CLA-2 RR: CTF:TCM W968301 ADK

Peter Jay Baskin, Esq.
Sharretts, Paley, Carter & Blauvelt, P.C.
75 Broad Street
New York, NY 10004

RE: Revocation of New York Ruling Letter (NY) L83296, dated March 25, 2005; Classification of Certain Protective Footwear from China

Dear Mr. Baskin:

This letter is in response to your request of June 19, 2006, to United States Customs and Border Protection (CBP), on behalf of your client Rallye Footwear Inc. (Rallye), in which you requested a binding ruling pertaining to the classification of unfinished Bean Boot bottoms, Style WJ02 (WJ02), under the Harmonized Tariff Schedule of the United States (HTSUS).

After reviewing your request, it came to our attention that New York Ruling (NY) L83296, dated March 25, 2005, in which we classified a Rallye product substantially similar to WJ02, may be inconsistent with our current views. In NY L83296, we determined that the Rallye Bean Boot bottom, Style WJ01 (WJ01), was classifiable under subheading 6402.99.18, HTSUS, which provides for “[o]ther footwear with outer soles and uppers of rubber or plastics: Other footwear: Other: Having uppers of which over 90 percent of the external surface area (including any accessories or reinforcement such as those mentioned in note 4(a) to this chapter) is rubber or plastics (except footwear having a foxing or a foxing-like band applied or molded at the sole and overlapping the upper and except footwear designed to be worn over, or in lieu of, other footwear as a protection against water, oil, grease or chemicals or cold or inclement weather): Other: Other.” We have reviewed NY L83296 and found it to be in error.

Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. §1625(c)), 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, 2186 (1993), notice of a proposed revocation was published on January 10, 2007, in the Customs Bulletin, Volume 41, No. 3. One comment was received in response to this notice.

FACTS:

Style WJ01 is a one-piece molded rubber/plastic boot bottom. The bottom has a treaded outer sole and covers the sides and top of the foot to a point just below the ankle. The sole features a pencil-sized hole, measuring approximately 1 ¼ inch by approximately 3/16 inch, which completely penetrates the heel area. As imported, the Bean Boot bottom does not have a “collar.” Upon entry into the United States, a collar of various heights and materials is attached and the soles are subjected to a molding operation which completes the Bean Boot for retail sale. During this operation, the hole in the sole is sealed.

ISSUE:

Was the unfinished bean boot bottom, style number WJ01, properly classified in NY L83296 as other than protective footwear?

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 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 GRIs 1 through 5, on the understanding that only subheadings at the same level are comparable.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not 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. See T.D. 89-80. It is undisputed that WJ01 is classified in subheading 6402.99, HTSUS, which provides for: “Other footwear with outer soles and uppers of rubber or plastics: Other….” Classification at the eight-digit level is disputed. Specifically, this case turns on whether WJ01 is “designed to be protective,” in its condition as imported. The HTSUS provisions under consideration are as follows:

6402 Other footwear with outer soles and uppers of rubber or plastics: Other footwear:

6402.99 Other: Having uppers of which over 90 percent of the external surface area (including any accessories or reinforcements such as those mentioned in note 4(a) to this chapter) is rubber or plastics (except footwear having a foxing or a foxing-like band applied or molded at the sole and overlapping the upper and except footwear designed to be worn over, or in lieu of, other footwear as a protection against water, oil, grease or chemicals or cold or inclement weather):

Other:

6402.99.18 Other * * *

6402 Other footwear with outer soles and uppers of rubber or plastics: Other footwear:

6402.99 Other: Other: 6402.99.20 Footwear designed to be worn over, or in lieu of, other footwear as a protection against water, oil, grease or chemicals or cold or inclement weather

* * *

On November 17, 1993, CBP published Treasury Decision (T.D.) 93-88, which contains certain footwear definitions used to classify footwear. Customs Bulletin, Volume 27, Number 46. The footwear definitions were provided merely as guidelines and, although consulted here, are not to be construed as CBP rulings. With regard to "protection," T.D. 93-88 states, in pertinent part:

Footwear is designed to be a "protection" against water, oil or cold or inclement weather only if it is substantially more of a "protection" against those items than the usual shoes of that type. For example, a leather oxford will clearly keep your feet warmer and drier than going barefoot, but they are not a "protection" in this sense. On the other hand the snow-jogger is the protective version of the non-protective jogging shoe.

A. Footwear that is a “protection” against water includes: Any item which will keep your foot dry if you linger in a pool of water which is more than 2 inches deep unless: It has a rigid, thick, clog bottom but no protective features – or In normal use, water will get in over the top of the shoe or boot… – or It is a woman’s molded high heeled shoe in which the top of the foot will be exposed to the rain – or It is a molded downhill ski boot. They are primarily designed to protect the ankle from injury, and no non-waterproof alternative is made.

In its March 3, 2005 ruling request, counsel for Rallye argued that WJ01 could not be classified as protective footwear because “[i]n its condition as entered, the subject unfinished article does not have the essential [character] of waterproof or protective footwear…” (Emphasis in original). This argument relies upon GRI 2 (a), which states, in pertinent part:

Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article….

