CLA-2 CO:R:C:T 953472 ch
Robert Swierupski
Chief, Special Merchandise Branch
National Import Specialist Division
New York Seaport
6 World Trade Center
New York, New York 10048
Re: Request for opinion concerning the classification of
printed matter packaged with footwear.
Dear Mr. Swierupski:
This correspondence is in reply to your Memorandum of
February 10, 1993, requesting our opinion with respect to the
classification of certain printed matter packaged with footwear
upon importation.
FACTS:
The instant merchandise is a printed leaflet and business
reply mail card packaged with certain footwear. The leaflet
functions as a promotion for shoes. Its text suggests that the
shoes are uniquely adapted for running, and extols the virtues of
their design. It also contains a phone number where information
regarding other products may be obtained. Basic care
instructions are provided.
The business reply mail card is postage prepaid to the
manufacturer. It provides the consumer with information on how
to obtain free publications, and contains a consumer
questionnaire/survey.
ISSUES:
1. Whether the printed matter and the footwear must be
classified separately, pursuant to GRI 1?
2. Whether the printed matter may be classified with the
footwear as "goods put up in sets for retail sale," pursuant to
General Rule of Interpretation GRI 3(b)?
3. Whether the printed matter may be classified with the
footwear as a "composite good," pursuant to GRI 3(b)?
4. Whether the printed matter may be classified with the
footwear as "packing materials," pursuant to GRI 5(b)?
LAW AND ANALYSIS:
General Rule of Interpretation 1
GRI 1 states, in pertinent part, that "classification shall
be determined according to the terms of the headings and any
relative section or chapter notes, provided such headings or
notes do not otherwise require." The leaflet is essentially
promotional in nature and is therefore classifiable under
subheading 4911.10.00, HTSUSA, which provides for trade
advertising material, commercial catalogs and the like. This
subheading is duty Free.
The business reply mail card is classifiable under
subheading 4907.00.00, as "stamp-impressed paper." This
provision is duty Free.
The footwear, which is imported packaged together with the
printed matter, is classifiable in accordance with the provisions
of Chapter 64, HTSUSA.
Goods Put up in Sets for Retail Sale
GRI 3(b) states:
Mixtures, composite goods consisting of different
materials or 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.
You argue that the leaflet, business reply mail card and shoes
packaged together comprise a "set," with the shoes imparting its
essential character. Hence, you conclude that the literature
should be classified with the shoes as "footwear."
The Explanatory Notes (EN) to GRI 3(b) provide, in pertinent
part, that:
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 different articles
which are, prima facie, classifiable in
different headings.
* * *
(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).
As noted above, the shoes and the accompanying literature are
classifiable in three distinct headings. Furthermore, as the
shoes and literature are packaged together in a shoe box, they
have been put up in a manner suitable for sale directly to users
without repacking. The primary issue presented is whether the
merchandise as packaged "meet a particular need or carry out a
specific activity."
The EN to GRI 3(b) set forth several examples which aid our
interpretation of this phrase:
Examples of sets which can be classified by reference
to Rule 3(b) are:
(1) Sets, the components of which are intended to
be used together in the preparation of a
spaghetti meal, consisting of a packet of
uncooked spaghetti (heading 19.02), a sachet
of grated cheese (heading 04.06) and a small
tin of tomato sauce (heading 21.03), put up
in a carton:
Classification in heading 19.02.
The Rule does not, however, cover selections
of products put up together and consisting,
for example, of:
- a can of shrimps (heading 16.05), a can of
pate de foie (heading 16.02), a can of cheese
(heading 04.06, a can of sliced bacon
(heading 16.02) and a can of cocktail
sausages (heading 16.01); or
- a bottle of spirits of heading 22.08 and a
bottle of wine of heading 22.04.
In the case of these two examples and similar
selections of products, each item is to be
classified separately in its own appropriate
heading.
(2) Hairdressing sets consisting of a pair of
electric hair clippers (heading 85.10), a
comb (heading 96.15), a pair of scissors
(heading 82.13), a brush (heading 96.03) and
a towel of textile material (heading 63.02),
put up in a leather case (heading 42.02):
Classification in heading 85.10.
