CLA-2 CO:R:C:T 954021 BC
Peter J. Fitch, Esq.
FITCH, KING AND CAFFENTZIS
116 John Street
New York, New York 10038
RE: Classification of jewelry presentation boxes covered with
flock-covered paper; outer surface; external surface; duty
allowance under subheading 9802.00.80, HTSUSA; fabricated
component; assembly; folding; gluing
Dear Mr. Fitch:
This responds to your letter of April 27, 1993, wherein you
requested a ruling regarding the proper classification of plastic
and metal framed jewelry presentation boxes that are covered with
flock-covered paper. Our decision follows.
FACTS:
Your client intends to export from the United States certain
cut-to-shape materials that will be used in the foreign assembly
of jewelry presentation boxes. The boxes are made of plastic or
metal, and are of the kind used in the presentation and/or sale
of jewelry. After production, these jewelry boxes will be
imported into the United States.
The cut-to-shape materials are made of paper and textile
flock material. You submitted samples of each material, and you
described them as follows: "[T]he materials enclosed consist of
paper backings to which textile materials have been applied. In
the case of the burgundy sample, the textile is a man made
flocking which is glued onto the paper. In the case of the tan
sample, the man-made decoration has been electrostatically drawn
onto the glued surface of the paper." The textile covered paper
materials will be assembled onto the jewelry boxes by a folding
and gluing process.
ISSUES:
(1) Are these jewelry boxes classifiable under subheading
4202.92., HTSUSA, as jewelry boxes with outer surface of textile
materials, or under 4202.99, HTSUSA, as jewelry boxes wholly or
mainly covered with paper?
(2) Do these jewelry boxes qualify for a partial duty
allowance under subheading 9802.00.80, HTSUSA, when returned to
the United States?
LAW AND ANALYSIS:
(1) Classification
The essential question is as follows: For purposes of
classification within heading 4202, HTSUSA, do these jewelry
boxes have an outer surface of textiles or of paper?
In Headquarters Ruling Letter 087760, dated October 31,
1991, a case involving the classification of jewelry presentation
boxes of the general kind at issue, Customs considered whether
flock-covered paper was a paper or a textile material for
purposes of classification at the heading level. At that time,
October 31, 1991, paper was not among the materials specified at
the end of the second part (after the semicolon) of heading 4202,
HTSUSA. Therefore, the determination that the flock-covered
paper was either a paper or textile material would determine
whether the jewelry boxes would be classifiable under heading
4202, HTSUSA, or under another heading. If a textile, the
jewelry boxes would be classified under heading 4202, HTSUSA; if
a paper, they would have to be classified elsewhere. The
operative language was the language of the heading: ". . . of
plastic sheeting, of textile materials, of vulcanized fiber or of
paperboard, or wholly or mainly covered with such materials."
The ruling stated the following regarding this particular
issue:
At the four-digit level, heading 4202, HTSUSA, requires
that a good be "of" or "wholly or mainly covered with"
a specified material. However, at the six-digit level,
the nomenclature classifies goods by the material which
comprises the "outer surface." . . . In classifying
goods such as these, we must distinguish between the
requirements of the four- and six-digit headings, since
they dictate different criteria for classifying goods.
. . . .
. . . We find that, used as a covering, the paper
and textile material should be considered a paper for
purposes of heading 4202, HTSUSA. [Emphasis in
original.] As such, it [a covering of paper] is
excluded from classification in that heading. We note
that this finding does not address what the outer
surface of the article might be for purposes of
subheading classification. [Emphasis supplied.]
Evident in the above are two important distinctions: (1) a
covering vs. an outer surface, and (2) classification at the
four-digit (or heading) level vs. classification at the six-
digit (or subheading) level. This ruling was a harbinger of the
instant case, and its pointed reservation to conclude regarding
the "outer surface" issue was an indication of Customs state of
mind on this question in 1991. That is, if Customs position then
was that the covering material was a paper for both heading and
subheading level classification, it would have so stated. That
it did not indicates a recognition that given appropriate facts,
the conclusion might be otherwise.
Today, paper is one of the materials specified in the second
part of heading 4202, HTSUSA. Thus, we are not concerned here
with classification at the heading, or four-digit, level. The
jewelry boxes are classifiable in heading 4202, HTSUSA; the only
question is under which subheading. As stated in HRL 087760, "at
the six-digit level, the nomenclature classifies goods by the
material which comprises the 'outer surface'." See also HRL
087640 (November 8, 1990) and HRL 087755 (December 4, 1990).
