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HQ 084930

October 6, 1989

CLA-2 CO:R:C:G 084930 JBW


TARIFF NO.: 9503.70.80

Mr. Fred Goris
International Distribution &
Customs Compliance
636 Girard Avenue
East Aurora, New York 14052-1885

RE: "My Pretty Purse Set"

Dear Mr. Goris:

Your letter of June 5, 1989, on behalf of Fisher-Price, addressed to our New York office, has been referred to this office for a binding ruling on the classification of "My Pretty Purse Set" under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).


"My Pretty Purse Set," style # 0128, consists of a vinyl purse manufactured in Mexico, a plastic comb manufactured in Taiwan, an imitation lipstick and compact manufactured in Hong Kong, and two plastic keys and a key ring manufactured in the United States. The items will be packaged for retail sale in Mexico in a package manufactured in the United States.


(1) What is the classification and rate of duty for a set when one or more components of the set is entitled to a special rate of duty as United States goods exported and returned without being advanced in value or improved in condition?

(2) How are sets evaluated for purposes of determining eligibility for special duty treatment under the Generalized System of Preferences?


Subheading 9801.00.10 of the HTSUSA provides special classification and duty-free treatment to United States goods exported and returned without being advanced in value or improved in condition. In your letter, you state that the keys, the key ring, and packaging will be manufactured in the United States, exported to Mexico for packaging with the other items of the "My Pretty Purse Set," and returned to the United States for retail sale. Thus, you conclude that these items in the set may be eligible for special classification under Chapter 98.

United States law requires classification of goods according to their condition as imported. United States v. Citroen, 223 U.S. 407, 414-415 (1911). The proper inquiry, as stated by the Court, is: "Does the article, as imported, fall within the description sought to be applied?" Id. at 415. The first issue, therefore, is what is the "article" being imported.

The General Rules of Interpretation (GRI's) govern classification of goods in the HTSUSA. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff and any relative section or chapter notes. Certain headings specifically describe goods put up in sets. GRI 3(b) governs classification of goods put up in sets for retail sale that are not governed under a single heading. According to GRI 3(b), sets are classified as if they consisted of the component that imparts the essential character to the set. In either case, once classification is made under these rules, the goods are considered, for duty assessment purposes, as a single unit. The "article, as imported" is the set, not the individual items.

The proper inquiry, therefore, when determining the eligibility of a set for duty-free treatment under subheading 9801.00.10, HTSUSA, is whether the set is a "product[] of the United States ... returned after having been exported, without having been advanced in value or improved in condition...." Unlike subheading 9802.00.80, HTSUSA, which addresses United States components assembled with foreign components, subheading 9801.00.10, HTSUSA, does not provide for a reduction in value for United States components; it merely states that products fitting the terms of the heading enter free of duty. Thus, subheading 9801.00.10, HTSUSA, contemplates an all or nothing application. A set that only contains components of United States origin meets the description of subheading 9801.00.10, HTSUSA, and would consequently be eligible for duty-free treatment. However, a set that includes one or more components of foreign origin cannot be considered a product of the United States. Duty-free treatment under subheading 9801.00.10, HTSUSA, in this case would be denied.

Applying the conclusions derived to "My Pretty Purse Set," the keys, the key ring, and the packaging would not be eligible for duty-free treatment as United States products exported and returned without being advanced in value or improved in condition. The product being imported is the set, not the individual components of the set. The presence of items not made in the United States would remove the set from the terms of subheading 9801.00.10, HTSUSA.

In your letter, you state that the purse will be manufactured in Mexico and that the packaging will be done in Mexico. The second issue presented by the importation of the goods under consideration is whether the set is eligible for special tariff treatment under the Generalized System of Preferences (GSP).

General Headnote 3(a)(iii), HTSUSA, states that rates found under the "special" column of the schedule "apply to those products which are properly classified under a provision for which a special rate is indicated and for which all of the legal requirements for eligibility for such program or programs have been met." Thus, the first step in the process of determining GSP eligibility is proper classification. In the case of a set, as stated above, the result of this first step will be the classification of the set under a single heading. Assuming a special GSP rate is indicated for the heading under which the set is classified, the legal eligibility requirements relating to country of origin and value, as set out in 19 C.F.R. 10.171 et seq. (1989), must be consulted to determine final eligibility. That components of the set are individually eligible for special duty treatment under GSP is not relevant. GSP eligibility depends on classification of the set as a whole.

"My Pretty Purse Set" includes a variety of items that would ordinarily be separately classified. However, the objects are designed and marketed for the amusement of children and are consequently considered toys. The Explanatory Notes, which provide the official interpretation of the HTSUSA at the international level, to Chapter 95 state:

Collection of articles, the individual items of which if presented separately would be classified in other headings in the
Nomenclature, are classified in this Chapter when they are put up in a form clearly indicating their use as toys....

Therefore, "My Pretty Purse Set" is classified in Chapter 95 as other toys, put up in sets, subheading 9503.70.80, HTSUSA. The "special" column accompanying this subheading indicates that duty-free treatment under GSP is available to the set, provided the legal requirements, when applied to the set as a whole, are met.


"My Pretty Purse Set" is classified under subheading 9503.70.80, HTSUSA, as other toys, put up in sets, other, and is eligible for duty-free treatment under the Generalized System of Preferences, provided all legal eligibility requirements are met.


John Durant, Director
Commercial Rulings Division

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