In (1) and (2), the examples referred to as "sets" share a
common trait. The individual components in each example are used
together or in conjunction with another for a single purpose or
activity. In the "spaghetti meal" example, each component may be
sold separately and used in a variety of recipes. However, sold
together they are clearly intended to be used together for the
specific purpose of preparing a single dish. Similarly, the
"hairdressing set" is comprised of various articles that may be
sold individually for many purposes. However, taken together
they are designed to be used together for a single activity.
On the other hand, (1) contains two examples where articles
put up together are not regarded as "sets," despite the fact that
they are related to one another and can be used at the same time.
In the "canned goods" example, each can is related by the fact
that they all contain food. In addition, it is possible to serve
them on the same occasion. One could argue that they meet the
specific need of "eating a meal." However, they do not interact
with one another so as to comprise a single dish. Therefore,
they do not comprise a set.
In the "spirits" example, the two articles are related as
they both contain alcohol. Moreover, the wine and liquor may be
served together at dinner or at a party. It is possible to argue
that they have been packaged together for the specific activity
of "social drinking." However, they are not used in conjunction
with one another so as to be suitable for a single drink or for
use on a specific occasion. Hence, they are not classified as a
set.
In this case, you reason that the shoes and the accompanying
literature satisfy the particular need of "having shoes to wear."
The individual component articles arguably serve this purpose as
they are each related to footwear. However, the shoes and
literature do not result in a combination that meets a single
need or activity. Rather, the literature serves a promotional or
advertising function, while the shoes serve a separate practical
purpose. Therefore, these items do not comprise a set.
Composite Goods
The EN to GRI 3(b) provide, in part, that:
For the 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.
The shoes and the printed materials are not attached to each
other. Hence, they may be viewed as composite goods only if they
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." You point out that the
literature accompanying the shoes would not normally be offered
for sale alone. Therefore, the issue before us is whether these
items are "adapted one to the other and are mutually
complementary and that together they form a whole."
The EN to GRI 3(b) set forth two examples of articles
regarded as composite goods:
(1) Ashtrays consisting of a stand incorporating
a removable ash bowl.
(2) Household spice racks consisting of a
specially designed frame (usually of wood)
and an appropriate number of empty spice jars
of suitable shape and size.
In the first example, a removable ashtray and a stand may be
joined to form an "ashtray stand." The second example involves a
customized frame which possesses slots of a proper size to hold
jars of specified dimensions. Thus, the frame and the jars may
be joined to form a spice rack. These exemplars suggest that a
composite good may consist of two or more items which may be
physically joined together so as to comprise a completed article.
In this case, the literature and the shoes cannot be joined
together physically, or in any other manner, to make up a single
complete article. Rather, the shoes are completed articles unto
themselves, as are the printed materials. Accordingly, they do
not comprise a composite good.
Packing Materials
GRI 5(b) states that:
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.
As this language indicates, GRI 5(b) encompasses materials and
containers used to protect goods for shipping, so long as they
are of a kind normally used for this purpose and they are not
clearly suitable for repetitive use. In addition, we have
interpreted this provision to include retail packing of a kind
used to display merchandise. For example, in Headquarters Ruling
Letter (HRL) 555806, dated January 14, 1991, and HRL 954437,
dated November 9, 1993, we concluded that devices used to inflate
certain handbags and backpacks were packing materials.
However, the instant printed matter fails to perform these
functions. The literature does not protect merchandise during
shipping. Moreover, the printed matter does not enhance the
appearance of the shoes for display purposes. We do not
interpret GRI 5(b) so as to encompass material which has been
merely packed with goods. Therefore, the printed material is not
classifiable as packing materials.
Practical Concerns
In your Memorandum, you assert that classifying the shoes
and accompanying literature individually will result in a
"blizzard" of unnecessary paperwork and irrational classification
distinctions.
First, you point out that separate classification of
incidental printed materials could have the effect of defeating
otherwise legitimate sets. For example, the items comprising the
"spaghetti meal" exemplar cited above are clearly to be regarded
as a set upon importation. If these articles are packaged with
promotional literature, however, this material would be
classified separately. From this fact we could infer that the
package as a whole could not be viewed as a set, and each
component item would be classified individually.
