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HQ 964793

April 3, 2001

CLA-2 RR:CR:TE 964793 GGD


TARIFF NO.: 4202.92.3031

Ms. Ludene Murphree
Gap, Incorporated
One Harrison Street
San Francisco, California 94105

RE: Clarification of PD D82557, issued October 8, 1998; Tote Bag with Coin Purse; Goods Put Up in a Set; Not Composite Good

Dear Ms. Murphree:

On October 8, 1998, the U.S. Customs Port of Philadelphia, Pennsylvania, issued to you Port Ruling Letter (PD) D82557, in which a tote bag and coin purse from China, of similar construction and design, were classified in subheading 4202.92.3031, textile category 670, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), the provision for “Trunks...and similar containers; traveling bags...: Other: With outer surface of sheeting of plastic or of textile materials: Travel, sports and similar bags: With outer surface of textile materials: Other, Other: Of man-made fibers: Other." This office has reviewed PD D82557 and has concluded that the discussion contained therein should be clarified.

In PD D82557, it was correctly determined that the tote bag component imparted the essential character of the two component import, and the import itself, identified as style 545636, was classified in the correct tariff provision. We find, however, that the description of style 545636 in the ruling as "a composite
of a tote bag and coin purse" (emphasis added) could lead to the incorrect conclusion that, for tariff classification purposes, the two components comprise "composite goods" as opposed to "goods put up in sets." Although the term "composite good" is not used in PD D82557, the ruling does not make clear that the two components actually make up a set, and that, as textile products of China, each component is subject to quota and each requires a visa.

The word "composite," standing alone, would appear only to suggest something made from other things. For example, Merriam-Webster’s Deluxe Dictionary, Tenth Collegiate Edition (1998), defines the adjective “composite” as: “1 : made up of distinct parts...." Use of the word "composite" in PD D82557, to describe merchandise consisting of two distinct parts, should no more suggest that the merchandise constitutes a composite good than a set, without a thorough discussion of how the General Rules of Interpretation (GRI) distinguish between the two tariff terms. As indicated above, therefore, this letter is intended to clarify certain aspects of PD D82557 which might otherwise be misinterpreted.

Classification under the HTSUSA is made in accordance with the GRI. 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 GRI may then be applied. The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI.

The complete good at issue in PD D82557 - a tote bag and a coin purse - cannot be classified solely by reference to GRI 1. Although both components are classifiable under heading 4202, classification of the complete good cannot be determined according to the terms of that heading because the good's components are classifiable in different subheadings, i.e., 4202.92 and 4202.32, HTSUSA.

GRI 6 is, by necessity, examined out of order here because it addresses the classification of goods in the subheadings of a heading. In pertinent part, GRI 6 states:

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 [i.e., GRI 1 through GRI 5], on the understanding that only subheadings at the same level are comparable....

In pertinent part, Explanatory Notes (I) and (II) to GRI 6 state:

(I) Rules 1 to 5 above govern, mutatis mutandis [meaning in generally the same manner, but are to be altered when necessary], classification at subheading levels within the same heading.

(II) For the purposes of Rule 6, the following expressions have the meanings hereby assigned to them:

(a) "subheadings at the same level" : one-dash subheadings (level 1) or two-dash subheadings (level 2).

Thus, when considering the relative merits of two or more one-dash subheadings within a single heading in the context of Rule 3(a) [below], their specificity or kinship in relation to a given article is to be assessed solely on the basis of the texts of the competing one-dash subheadings. When the one-dash subheading that is most specific has been chosen and when that subheading is itself subdivided, then, and only then, shall the texts of the two-dash subheadings be taken into consideration for determining which two-dash subheading should be selected.

We thus continue classification analysis of the two component good using the remaining applicable GRI. In pertinent part, GRI 2(b) states:

The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.

GRI 3(a) directs that the headings [and by operation of GRI 6 above, the subheadings] are regarded as equally specific when they each refer to part only of the materials contained in composite goods, or of the items in a set put up for retail sale. Since each of the subheadings refers to part only of the items, however, GRI 3(a) requires that the one-dash subheadings be regarded as equally specific despite the apparent disparity in their texts. For this reason, we next look to GRI 3(b).

GRI 3(b) states, in part, that:

...composite goods...made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a),
shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.

As with GRI 3(a) above, the applicability of GRI 3(b) is somewhat dependent upon whether the complete article is deemed to comprise a composite good or a set. In pertinent part, Explanatory Note IX to GRI 3(b) indicates that:

For purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.

In this instance, the tote bag and coin purse do not form a whole which would not normally be offered for sale in separate parts. Each component is of a kind that is normally offered for sale separately. Therefore, the tote bag and coin purse do not comprise a composite good.

With respect to whether the tote bag and coin purse are classifiable as a set, Explanatory Note X(b) to GRI 3(b) provides, in pertinent part, the following guidance:

For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to mean goods which:

(a) consist of at least two articles which are, prima facie, classifiable in different headings [or, by operation of GRI 6 above, different subheadings]....

(b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and

(c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).

The tote bag and coin purse are classifiable in different subheadings, are put up together to meet the need of carrying various items of personal effects, and are imported suitable for retail sale without repacking. The components therefore constitute goods that are put up in a set for retail sale. GRI 3(b) by application of GRI 6.

Although the essential character analysis was not set forth in PD D82557, the tote bag component was found to impart the essential character of style 545636. At GRI 3(b), the tote bag and coin purse set is classified as if it consisted of the article that gives the set its essential character. The basis for finding that the tote bag component imparts the set's essential character is contained in Explanatory Note VIII to GRI 3(b), which states:

The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.

The tote bag is the component of greatest bulk, weight, and value. It is a travel bag, and its ability to contain and carry a significant array of personal effects, including the only other component of the set, indicates that it imparts the set's essential character. Style 545636 thus remains properly classified in subheading 4202.92.3031, HTSUSA, textile category 670. Both the tote bag and the coin purse components are subject to quota and visa requirements and, for this purpose only, the coin purse component is classified in subheading 4202.32.9550, HTSUSA, textile category 670, the provision for "Trunks...and similar containers; traveling bags...: Articles of a kind normally carried in the pocket or in the handbag: With outer surface of...textile materials: Other: Other, Of man-made fibers."

In light of the analysis above, PD D82557, issued October 8, 1998, is hereby clarified to reflect the fact that the tote bag and coin purse identified as style 545636 constitute a "set," the components of which are each subject to quota and visa requirements. The merchandise remains classified in subheading 4202.92.3031, HTSUSA, textile category 670.

The designated textile and apparel category may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available, we suggest that you check, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories applicable to textile merchandise, you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.


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