CLA-2 RR:CR:TE 964978 BAS
Stephanie A. Goldfischer, Esquire
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP
245 Park Avenue
33rd Floor
New York, New York 10167-3397
RE: Classification of a women’s slip-on shoe with outer sole of textile and rubber/plastics
Dear Ms. Goldfischer:
This is in reply to your letter, dated February 2, 2001, on behalf of your client, E.S. Originals, Inc., requesting a ruling concerning the classification of a women’s open toe slip-on shoe. You submitted a sample of the shoe to assist us in our determination, as well as a supplemental submission, dated October 5, 2001.
FACTS:
The merchandise under consideration is a navy blue, size six, open toe shoe, identified by Style Number PP 759-0. The upper is made of an elasticized textile material. The outer sole is composed of a unit-molded rubber/plastics material to which a thin layer of textile material has been applied on the portion of the sole below where the ball of the foot rests. The area of textile material measures approximately 2.5 inches by 4 inches, an area of the sole which appears to be considerably larger than the area of rubber/plastics to which textile has not been applied. Counsel submits the results of laboratory tests on the shoe. According to Consumer Testing Laboratories report number N 60934R of January 30, 2001, 69.59% of the subject merchandise’s outer sole in contact with the ground is textile.
ISSUE:
Whether the women’s slip-on shoe is classifiable under Heading 6404, HTSUSA, which provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials; or under Heading 6405, HTSUSA, as other footwear?
LAW AND ANALYSIS:
Classification under the HTSUSA is made in accordance with the General Rules of Interpretation (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 GRIs may then be applied. When interpreting and implementing the HTSUSA, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, while neither legally binding nor dispositive, provide a guiding commentary on the scope of each Heading, and are generally indicative of the proper interpretation of the HTSUSA. Customs believes the ENs should always be consulted. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The ladies open toe slip-on shoe is potentially classifiable in two HTSUSA headings, these being Heading 6404, HTSUSA, which provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials, and Heading 6405, HTSUSA, which provides for other footwear.
HEADING 6404, HTSUSA
Heading 6404, HTSUSA, provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials.
Chapter 64, note 4(b) states that “[t]he constituent material of the outer sole shall be taken to be the material having the greatest surface area in contact with the ground, no account being taken of accessories or reinforcements such as spikes, bars, nails, protectors or similar attachments.” General EN (C) chapter 64, HTSUSA, specifies that the outer sole is that part of the footwear which, when in use, is in contact with the ground.
The subject shoe features an outer sole that consists of both textile and rubber/plastics. Should it be determined that the rubber/plastic is the material having the greatest surface area in contact with the ground, the shoe will be classified under heading 6404, HTSUSA.
HEADING 6405, HTSUSA
The other heading at issue is heading 6405, HTSUSA, which provides for other footwear. The ENs to heading 6405, HTSUSA, state, in pertinent part, that the heading includes footwear with outer soles of textile fabric. As previously noted, visual examination and lab testing of the subject merchandise indicate that the textile material would have the greatest surface area in contact with the ground. Should we conclude that the shoe has an outer sole of textile material, the shoe will be classified in Heading 6405, HTSUSA.
TARIFF ENGINEERING
With a significant disparity in duty rates, it may be financially advantageous to import a shoe with an outer sole of textile materials as opposed to one of rubber or plastic material. It is clear that a thin layer of textile material has been attached which covers most of the rubber portion of the shoe, which rests under the ball of the foot. Accordingly, the fundamental issue in this case is whether or not the textile material that has been applied to the contact surface of the outer sole is permissible tariff engineering.
The concept of tariff engineering is based on the long-standing principles that merchandise is classifiable in its condition as imported and that an importer has the right to fashion merchandise to obtain the lowest rate of duty and the most favorable treatment. In U.S. v. Citroen, 223 U.S. 407 (1912), Justice Hughes pointed out that “although dutiable classification of articles imported must be ascertained by an examination of the imported article itself, in the condition in which it is imported [,] this, of course does not mean that a prescribed rate of duty can be escaped by resort to disguise or artifice.” In the case at hand, then, a determination must be made as to whether or not the addition of a layer of textile material to the otherwise rubber/plastic sole is a disguise or artifice. The textile material is part of the merchandise as imported. The textile appears to have been glued to the sole of the shoe and is not easily removed. We find that the textile material is not an artifice or a disguise but rather a constituent material of the outer sole.
