BOR-4-07/CLA-2-RR-IT-EC 114360 GOB
Lynne W. Wendt, Esq.
Wendt, Weinberg & Temples LLC
127 Peachtree Street, NE
Suite 1303
Atlanta, GA 30303-1800
RE: Hangers; subheading 9803.00.50, HTSUS; Classification
Dear Ms. Wendt:
This is in response to your recent letter on behalf of FRM
Services ("FRM") which we received on May 14, 1998.
FACTS:
FRM requests that certain hangers be classified under
subheading 9803.00.50, Harmonized Tariff Schedule of the United
States ("HTSUS").
FRM describes certain of the pertinent facts as follows:
The merchandise at issue is clear plastic garment
hangers that have previously been used. These hangers
will be acquired in the U.S. by FRM from clothing
retailers who have used them to transport and display
garments. FRM will sort, sanitize, package and export
the used hangers to various garment manufacturers
around the world in connection with the packaging of
garments to be exported to certain importers in the
U.S. The hangers at issue will then be imported into
the U.S. holding new garments...
...
FRM ... is the exclusive licensee of a patented
automated process for sorting clear plastic garment
hangers for subsequent reuse. FRM is in the process of
contracting with major U.S. retailers to acquire their
excess used garment hangers. FRM will then sort them
to eliminate damaged and defective hangers, sanitize
those selected, package them and ship the used hangers
to garment manufacturers on a global basis. The
garment manufacturers will in turn use the hangers in
preparing new garments for shipment to the retailer.
The hangers we are concerned with in this request will
be imported into the U.S. holding the garments by the
U.S. retailer or its agent.
FRM further states as follows. The hangers are durable and
capable of reuse. The importer of the garments and FRM will be
able to establish and document the reuse of the hangers which
will be used to transport different garments in international
commerce. Documentation is available to establish the U.S. or
foreign origin of the hangers.
The hangers will be owned by the importers of the garments.
FRM states that it will be the "contract recycler" of the
hangers. Once the hangers commence their use as described herein,
FRM will be able to keep track of the total hanger pool.
FRM has provided samples for the three most popular hanger
styles: #484 (17" top hanger), #2012 (12" bottom hanger), and
#4012 (12" bottom hanger with soft pad). FRM states that these
three styles comprise 80 percent of the total hanger volume at
issue. Other style numbers are 479, 485, 498, 1200, 1203, 2008,
2010, 2014, 3328, 5245, and 5265.
ISSUE:
Whether the subject hangers are eligible for classification
under subheading 9803.00.50, HTSUS.
LAW AND ANALYSIS:
Subheading 9803.00.50, HTSUS, is a duty-free provision which
provides:
Substantial containers and holders, if products of the
United States (including shooks and staves of United
States production when returned as boxes or barrels
containing merchandise), or if of foreign production
and previously imported and duty (if any) thereon paid,
or if of a class specified by the Secretary as
instruments of international traffic, repair components
for containers of foreign production which are
instruments of international traffic, and accessories
and equipment for such containers, whether the
accessories and equipment are imported with a container
to be reexported separately or with another container,
or imported separately to be reexported with a
container... [Emphasis supplied.]
Subheading 9803.00.50 is the only subheading in Subchapter
III, Chapter 98, HTSUS. U.S. Note 1(a) to Subchapter III,
Chapter 98, provides, in pertinent part:
This subchapter covers only the following:
(a) Substantial containers or holders which are subject
to tariff treatment as imported articles and are:
(i) Imported empty and not within the purview of
a provision which specifically exempts them from
duty; or
(ii) Imported containing or holding articles, and
which are not of a kind normally sold therewith or
are entered separately therefrom; ...
General Rule of Interpretation 5(b), HTSUS, provides:
Subject to the provisions of rule 5(a) above, 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.
[Emphasis supplied.]
FRM asserts that the second sentence of GRI 5(b) is
applicable in that the hangers are clearly suitable for
repetitive use. It states that its hangers are distinguishable
from other hangers in that FRM "is able to prove that the hangers
will be reused to transport garments from their origin into the
United States and that the same pool of hangers will be
associated with the transportation of many different garments
during their useful life."
In Holly Stores, Inc. v. U.S., 697 F.2d 1387, 1388 (1983),
the Court of Appeals for the Federal Circuit stated with respect
to former General Headnote 6(b):
"Reuse" in this context has been consistently
interpreted to mean practical, commercial reuse, not
incidental reuse. Fontana Hollywood Corp. v. United
States, 64 Cust. Ct. 204, C.D. 3981 (1970), relying on
Tariff Classification Study, Seventh Supplemental
Report (Aug 14, 1963) at 99.
The court in Holly Stores rejected the concept of reuse with
respect to the hangers at issue there based upon the lower
court's finding that only about one percent of the hangers were
reused in any manner at all, and that those uses were
noncommercial. The court did accept the facts that the hangers
were of fairly durable construction and that it would be
physically possible to reuse them.
In Ruling 084068 dated July 21, 1989, we stated:
The classification of the plastic hangers with the
garments with which they are imported in NYRL 837830
was based on the decision in Holly Stores, Inc. v. The
United States ... Although this decision involves the
interpretation of the meaning of "reuse" as it appears
in General Headnote 6(b) of the Tariff Schedules of the
United States (TSUS), we believe it is applicable in
understanding the meaning of "repetitive use" as it
appears in General Rule of Interpretation (GRI) 5(b) of
the Harmonized Tariff Schedule of the United States.
Each provision addresses the issue of when containers
imported with goods are classifiable with those goods
or classifiable separately.
... If considered designed for, or capable of, reuse,
the hangers were to be treated as separate articles of
commerce; if not, they were to be treated as part of
the value of the clothing with which they were shipped
and dutied at the rate for the clothing,
Within the context of 19 CFR 10.41a and instruments of
international traffic, we have held that "repeated use" means
"more than twice." See Ruling 108658.
Our examination of the hangers submitted as samples reveals
that they are of durable construction. We therefore conclude
that they are physically capable of, and suitable for, reuse or
repetitive use.
As stated above, FRM states that the hangers will be reused
and "will be associated with the transportation of many different
garments during their useful life."
The reuse which FRM describes and proposes is a "commercial
reuse," i.e., the hangers will continue to be used in the
commercial transportation of garments. Based upon these
assertions, we accept as a factual premise, and for the purpose
of this ruling we make a factual determination, that the subject
hangers are intended to be reused on a consistent basis.
Because the hangers are durable and capable of reuse, we
determine that they are "substantial holders" within the meaning
of subheading 9803.00.50, HTSUS.
We also find that the requirements of U.S. Note 1 to
Subchapter III, Chapter 98, HTSUS are met in that the hangers
will be imported holding articles and the hangers are not of a
kind normally sold with the articles which they hold. See U.S.
Note 1(a)(ii), Subchapter III, Chapter 98, supra.
FRM has also asserted that documentation is available to
establish the U.S. or foreign origin of the hangers. If the
hangers are of foreign origin, they will have been previously
imported and duty (if any) paid.
Based upon the facts and findings, as detailed supra, we
determine that the subject hangers are eligible for treatment
under subheading 9803.00.50, HTSUS.
HOLDING:
The subject hangers are eligible for treatment under
subheading 9803.00.50, HTSUS.
Sincerely,
Jerry Laderberg
Chief,
Entry Procedures and Carriers
Branch