Inc.’s (“Chanel”) runway haute couture wearing apparel, headwear, accessories, jewelry and footwear under the Harmonized Tariff Schedule of the United States (“HTSUS”). In NY N279394, U.S. Customs and Border Protection (“CBP”) classified the runway haute couture items under subheading 9705.00.0070, HTSUSA (“Annotated”) (2018), as “Collections and collectors’ pieces of zoological, botanical, mineralogical, anatomical, historical, archeological, paleontological, ethnographic or numismatic interest … Archaeological, historical, or ethnographic pieces.” After reviewing the ruling in its entirety, we find it to be in error. For the reasons set forth below, we are revoking NY N297394.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice proposing to revoke NY N297394 was published on September 14, 2022, in Volume 56, Number 36 of the Customs Bulletin. No comments were received in response to the notice.
FACTS:
In NY N297394, the runway haute couture items were described as follows:
The merchandise concerned as stated by Counsel is Chanel’s, “one of a kind haute couture runway items,” which include fashion apparel, accessories, jewelry and footwear. No specific year or semi-annual timeframe was mentioned for the runway showcases, nor were styles of identification mentioned for the clothing and accessory items paired together to create specific looks. These showcases occur twice yearly, one in January and one in July. Taken from the position paper filed by Counsel on behalf of Chanel, the haute couture runway apparel items are crafted by hand, some pieces require more than 600 hours to create, and use rare and in many cases one-of-a-kind fabrics and decorative elements.
Chanel is a member of the Chambre Syndicale de la Haute Couture
(“Chambre Syndicale”) in France. The Chambre Syndicale requires its members to adhere to specific criteria as part of its business structure, which includes designing made-to-order clothes for private clients, with more than one fitting, having an atelier (workshop) in Paris that employs at least fifteen staff members full-time; having twenty full-time technical workers in one of their workshops; and presenting a collection of at least fifty original designs—both day and evening garments—to the public every fashion season, in January and July of each year.
Nowhere in NY N297394, or in its original submission, did Chanel identify item numbers, product numbers, item descriptions, costs, or material build sheets for the merchandise at issue.
ISSUE:
Whether the Chanel runway haute couture wearing apparel, headwear, accessories, jewelry, and footwear are properly classified in heading 9705 as a collectors' piece of historical interest or in the HTSUS heading that corresponds to the constituent material of each item.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). 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 2 through 6 may then be applied in order.
GRI 6 provides that for legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.
The HTSUS headings under consideration are the following:
4202 Trunks, suitcases, vanity cases, attaché cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper
4203 Articles of apparel and clothing accessories, of leather or of composition leather
4303 Articles of apparel, clothing accessories and other articles of furskin
4304 Artificial fur and articles thereof
Various headings of chapter 61: Articles of apparel and clothing
accessories, knitted or crocheted
Various headings of chapter 62: Articles of apparel and clothing
accessories, not knitted or crocheted
6402 Other footwear with outer soles and uppers of rubber or plastics
6403 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather
6404 Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials
6405 Other footwear
6504 Hats and other headgear, plaited or made by assembling strips of any material, whether or not lined or trimmed
6505 Hats and other headgear, knitted or crocheted, or made up from lace, felt or other textile fabric, in the piece (but not in strips), whether or not lined or trimmed; hair-nets of any material, whether or not lined or trimmed
6506 Other headgear, whether or not lined or trimmed
7113 Articles of jewelry and parts thereof, of precious metal or of metal clad with precious metal
7116 Articles of natural or cultured pearls, precious or semiprecious stones (natural, synthetic or reconstructed)
9705 Collections and collectors' pieces of zoological, botanical, mineralogical, anatomical, historical, archeological, paleontological, ethnographic or numismatic interest
Note 1(c) to chapter 97, HTSUS, provides that the chapter does not cover “Pearls, natural or cultured, or precious or semiprecious stones (7101 to 7103).”
Note 4(a) to chapter 97, HTSUS, provides that “…articles of this chapter are to be classified in this chapter and not in any other chapter of the tariff schedule.” Consequently, classification in heading 9705, HTSUS, must be considered before resorting to any other heading in the HTSUS. See Headquarters Ruling Letter ("HQ") H021886, dated August 6, 2008.
The Explanatory Notes (“ENs”) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
EN 97.05 states, in pertinent part, the following:
These articles are very often of little intrinsic value but derive their interest from their rarity, their grouping or their presentation….
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(B) Collections and collectors’ pieces of historical, ethnographic, palaeontological or archaeological interest, for example :
Articles being the material remains of human activity suitable for the study of the activities of earlier generations, such as mummies, sarcophagi, weapons, objects of worship, articles of apparel, articles which have belonged to famous persons.