Recently in Heartland By-Products, Inc. v. United States, 264 F.3d 1126 (Fed. Cir. 2001), the Court upheld Customs’ determination that adding molasses to raw sugar prior to importation in order to obtain a lower duty rate and to avoid quota restrictions was improper tariff engineering. The Court upheld Customs’ revocation of a New York ruling letter in which the agency concluded that “the processing in this case is not legitimate tariff engineering. But rather, it is merely disguise or artifice intended to escape a higher rate of duty such as a quota tariff rate.” Heartland at 1126 citing 33 Cust B. & Dec. 41, 44 (1999). In Heartland the molasses was added to the sugar to form a syrup prior to importation. Once imported the molasses was removed. After the molasses was removed, the sugar was used in the same manner as sugar subject to quota. In its condition as imported then, there was no commercial use for the syrup. Id.
The facts in the instant case are significantly distinguishable from Heartland. The layer of textile material in the instant case is a part of the sole when it is imported. The textile slip-on shoe is sold in exactly the condition as imported. Unlike the facts in Heartland where the molasses was added prior to importation and then removed once imported, the textile covering on the sole of the shoe is not removed prior to its sale. Accordingly, we cannot conclude that the addition of the textile layer to the instant shoe presents a disguise or artifice.
Having concluded that the layer of textile material is a constituent material as imported and is not a disguise or artifice, we find that the textile material has the greatest surface area in contact with the ground. Therefore, the shoe is properly classified under heading 6405, HTSUSA, which provides for “Other footwear.”
This rationale is consistent with several rulings in which importers have altered a shoe’s composition in order to benefit from a lower duty rate. For example, Customs has allowed an importer to add metal weights to shoes to achieve a favorable rate of duty. See PD D85216, dated December 1, 1998 (classifying a dance shoe under a 37-1/2% ad valorem duty rate provision) and NY E81498, dated May 10, 1999 (classifying a metal-weighted modified version of the same dance shoe under a 10% duty rate provision). It would appear that the addition of a metal weight to a dance shoe has questionable commercial purpose. Likewise, in the instant case, it is not necessary that the outer sole’s textile layer have any commercial purpose. Customs has also allowed the composition of shoes to be altered in order to manipulate tariff rates in the minimizing of rubber outsoles on jute espadrilles. See NY F82399, dated February 9, 2000; NY D84488, dated December 4, 1998; and NY 888228, dated August 20, 1993. In addition, this holding is consistent with prior rulings in which we have classified house slippers with stitched on textile outer soles in heading 6405, HTSUSA. See HQ 086349, dated June 25, 1990;
NY 89960, dated April 19, 2001; NY G89205, dated April 19, 2001;
NY E87552, dated October 9, 1999; NY D88731, dated March 11, 1999; PD D80158, dated August 11, 1998; NY D80003, dated July 17, 1998;
NY C87115, dated May 6, 1998; NY D80246, dated August 6, 1998;
NY A86641, dated September 9, 1996; NY 805026, dated December 20, 1994; NY 802557, dated October 24, 1994. This office has also classified rubber fishing boots (waders) with felt soles under heading 6405, HTSUSA. See HQ 953404, dated April 19, 1993.
But see also HQ 955720, dated May 6, 1994, in which footwear with an outer sole consisting of a layer of wool felt glued to a mid-sole of rubber was classified in subheading 6404.19.35, HTSUSA. The layer of wool felt material with a light adhesive backing was easily removed and not intended to be used after importation.
HOLDING
The women’s slip-on, identified by style number PP 759-0 is properly classified under subheading 6405.20.9060 which provides for “Other footwear: With uppers of textile materials: Other, Other: For women.” The general column one rate of duty is 12.5 percent ad valorem.
Sincerely,
John Durant, Director
Commercial Rulings Division