The term "outer surface" is not defined in Chapter 42, nor
anywhere else in the HTSUS. In HRL 086775, dated July 9, 1990,
Customs stated that the outer surface "is that which is both
visible and tactile." This statement was repeated with approval
in HRL 087760, which revoked HRL 086775. See also HRL 087787
(December 20, 1990) and HRL 088571 (May 31, 1991). "Tactile" is
defined as follows: "1. Perceptible to the touch: TANGIBLE."
"Tangible" is defined as follows: "1.a. Discernible by the touch
or capable of being touched." Webster's II New Riverside
University Dictionary, (1984) at 1178 and 1182, respectively.
Additional U.S. Note 2 of Chapter 42, HTSUSA, provides that
for purposes of classification under subheadings 4202.12,
4202.22, 4202.32, and 4202.92, "articles of textile fabric
impregnated, coated, covered or laminated with plastics (whether
compact or cellular) shall be regarded as having an outer surface
of textile materials or of plastic sheeting, depending upon
whether and the extent to which the textile constituent or the
plastic constituent makes up the exterior surface of the
article." Thus, this note explicitly provides the mechanism for
making an "outer surface" determination where a textile is
impregnated, coated, covered or laminated with plastic. The note
expresses the concept of "outer surface" by use of the term
"external surface." This note provides a useful clue in
understanding the term "outer surface" when applied to other
component combinations.
Customs application of this note makes it clear that a
composite material that is a textile for classification at the
heading level may be, nonetheless, a plastic for classification
at the subheading level. For example, in HRL 087640, an article
similar to a backpack was classified under heading 4202, HTSUSA.
It was made of a composite textile and plastic material. For
heading level classification purposes, the composite material was
considered a textile, but for classification at the subheading
level, the outer surface, or external surface, was considered a
plastic sheeting. In HRL 087755, a handbag made of a composite
textile and plastic material was classified under heading 4202,
HTSUSA. As in HRL 087640, the composite material was considered
a textile for heading level classification, but the outer
surface, or external surface, was considered a plastic sheeting
for subheading level classification. See also HRL 087210, dated
May 10, 1991.
While there is no legal or U.S. note concerning the
classification of a paper and textile composite material, we
believe that Additional U.S. Note 2 of Chapter 42, HTSUSA, is
instructional in understanding the meaning of "outer surface."
The jewelry boxes at issue are classifiable under the heading as
jewelry boxes wholly or mainly covered with paper. However, for
purposes of classification within heading 4202, HTSUSA, the outer
or "external surface" of the covering controls. The outer or
external surface of the jewelry boxes is textile flock material.
Thus, the jewelry boxes are classifiable under the appropriate
subheading pertaining to articles with an "outer surface of
textile materials." This conclusion is consistent with HRL
087760 and its distinctions pertaining to covering vs. outer
surface and heading level vs. subheading level classification.
You argue that the existence of Additional U.S. Note 2 of
Chapter 42, HTSUSA - restricted as it is to composite materials
of textile and plastic - and the absence of any other note
pertaining to other materials, such as paper and textile,
evidences an intent to limit this kind of construction only to
situations where textiles are impregnated, coated, etc., with
plastic. Thus, you contend, a flock-covered paper covering would
be a paper for both heading level and subheading level
classification regardless of the external surface. The logic is
that if the drafters of the additional U.S. notes intended that
textile and paper combinations be treated in the same way that
Additional U.S. Note 2, Chapter 42, treats plastic and textile
combinations, the drafters would have so specified.
We disagree. We believe that the drafters included the
"instruction" of Additional U.S. Note 2 for the simple reason
that the structure of heading 4202, HTSUSA, calls upon the
classifier to frequently make distinctions based on the
appearance of outer surfaces of textile or plastic materials. The
structure of the heading has not been set up with the same
emphasis on paper and textile material distinctions. Also,
articles consisting of textile and plastic composite materials
are frequently, and properly, considered for classification under
heading 4202, and instructions as to them in this regard, given
the structure of the heading, are helpful. We do not believe
that the absence of a note addressing paper and textile composite
materials, or other composite materials, evidences an intent to
interpret the term "outer surface" differently when confronted
with other component combinations.