In Headquarters Ruling Letter 950466, dated January 6, 1992,
we addressed the classification of an elastic cord lace system
for athletic shoes. This unit was comprised of two stretch lace
cords secured at either end by a piece of plastic, two round
plastic clips covered by rubber semi-basketballs, and a round
flat plastic sticker printed with the legend "Do It With NRG."
In that ruling, the importer argued that inclusion of the plastic
sticker precluded the entire unit from being classified as a set.
We stated:
Under the de minimis rule, a component which is merely
an incidental or immaterial element of an entire
article, does not enhance its value, and has no
commercial purpose, is disregarded for classification
purposes. (Emphasis in original).
Applying these criteria, we held that the sticker was de minimis
and we disregarded the sticker completely. Therefore, the set
was not defeated.
In this case, the purchaser of the shoes does not bargain
for inclusion of the printed matter. Hence, this material is an
incidental or immaterial component of the package, and does not
enhance the value of the merchandise. Moreover, the literature
has no commercial purpose related to the set, as the consumer
does not view this material at the time of purchase.
Accordingly, the printed literature is de minimis and may be
disregarded for classification purposes. Hence, a valid set will
not be defeated by the inclusion of the instant literature.
Second, you state that many inspectors and import
specialists ignore the promotional literature accompanying the
article of chief value in a given shipment. On the other hand,
it is possible for importers to list the printed materials as
separate items upon entry. If we find that the literature is not
classifiable with the merchandise as a set or composite good, you
argue that the shipments will be inconsistently classified based
solely upon the manner in which they are entered.
The differing entry practices you cite are not the result of
inconsistent classification principles. Although the printed
matter is properly classified as separate items when imported
with the footwear, Customs officials ignore the literature
because it is de minimis. For the same reason, importers usually
do not itemize de minimis literature accompanying the merchandise
of chief value. In the interests of consistency, Customs should
disregard the literature even when an importer takes the trouble
to itemize it separately.
Although we have determined that the printed matter is de
minimis in this instance, we note that this conclusion may not be
warranted in all cases. We recognize that literature packaged
with merchandise may be of such a nature or of such value in
certain instances that it cannot and should not be considered de
minimis. In that event, the de minimis rule will not apply and
the printed matter should be classified separately. Further,
there may be instances where an importer wishes to take advantage
of certain special programs available under Chapter 98. In these
instances the de minimis rule should not be used to defeat the
importer's right to claim such preferential treatment.
Finally, you point out that certain tariff headings involve
"price breaks." As an example, you cite the classification of
sports footwear, with outer soles of rubber or plastics.
Pursuant to subheading 6404.11.70, if the shoes are valued at
between $3.00 and $6.50 per pair, they are dutiable at $.90 per
pair + 37.5%. On the other hand, if the shoes are valued at
between $6.50 and $12.00 per pair, they are dutiable at $.90 per
pair + 20%. Thus, if the shoes have a value of $6.49 per pair
and the promotional literature has a value of $.02, separating
the literature from the shoes will affect their classification.
You imply that this result will negatively impact the
classification of footwear. We disagree.
It should be noted that this decision is inapplicable
insofar as the appraisement of merchandise is concerned.
Accordingly, the classification of merchandise subject to price
break subheadings, i.e., where classification of the merchandise
is dependent on its appraised value, will be unaffected.
Furthermore, it should also be noted that while the concept of de
minimis is present in NAFTA, e.g., in article 405 and in section
5 of the NAFTA Rules of Origin Regulations, this decision has no
bearing whatsoever on the application of de minimis under NAFTA.
American Goods Returned
It should be noted that if the literature involved in this
case is of United States origin and is being returned with the
footwear without having been advanced in value or improved in
condition while abroad, it would be entitled to duty-free
treatment under subheading 9801.00.10, HTSUSA, assuming
compliance with the documentation requirements of 19 CFR 10.1.
See Superscope, Inc. v. United States, 13 CIT 997, 727 F.Supp.
629 (1989), and HRL's 731806, dated November 18, 1988, and
556798/556797, dated September 23, 1993. Under these
circumstances, the value of the printed matter would not be
included in the appraised value of the footwear.
Holding
The subject leaflet, business reply mail card and footwear
do not comprise a "set put up for retail sale," a "composite
good" or "packing materials" pursuant to the GRI. They shall be
disregarded as de minimis materials for classification purposes.
Sincerely,
John Durant, Director