Under GRI 2 (a), incomplete or unfinished merchandise is classified as if it were complete, provided that it bears the essential character of completed or finished merchandise. Based on counsel’s argument, CBP held that “[w]hile “unfinished” in it’s imported condition, the item exhibits the essential character of completed footwear in that it possesses a complete outer sole as well as a substantially complete upper.” NY L83296. As a result, WJ01 was classified under subheading 6402.99.18, HTSUS. We find this analysis to be in error.

While the vast majority of unfinished or incomplete merchandise is classified according to GRI 2 (a), its application is unnecessary here. The subheading 6402.99.20, HTSUS, is broad enough to encompass this merchandise by application of GRI 1. Classification under subheading 6402.99.20, HTSUS, turns on whether the incomplete article is designed to be protective, not whether it has the essential character of completed protective footwear. See Headquarters Ruling (HQ) 963224, dated March 22, 2002 and NY E88827, dated December 6, 1999. Importantly, this test does not require that the footwear actually offer protection in its imported condition. Instead, the unfinished footwear must feature a design capable of offering such protection once completed. Classification in the present matter therefore turns on whether WJ01 is capable of offering protection once completed.

According to T.D. 93-88, footwear is designed to be protective if it will offer “substantially more of a ‘protection’ against [water, oil or cold or inclement weather] than the usual shoes of that type.” Footwear that qualifies as ‘protective’ must be capable of keeping the foot dry if the wearer lingers “in a pool of water which is more than 2 inches deep.” If the footwear features any of the four enumerated exceptions listed in T.D. 93-88, however, it is not protective. Again, we note that subheading 6402.99.20, HTSUS, does not require the merchandise to offer such protection in its condition as imported. Instead, it must be designed or dedicated to provide such protection.

As imported, WJ01 features a heavily treaded outer sole made of thick rubber. These treads are designed to offer maximum traction in slippery or wet conditions. The rubber itself will prevent penetration from winter elements such as rain and ice. The rubber sole, which measures approximately 3 inches, reaches a point just below the wearer’s ankle. Once completed, this will offer enough protection to allow the wearer to linger in a pool of water which is more than 2 inches deep. In addition, style WJ01 does not feature any of the four enumerated exceptions which would prevent classification as protective footwear. Notwithstanding the hole in its sole, WJ01 is designed to offer protection from inclement weather conditions.

Furthermore, Rallye advertises and markets its products as protective footwear. According to its website, Rallye’s products “are designed to withstand the challenging elements of Canadian winters and provide comfort and durability.” (Emphasis added). By Rallye’s own admission, the boots are designed to be worn as protection against inclement weather conditions.

Pursuant to 19 U.S.C. §1625(c)), CBP published a proposed notice of revocation of NY L83296, on January 10, 2007. See Customs Bulletin, Volume 41, No. 3. On February 7, 2007, one comment was received in response to the publication of the proposed revocation. The comment supported CBP’s decision to re-classify the subject Bean Boot bottom in subheading 6402.99, HTSUS. The comment also raised two further arguments in support of the revocation.

The first argument concerns the protection of a domestic U.S. industry through increased duty rates. According to the commenter, “the appellate courts…have consistently recognized that where Congress has expressed a desire to protect a domestic American industry the customs laws should be so construed.” Tariff provisions designed and intended to protect a domestic industry should be construed, to the extent possible, so as to effectuate the legislative purpose of the act. This notion has been expressly extended to the rubber and plastic footwear tariff provisions. While true, this argument does not affect our classification analysis in this matter.

The second argument concerns the issue of tariff engineering. “It is a principle of Customs law that imported merchandise is dutiable in its condition as imported, except in the instance…of deception, disguise or artifice resorted to for the purpose of perpetrating a fraud of the revenue.” Simod America v. United States, 872 F.2d 1572, 1577 (1989) (Citing United States v. Citroen, 223 U.S. 407 (1912)). With respect to tariff engineering, “the inquiry must be -- Does the article, as imported, fall within the description sought to be applied?” Citroen, 488. The commenter asserts that Rallye’s treatment of the boot bottom amounted to disguise because of the intentional alteration of the sole.

It is true that in the instant case, the article does not fit within the description of the merchandise sought to be applied. Nonetheless, the importer’s conduct does not rise to the level of disguise or artifice. The goods were described fully and completely in the initial ruling request. "So long as no deception is practiced, so long as the goods are truly invoiced and freely and honestly exposed to the officers of customs for their examination, no fraud is committed, no penalty is incurred." Meritt v. Welsh, 104 U.S. 694, 704 (1882).

HOLDING:

By application of GRI 6, applying GRI 1, the Bean Boot bottom is classified in subheading 6402.99.33, HTSUS, the provision for: “[o]ther footwear with outer soles and uppers of rubber or plastics: Other footwear: Other: Other: Other: Footwear designed to be worn over, or in lieu of, other footwear as a protection against water, oil, grease or chemicals or cold or inclement weather.” The 2007, Column 1, general rate of duty is 37.5 percent ad valorem.

EFFECT ON OTHER RULINGS:

NY L83296, dated March 25, 2005, 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