Articles having a bearing on the study of the activities, manners, customs and characteristics of contemporary primitive peoples, for example, tools, weapons or objects of worship.
Geological specimens for the study of fossils (extinct organisms which have left their remains or imprints in geological strata), whether animal or vegetable….
***
Goods produced as a commercial undertaking to commemorate, celebrate, illustrate or depict an event or any other matter, whether or not production is limited in quantity or circulation, do not fall in this heading as collections or collectors’ pieces of historical or numismatic interest unless the goods themselves have subsequently attained that interest by reason of their age or rarity.
There exists no strict standard or enumerated criteria for articles classified in heading 9705, HTSUS. The word “historic” is not defined by the tariff, nor by the ENs, and the dictionary definition is quite broad. The Oxford English Dictionary states that it is, “[a] historical work or subject; a history. Now rare,” and “relating to history; concerned with past events”; “historic, n. and adj.” OED Online. Oxford University Press, July 2022, https://www.oed.com/view/Entry/87298?redirectedFrom=HISTORIC #eid (last visited July 14, 2022).
Translated directly from French, couture means “dressmaking,” while haute means “high.” A haute couture item is always created for an individual client, tailored specifically for the client’s measurements and body proportions based on the couturier’s unique and original design for a particular season. The commercial undertaking in exhibiting Chanel haute couture twice a year in January and July during Paris Fashion Week serves a primary purpose of generating interest in the products displayed and in attracting prospective future business. A secondary objective is the expectation, solicitation, and acquiring of commercial and retail orders for future delivery. The main purpose of showcasing the subject merchandise as runway articles is to further Chanel’s commercial undertaking of advertising and offering its custom haute couture pieces to prospective clients. Thus, haute couture items cannot be classified in heading 9705, HTSUS, as collections or collectors’ pieces of historical interest unless the goods themselves have subsequently attained that interest by reason of their age or rarity. Moreover, Customs stated in HQ 961279, dated November 5, 1998, that not all collections qualify for classification in heading 9705, HTSUS. In relation to the runway haute couture merchandise in NY N297394, although such merchandise is limited in circulation based on the specific business structure rules set forth by the Chambre Syndicale, such items are nevertheless produced by Chanel as a commercial undertaking and do not constitute a collection of pieces of historical interest.
Our analysis of how to classify merchandise in heading 9705. HTSUS, is further guided by prior CBP rulings. In HQ 961279, dated November 5, 1998, Customs held that two collector automobiles, one produced in 1929 and the other produced in 1936, did not qualify for classification in heading 9705, HTSUS. One automobile was a 1929 Bentley racing car. The other automobile was a 1936 Mercedes-Benz Special Roadster. Only 50 Bentleys of this type were produced; the first five were produced for racing purposes. It is estimated that less than 15 of the 1936 Mercedes-Benz Special Roadsters still exist. Both automobiles were owned by the Connor Living Trust that maintains a collection of unique and unusual automobiles, mainly produced during the late 1920's through the 1950's that are exhibited at museums and public exhibitions. However, there was no claim that the automobiles in HQ 961279 were connected to famous persons or a historical event. Accordingly, they did not meet the criteria for classification in heading, 9705, HTSUS. Customs also stated in HQ 961279 that EN 97.05 describes a narrow interpretation of coverage that would not include all collection pieces and that heading 9705 is to be applied narrowly.
The runway haute couture wearing apparel, headwear, accessories, jewelry, and footwear present an interesting scenario in a heading 9705 analysis as apparel, headwear, fashion accessories, jewelry, and footwear, even luxury ones, are—generally speaking—mass-produced for commercial consumption. The EN 97.05 provides that “Goods produced as a commercial undertaking to commemorate, celebrate, illustrate or depict an event or any other matter whether or not product is limited in quantity or circulation, do not fall in this heading as collections or collectors’ pieces of historical or numismatic interest unless the goods themselves have subsequently attained that interest by reason of their age or rarity.” Thus, where an item is merely noteworthy, but not of historical significance, CBP will not classify such goods in heading 9705, HTSUS. For example, in HQ 961279, Customs denied duty-free treatment under heading 9705 to two vehicles: a 1929 Bentley Supercharger (Blower) 4 1/2 liter racing car and a 1936 Mercedes-Benz 500K “Special Roadster,” noting that “[t]here is no claim of a specific incident or occurrence involving these automobiles in a significant historical event and there is no specific claim that these automobiles ‘belonged to famous (historical) persons.’”
