CLA-2 CO:R:C:G 084930 JBW
Mr. Fred Goris
International Distribution &
Customs Compliance
Fisher-Price
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).
FACTS:
"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.
ISSUES:
(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?
LAW AND ANALYSIS:
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.
HOLDING:
"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.
Sincerely,
John Durant, Director
Commercial Rulings Division