CLA-2 CO:R:C:M 951155 DWS
Ms. Holly E. Hanson
Expeditors International of Washington, Inc.
2612 E. 81st Street
Bloomington, MN 55425
RE: Labsac Kit; T.D. 91-7; GRI 3(c); HQ 950514;
Revocation of NY 866500
Dear Ms. Hanson:
We have been asked to review NY 866500, dated September 13,
1991, which classified a Labsac kit under the Harmonized Tariff
Schedule of the United States (HTSUS). The merchandise was
classified under subheading 9801.00.10, HTSUS, which provides
for: "[p]roducts of the United States when returned after having
been exported, without having been advanced in value or improved
in condition by any process of manufacture or other means while
abroad."
FACTS:
The Labsac kit is designed for use in a darkroom to protect
against exposure to photographic chemicals used in
photofinishing. It is assembled in Canada from articles produced
in various countries. The following is a list of the articles
including their country of origin:
1. Pair of safety goggles United States
2. PVC coated nylon apron China
3. Pair of nitrile gloves Canada
4. Nylon carrying bag Canada or Korea
The articles do not undergo any manufacturing process in
Canada but are merely packaged in the nylon carrying bag. The
kit is suitable for sale directly to users without repacking.
ISSUE:
When a set contains U.S. components entitled to duty free
treatment and also contains foreign components, are the foreign
components also entitled to duty-free treatment?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.
In NY 866500, as noted, the merchandise was classified under
subheading 9801.00.10, HTSUS. This ruling was based upon the
reasoning in HQ 554935, dated April 10, 1989, and in HQ 085967,
dated March 2, 1990, both of which were revoked by HQ 950514,
dated December 30, 1991. Both rulings stood for the proposition
that, when a United States-origin item qualifying for subheading
9801.00.10, HTSUS, treatment imparts the essential character of
a set, in such a case that duty-free treatment should be accorded
not only to the United States-origin item but to the foreign-
origin items in the set as well.
Note 1 to chapter 98, HTSUS, provides that:
[t]he provisions of this chapter are not subject to the rule
of relative specificity in general rule of interpretation
3(a). Any article which is described in any provision in
this chapter is classifiable in said provision if the
conditions and requirements thereof and any applicable
regulations are met.
In T.D. 91-7, dated January 8, 1991, it was stated that "[t]he
'conditions and requirements' of subheading 9801.00.10, HTSUS,
are (1) that the article be a product of the U.S.; and (2) that
it not be advanced in value or improved in condition by any means
while abroad."
In NY 866500, it was decided that, under GRI 3(c), the kit
was indeed a set but that no essential character of the set
existed. GRI 3(c), HTSUS, requires classification under the last
applicable subheading in the HTSUS when the essential character
of a set cannot be determined. Because of the reasoning in both
HQ 554935 and HQ 085967, it was ruled that the set was
classifiable under subheading 9801.00.10, HTSUS, the
classification for the United States-origin goggles and the last
applicable subheading in the HTSUS with regard to the subject
articles.
However, T.D. 91-7 reconsidered the reasoning in HQ 554935
and HQ 085967, and it was "determined that [the reasoning] not
only is inconsistent with U.S. Note 1, Chapter 98, HTSUS, but
leads to results not intended by GRI 3(b) or 3(c)." Based upon
the principles established in T.D. 91-7, only United States-
origin products will be entitled to subheading 9801.00.10,
HTSUS, treatment.
In HQ 950514, it was stated that "[i]f a United States-
origin product, such as the respirator with cartridges, imparts
the essential character of a set, then the foreign-origin
products will take the chapter 1-97, HTSUS, rate of duty
applicable to the respirator with cartridges, as if those
articles were ineligible for subheading 9801.00.10, HTSUS,
treatment. They will not be subject to 9801.00.10, HTSUS,
treatment as previously ruled."
The subject goggles, regardless of origin, are classifiable
under subheading 9004.90.00, HTSUS, which provides for:
"[s]pectacles, goggles and the like, corrective, protective or
other: [o]ther." Under the reasoning provided in T.D. 91-7 and
in HQ 950514, the foreign-origin articles of the Labsac kit are
classifiable under subheading 9004.90.00, HTSUS, as it is the
last applicable subheading in the HTSUS with regard to the
subject articles. However, the United States-origin goggles are
classifiable under subheading 9801.00.10, HTSUS, and receive duty
free treatment.
HOLDING:
The safety goggles are classifiable under subheading
9801.00.10, HTSUS, and receive duty-free treatment. Because,
under GRI 3(c), the goggles are classified under the last
applicable subheading in the HTSUS with regard to the subject
articles, under T.D. 91-7, the remainder of the articles are
classifiable under the chapter 1-97, HTSUS, rate of duty
applicable to the goggles. That rate is classifiable under
subheading 9004.90.00, HTSUS, which provides for: "[s]pectacles,
goggles and the like, corrective, protective or other: [o]ther."
The general, column one rate of duty is 7.2 percent ad valorem.
Because of the principles established in T.D. 97-1, NY
866500 is revoked. This revocation is issued under Section
177.9(d), Customs Regulations [19 CFR 177.9(d)]. It is not to be
applied retroactively to NY 866500 [19 CFR 177.9(d)(2)], and will
not, therefore, affect past transactions for the importation of
your merchandise under those rulings. However, for the purposes
of future transactions in merchandise of this type, the above
cited rulings will not be valid precedent. We recognize that
pending transactions may be adversely affected by this
revocation, in that current contracts for importations arriving
at a port subsequent to this decision will be classified pursuant
to them. If such a situation arises, you may, at your discretion
notify this office and apply for relief from the binding effects
of this decision as may be warranted by the circumstances.
Sincerely,
John Durant, Director
Commercial Rulings Division