In reaching its conclusion in HQ 088031 that jewelry owned by the Duke and Duchess of Windsor was eligible for classification in heading 9705, HTSUS, Customs considered the following factors: 1) the articles belonged to famous people; 2) the individuals were not only famous, but historically significant; 3) the articles had a markedly increased value because of their historical significance; 4) the jewelry was not just owned by the Duke and Duchess but was very closely associated with them; and 5) jewelry in general, and this jewelry in particular, is useful in the study of earlier generations.
Applying EN 97.05, the factors considered in HQ 088031, and the above-cited CBP precedent for interpreting heading 9705, HTSUS, to the runway haute couture merchandise in NY N297394, we find that the subject merchandise was improperly classified in heading 9705, HTSUS, which is to be applied narrowly. Here, it is almost impossible to apply the factors that were considered in HQ 088031 or to otherwise analyze the historical significance of the runway haute couture merchandise in NY N297394 because no item numbers, product numbers, item descriptions, cost or material build sheets, or other inventory listing are set forth in the ruling. In addition, NY N297394 does not describe how any of the individual haute couture runway items rises to the level of specific historical interest, rarity or authenticity of ownership. Further, the ruling does not identify an individual item by its rarity, grouping, or presentation. While Chanel’s founder, Coco Chanel, may be considered a historical famous person on the spectrum of fashion and design, there is no indication that any of the runway haute couture merchandise was designed by Coco Chanel herself, such that there would be a nexus or close association with a famous person. More contemporary designers employed by Chanel do not rise to the level of being historically significant for purposes of heading 9705, HTSUS, just because they design for Chanel. Neither is there an indication that any of the haute couture runway items was owned by or otherwise associated with a historical famous person.
Moreover, in HQ 089226, dated July 29, 1991, Customs found that a one-of-a kind watch, valued at $4,975,000.00, taking five years to design, four years to complete, consisting of 1,728 parts and made of 18 carat gold was not classified in heading 9705, HTSUS, because none of these factors associated with its high value established a “historical interest.” Similarly, while Chanel haute couture runway items are one of a kind, high in value, take hours to craft by hand and consist of luxury materials, there is no indication that the exceptionally high value of a particular piece is tied to any historically famous person or specific historically significant event, as no specific pieces are identified in the ruling and the merchandise is only described broadly.
While Chanel itself may be considered an iconic fashion house, that alone does not bestow all of its haute couture runway merchandise with historical significance for purposes of classification in heading 9705, HTSUS. Ultimately, what Chanel has described in its underlying ruling request to NY N297394 is the business structure of a haute couture fashion house as part of a larger commercial undertaking. Chanel adheres to particular industry requirements set forth by the Chambre Syndicale pertaining to its business structure of engaging in the production of high end, customized fashion merchandise in which price is a factor contributing to an item’s rarity. Although limited in circulation because of this business structure, Chanel runway haute couture merchandise is produced as a commercial undertaking. Beyond that, unless a particular piece is closely associated with a historically significant event or historically famous person, it does not qualify for classification in heading 9705, HTSUS.
Based on the foregoing, we find that the runway haute couture wearing apparel, headwear, footwear, jewelry, and accessories in NY N297394, none of which are specifically described or identified, were improperly classified in heading 9705, HTSUS.
Rather, they are classified according to their constituent materials in headings 4202 (certain accessories); 4203 (leather apparel and clothing accessories); 4203 (fur apparel and clothing accessories); 4303 (articles of artificial fur); various headings of chapter 61 and 62 (articles of apparel and clothing); 6402, 6403, 6404, and 6405 (footwear); 6504, 6505, and 6506 (various hats and headgear); and 7113 and 7116 (certain jewelry).
HOLDING:
Pursuant to GRI 1, the Chanel runway haute couture wearing apparel, headwear, footwear, jewelry and accessories in NY N297394 are classified according to their constituent materials in headings 4202 (certain accessories); 4203 (leather apparel and clothing accessories); 4203 (fur apparel and clothing accessories); 4303 (articles of artificial fur); various headings of chapter 61 and 62 (articles of apparel and clothing); 6402, 6403, 6404, and 6405 (footwear); 6504, 6505, and 6506 (various hats and headgear); and 7113 and 7116 (certain jewelry). In order to provide duty rates for the merchandise at issue, each item must be specifically described and identified for purposes of classification.
The text of the most recent HTSUS and the accompanying duty rates are provided for at www.usitc.gov.
EFFECT ON OTHER RULINGS:
NY N297394 is revoked in accordance with the above analysis.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Andrew Langreich for
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
cc: NIS Dharmendra Lilia