CLA-2 CO:R:C:M 952560 DWS
Mr. Norm Seegert
Norman G. Jensen, Inc.
P.O. Box 227
Ranier, MN 56668
RE: Boat Patch Kit; Set; GRI 3(b); Explanatory Note 3(b)(X);
T.D. 91-7; Superscope, Inc. v. U.S.; Country of Origin
Marking; 19 U.S.C. 1304; 19 CFR 134.1(b); 19 CFR 134.32(d);
19 CFR 134.32(m)
Dear Mr. Seegert:
This is in response to your letter of August 3, 1992, on
behalf of Northland Marketing, Inc., concerning the
classification and country of origin marking of boat patch kits
under the Harmonized Tariff Schedule of the United States
(HTSUS).
FACTS:
The merchandise consists of boat patch kits, used in the
repairing and waterproofing of rivets and cracks in aluminum
boats. The kit is comprised of a self-contained butane gas
operated torch, a hand-held, plastic handled, steel wire brush
measuring approximately seven inches, and two glue sticks. The
brush and the glue sticks are products of the U.S., exported to
Canada for repackaging with the butane torch in a blister pack,
and subsequently exported back to the U.S. as a kit. The butane
torch is a product of Taiwan, exported to Canada for repackaging.
ISSUE:
Whether the boat patch kit is classifiable as a set under
the HTSUS? Whether the U.S.-origin articles are entitled to duty
free treatment under subheading 9801.00.10, HTSUS? How are
country of origin marking requirements applied to sets?
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, and provided the headings or notes do not
require otherwise, according to GRI's 2 through 6.
GRI 3 must be considered in the classification of
merchandise put up in sets for retail sale. GRI 3(b) provides
that:
[m]ixtures, 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, insofar as this criterion is
applicable.
In understanding the language of GRI 3(b), the Harmonized
Commodity Description and Coding System (HCDCS) Explanatory Notes
may be utilized. The Explanatory Notes, although not
dispositive, are to be used to determine the proper
interpretation of the HTSUS. Explanatory Note 3(b)(X) (p. 4),
HTSUS, provides that "[f]or the purpose 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)."
It is our position that the subject boat patch kit is a set
for classification purposes. It fully satisfies all three
requirements of Explanatory Note 3(b)(X), HTSUS.
Because the boat patch kit is a set, its essential character
must be determined. In general, essential character has been
construed to mean the attribute which strongly marks or serves to
distinguish what an article is; that which is indispensable to
the structure, core, or condition of the article. In addition,
Explanatory Note VIII to GRI 3(b) provides further factors which
determine the essential character of goods. Factors such as
bulk, quantity, weight or value, or the role of a constituent
material in relation to the use of the goods are to be utilized,
though the importance of certain factors will vary between
different kinds of goods. HCDCS, Vol. 1, p. 4.
We find that the essential character of the kit is the
butane torch. It is the key component in relation to the use of
the kit. The brush and glue sticks are replaced when they are
worn down. The torch, however, is not meant to be replaceable,
as is evidenced by the fact that it is refillable. Therefore,
the kit is classifiable under subheading 8205.60.00, HTSUS, which
provides for: "[b]low torches and similar self-contained torches,
and parts thereof."
Subheading 9801.00.10, HTSUS, 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."
Articles classifiable under that subheading receive duty free
treatment.
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 Superscope, Inc. v. U.S., 13 CIT ___, 727 F.Supp. 629
(1989), the court held that certain glass panels of U.S. origin
that were exported, repacked abroad with certain foreign
components, and returned to the U.S. as part of unassembled audio
cabinets, were entitled to duty free treatment under item 800.00,
Tariff Schedules of the United States (TSUS) (now subheading
9801.00.10 (HTSUS). This was based on the fact that the U.S.
panel portion of the imported article was "not 'advanced in value
or improved in condition . . . while abroad,' but [was] merely
repacked." id. at 631. See HQ 556355.
It is our position that the brush and the glue sticks meet
the requirements of subheading 9801.00.10, HTSUS, and are
therefore classifiable therein. They are products of the U.S.,
and, under Superscope, they are not "advanced in value or
improved in condition by any means" while in Canada.
Consequently, the brush and the glue sticks are classifiable
under subheading 9801.00.10, HTSUS.
As to the country of origin marking issue concerning sets,
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that every article of foreign origin (or its
container) imported into the U.S. shall be marked in a
conspicuous place as legibly, indelibly and permanently as the
nature of the article (or container) will permit, in such a
manner as to indicate to the ultimate purchaser in the U.S. the
English name of the country of origin of the article. Section
134.1(b), Customs Regulations [19 CFR 134.1(b)], defines "country
of origin" as the country of manufacture, production or growth of
any article of foreign origin entering the U.S. Further work or
material added to an article in another country must effect a
substantial transformation in order to render such other country
the "country of origin" within the meaning of marking laws and
regulations.
It is stated in section 134.32(d) and (m), Customs
Regulations [19 CFR 134.32(d) and (m)], that:
[t]he articles described or meeting the specified conditions
set forth below are excepted from marking requirements:
(d) Articles for which the marking of the containers will
reasonably indicate the origin of the articles. . .
(m) Products of the United States exported and returned.
Under 19 CFR 134.32(m), the brush and the glue sticks, all
products of the U.S., do not need to be marked individually, nor
does their country of origin need to be marked on the container.
However, under 19 CFR 134.32(d), the country of origin of the
torch, which is Taiwan, needs to be marked on the container
reasonably indicating the origin of the article.
HOLDING:
The boat patch kit is a set under GRI 3(b), and therefore is
classifiable under subheading 8205.60.00, HTSUS, which provides
for: "[b]low torches and similar self-contained torches, and
parts thereof." The general, column one rate of duty is 5.7
percent ad valorem.
However, the U.S.-origin articles of the kit are
classifiable under 9801.00.10.00, 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." Articles classifiable under that subheading receive
duty free treatment provided that the documentation required by
19 CFR 10.1 is satisfied.
Under 19 CFR 134.32(m), the brush and the glue sticks, all
products of the U.S., do not need to be marked individually, nor
does their country of origin need to be marked on the container.
However, under 19 CFR 134.32(d), the country of origin of the
torch, which is Taiwan, needs to be marked on the container
reasonably indicating the origin of the article.
Sincerely,
John Durant, Director
Commercial Rulings Division