OT:RR:CTF:CPMM H305441 KSG
Allan H. Kamnitz
Sharretts, Paley, Carter & Blauvelt, P.C.
75 Broad Street
New York, NY 10004
RE: Modification of HQ 081729 and HQ 958308; tariff classification of novelty backpacks
Dear Mr. Kamnitz:
This letter is in reference to Headquarters Ruling Letter (HQ) 081729, dated February 16, 1990, and HQ 958308, dated November 7, 1995, regarding the tariff classification of novelty backpacks under the Harmonized Tariff Schedule of the United States (HTSUS).
In HQ 081729, U.S. Customs & Border Protection (CBP) classified a textile stuffed figure representing the character Mickey Mouse with a zippered compartment and straps which allow the item to be worn as a backpack in subheading 4202.92.30, HTSUS, as a backpack. In HQ 958308, CBP classified a stuffed figure representing the character Tasmanian Devil with a zippered compartment and straps which allow the item to be worn as a backpack in subheading 4202.92.30, HTSUS, as a backpack of textile material.
We have reviewed HQ 081729 and HQ 958308 and determined that while the conclusion of the rulings are correct, the reasoning is in error. Accordingly, for the reasons set forth below, CBP is modifying HQ 081729 and HQ 958308.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice proposing to modify HQ 081729 and HQ 958308 was published on June 10, 2020, in Volume 54, Number 22 of the Customs Bulletin. No comments were received in response to this notice.
FACTS:
HQ 081729 involved a backpack representing the character Mickey Mouse. It is composed of man-made textile and has a compartment with a slide fastener closure. Attached to Mickey's hands and feet are straps which allow the article to be worn as a backpack. The marketing for this article refers to it as a "Mickey's Pals Backpack."
HQ 958308 involved a textile backpack representing the character "Tasmanian Devil." It has a semi-plush body, arms, legs and an oversized head. The mouth of the oversized head has a 6 inch deep compartment. The mouth closes with velcro straps. Backpack straps are attached to the upper back and legs.
Both articles were classified by CBP at heading 4202, HTSUS, which provides for backpacks. Both HQ rulings applied GRI 3(b) to arrive at their conclusion.
ISSUE:
Are the novelty backpacks described above properly classified by application of GRI 3(b)?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). 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 2 through 6 may then be applied in order.
The HTSUS subheadings under consideration are the following:
4202 Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper:
9503 Tricycles, scooters, pedal cars and similar wheeled toys; dolls'
carriages; dolls, other toys; reduced-scale (“scale?) models
and similar recreational models, working or not; puzzles of all
kinds; parts and accessories thereof
Chapter Note 2(l), of Chapter 42, HTSUS, excludes articles of chapter 95 (for example, toys, games, sports equipment) from Chapter 42.
Chapter note 1(d), of Chapter 95, HTSUS, excludes containers of heading 4202 from Chapter 95.
The Court of International Trade (CIT) stated in Rubies Costume Co. v. United States, 279 F. Supp. 3d 1145 (Ct. Intl' Trade 2017), aff'd, 922 F.3d 1337 (Fed. Cir. 2019), that "the HTSUS is designed so that most classification questions can be answered by GRI 1." The Explanatory Note ("EN") for Rule 1 states at (IV) that “[P]rovision (III) (a) is self evident, and many goods are classified in the Nomenclature without recourse to any further consideration of the Interpretative Rules (e.g., live horses (heading 01.01), pharmaceutical goods specified in Note 4 to Chapter 30 (heading 30.06)).”
The EN for GRI 3, EN (I) provides as follows:
This Rule provides three methods of classifying goods which, prima facie, fall under two or more headings, …These methods operate in the order in which they are set out in the Rule. Thus Rule 3(b) operates only if Rule 3(a) fails in classification,….
In Rubies, the CIT set forth an approach to reconcile exclusionary notes of varying specificity. In Rubies, the chapter 95 note was more specific than the section XI Note (which includes chapter 61), which broadly excluded all chapter 95 articles. The Court stated that the broad exclusion to chapter 95 operated to eliminate their possible classification as festive articles in chapter 95, HTSUS.
In the instant case, like in Rubies, the exclusionary notes at issue are not equal in specificity. Note 1(d), chapter 95, HTSUS, excludes sports bags and other containers of chapter 42. Note 2(l), chapter 42, HTSUS, excludes articles of chapter 95. In accordance with Rubies, the exclusionary note in chapter 95 is more specific. Therefore, the backpacks of HQ 081729 and HQ 958308 could not be classified in chapter 95, HTSUS.
Further, CBP incorrectly stated in HQ 958308 that both heading 9503, which describes toys, and heading 4202, which describes backpacks, are "equally descriptive of the subject merchandise." Upon further reflection, we find that the headings are not equally descriptive; heading 4202 describing backpacks of textile materials is more descriptive of the articles being classified in Headquarters Ruling Letter (HQ) 081729 and HQ 958308 than heading 9503. Both articles in HQ 081729 and HQ 958308 have a functional storage area in which to transport items. This is in contrast to HQ 962670, dated April 20, 1999, and HQ 961502, dated April 19, 1999, in which dolls with a very small compartment with minimal storage capacity were determined to be classified outside of heading 4202. In NY N149435, dated March 18, 2011 and in NY B85711, dated June 12, 1997, a plush stuffed character with a strap and containing a very small compartment with minimal storage capacity were properly classified in heading 9503, HTSUS, because they were dolls or stuffed animals, which are classified as toys and are not excluded from the heading as a container under Chapter 95 Note 1(d). The articles in HQ 081729 and HQ 958308 must be classified in accordance with GRI 1 in heading 4202, HTSUS, as they store, protect, organize and carry in the manner of a backpack. See Totes, Inc. v. United States, 18 C.I.T. 919 (1994), aff’d by Totes, Inc. v. United States, 69 F.3d 495 (Fed. Cir. 1995). There is no need and it is not proper to proceed to GRI 3.
Based on the above analysis, we affirm the classification in HQ 081729 and in HQ 958308 of the novelty stuffed animal textile backpacks in heading 4202, HTSUS, specifically in subheading 4202.92.31, HTSUS (which replaces the former subheading 4202.92.30, HTSUS), based on the application of GRI 1. We do not proceed to GRI 3 analysis.
HOLDING:
The textile articles are classified in subheading 4202.92.31, HTSUS, the provision for “…backpacks…: Other: With outer surface of sheeting of plastics or of textile materials: Travel, sports and similar bags: With outer surface of textile materials: of manmade fibers”, by application of GRI's 1 and 6. The column one general rate of duty is 17.6% ad valorem.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided for at www.usitc.gov.
EFFECT ON OTHER RULINGS:
HQ 081729 and HQ 958308 are modified in accordance with the above analysis.
In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after publication in the CUSTOMS BULLETIN.
Sincerely,
for
Craig T. Clark, Director
Commercial and Trade Facilitation Division