HQ H258772
CLA-2 OT:RR:CTF:TCM H258772 TSM
Mr. Mark J. Segrist, Esq.
Sandler, Travis & Rosenberg, P.A.
225 West Washington Street, Ste. 1640
Chicago, Il 60622
RE: Revocation of NY N255930; Classification of imported garment hangers.
Dear Mr. Segrist:
This is in reference to New York Ruling Letter (NY) N255930, issued to Sears Holding Management Corporation on August 20, 2014, concerning tariff classification of imported garment hangers. In that ruling, the National Commodity Specialist Division found that plastic hangers imported by your client, Sears Holding Management Corporation, when imported separately, are classified under subheading 3923.90.00, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Other.” However, when imported with garments, the subject hangers were found to be classified with those garments and to be dutiable at the same rate of duty as those garments. Upon additional review, we have found this to be incorrect. For the reasons set forth below we hereby revoke NY N255930.
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 (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice was published in the Customs Bulletin, Volume 50, No. 20, on May 18, 2016, proposing to revoke NY N255930, and any treatment accorded to substantially identical transactions. One comment in support of our proposal to revoke NY N255930 was received in response to this notice.
FACTS:
NY N255930, issued to Sears Holding Management Corporation on August 20, 2014, describes the subject merchandise as follows:
Five samples were included with your request. All are hangers made of black plastic with an integral plastic top hanging hook. KMTN15 and KMTR15 are 15 inch top hangers. KMT17 and KMTNR17 are 17 inch top hangers. KMBP12 is a 12 inch bottom hanger with metal spring clips.
ISSUE:
What is the correct classification of the subject plastic garment hangers when imported separately and when imported carrying garments?
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.
The HTSUS provisions under consideration are as follows:
3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics:
3923.90.00 Other
* * *
GRI 5(b), HTSUS, provides as follows:
(b) Subject to the provisions of rule 5(a) above [which are not pertinent here], 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.
It has long been CBP’s position that actual reuse of the imported hangers is not necessary, and is not required, as long as the hangers are of a type suitable for repetitive use. “Suitable for reuse” does not mean merely that the specific hangers are strong enough to be reused, but also that there exists a commercial viability for that reuse. Once it is determined that the particular hanger style is suitable for reuse, there is no need for any importer to provide evidence that hangers of that style are suitable for reuse, and the benefit of separate classification is afforded to all importers of those hangers, even if the hangers are never actually reused. In HQ 964963, HQ 964964 and HQ 964948, all dated June 19, 2001, CBP ruled that certain plastic hangers that were of substantial construction and that were used in hanger recovery systems for the repeated international transport of garments, were suitable for repetitive use for the conveyance of goods within the meaning of GRI 5(b). Accordingly, CBP concluded that these hangers could be classified separately in subheading 3923.90.00, HTSUS, even when imported with garments. Documents were provided to verify the claim that a substantial portion of the hangers that were the subject of those rulings were forwarded to a hanger supply company and then sorted, sanitized and sold to garment vendors for use in packing, shipping, and transporting other garments. In HQ 964963, CBP noted that actual reuse of the hangers is not necessary as long as the hangers are substantial and are of the class or kind of goods used repetitively for the conveyance of garments.
In NY H86527 and NY H86752, CBP classified separately from the accompanying garments hangers that were part of both the “floor ready” and “hanger recovery” programs of the “VICS.” Hangers in the “floor ready” program are those hangers that are ready for sale when received at a retail selling location. Hangers in the “hanger recovery” program are hangers of substantial construction and suitable for international shipment of garments, that are resold for reuse for that function. It should be emphasized that it was only because of the hangers’ suitability for reuse in the hanger recovery program that they were classified separately from the accompanying garments in both NY H86527 and NY H86752.
Sears Holding Management Corporation provided the following information demonstrating that the hangers at issue are suitable for repetitive use within the meaning of GRI 5(b): (1) the subject hangers are made entirely of durable molded plastic and are specially designed by the manufacturer for international transit and multiple international reuse cycles; (2) Sears Holding Management Corporation has successfully obtained from CBP HQ 961973, dated August 13, 1999, in which CBP found that hangers substantially similar in construction to the ones at issue here were clearly suitable for repetitive use within the meaning of GRI 5(b); (3) just like the hangers at issue in HQ 961973, the subject hangers were specifically constructed and tested to be used approximately seven to nine times during their useful life; (4) the subject hangers meet and exceed the VICS hanger guidelines, and were specifically designed for international transit and multiple reuse cycles; and (5) upon comparing the subject hangers to the hangers at issue in HQ H079697, dated October 26, 2009 (which were found to be substantial, suitable for and capable of repeated use), the manufacturer of the subject hangers found that they exceeded, in both strength and durability, those at issue in HQ H079697.
Upon review, we find that the record supports a finding that the hangers at issue are strong enough to be reused and that there exists a commercial viability for that reuse, and that hangers of similar construction are reused repeatedly for commercial shipment of garments. Accordingly, it is our position that the hangers at issue are clearly suitable for repetitive use within the meaning of GRI 5(b). Therefore, we conclude that they are separately classified (whether imported separately or with garments) in subheading 3923.90.00, HTSUS, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Other.”
HOLDING:
By application of GRI 5(b), we find that the subject hangers are classified under heading 3923, HTSUS. Specifically, they are classified in subheading 3923.90.00, HTSUS, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Other.” The 2016 column one, general rate of duty 3% ad valorem.
EFFECT ON OTHER RULINGS:
NY N255930, dated August 20, 2014, is hereby REVOKED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division