Based on the foregoing, we conclude that the composite paper
and textile flock material that covers the jewelry boxes being
imported by your client is a paper for heading level
classification but has an "outer surface" of textile material for
subheading level classification.
2. Duty Allowance Under 9802.00.80, HTSUSA
Subheading 9802.00.80, HTSUSA, provides a partial duty
exemption for:
[a]rticles assembled abroad in whole or in part of
fabricated components, the product of the United
States, which (a) were exported in condition ready for
assembly without further fabrication, (b) have not lost
their physical identity in such articles by change in
form, shape, or otherwise, and (c) have not been
advanced in value or improved in condition abroad
except by being assembled and except by operations
incidental to the assembly process, such as cleaning,
lubricating and painting.
All three of the above requirements must be satisfied before a
duty allowance is granted. An article entered under this tariff
provision is subject to duty upon the full cost or value of the
imported assembled article, less the cost or value of the U.S.
components assembled therein, upon compliance with the
documentary requirements of section 10.24, Customs Regulations
(19 CFR 10.24).
Section 10.14(a), Customs Regulations (19 CFR 10.14(a)),
provides in part that:
[t]he components must be in condition ready for
assembly without further fabrication at the time of
their exportation from the United States to qualify for
the exemption. Components will not lose their
entitlement to the exemption by being subjected to
operations incidental to the assembly either before,
during, or after their assembly with other components.
Section 10.16(a), Customs Regulations (19 CFR 10.16(a)),
provides that the assembly operation performed abroad may consist
of any method used to join or fit together solid components, such
as welding, soldering, riveting, force fitting, gluing,
lamination, sewing, or the use of fasteners.
Operations incidental to the assembly process are not
considered further fabrication operations, as they are of a minor
nature and cannot always be performed in advance of the assembly
operation. See 19 CFR 10.16(a). However, any significant
process, operation or treatment, the primary purpose of which is
the fabrication, completion, physical or chemical improvement of
a component, precludes the application of the exemption under
subheading 9802.00.80, HTSUSA, to that component. See 19 CFR
10.16(c).
In HRL 555601, dated October 29, 1990, Customs held that the
combined operations of scoring paper (of United States origin),
applying tape to its ends, and folding the paper into a bellows
portion in order to make an expandable 21-pocket letter file
folder constituted a fabrication of the component paper within
the meaning of 19 CFR 10.16(c). The bellows configuration was
not only the essence of the U-shaped paper component, but was
also the foundation of the expandable pocket file folder. These
operations were also not considered incidental to the assembly
process, pursuant to 19 CFR 10.16(b)(5), since they constituted
more than "adjustments in the shape or form of a component to the
extent required by the assembly being performed abroad." See
Samsonite Corp. v. United States, 702 F. Supp. 908 (CIT 1988),
aff'd 889 F. 2d 1074 (Fed. Cir. 1989). However, in HRL 556010,
dated June 24, 1991, it was held that the sewing together of cut-
to-shape United States origin fabric to enclose a collapsible
cardboard box constituted an acceptable assembly operation
pursuant to 19 CFR 10.16(a).
In this case, gluing the material, which already has been
cut-to-shape in the United States, onto the metal or plastic box
is explicitly provided for in 19 CFR 10.16(a) as an acceptable
assembly operation. Furthermore, although the operation here
involved includes a folding process, we find that it is
distinguishable from the folding operation performed in HRL
555601, where the folding of the paper created the essence and
foundation of the expandable pocket file folder. In addition,
the United States origin material in the instant case qualifies
as a fabricated component under 19 CFR 10.14(a). It is cut-to-
shape in the United States and is used to cover the boxes without
further fabrication. The United States origin material in HRL
555601 was not a fabricated component; it was further fabricated
abroad in the assembly process.
HOLDING:
(1) The jewelry boxes at issue, covered with a flock-covered
paper, are classifiable under subheading 4202.92.9015, HTSUSA, as
jewelry boxes of a kind normally sold at retail with their
contents, with an outer surface of textile material. The
applicable duty rate is 20% ad valorem.
(2) On the basis of the information provided, it is our view
that the folding and gluing operations performed abroad in
producing the jewelry boxes qualify as assembly operations under
19 CFR 10.16(a). Therefore, allowances in duty may be made under
subheading 9802.00.80, HTSUSA, for the cost or value of the
United States origin materials used to cover the jewelry boxes,
provided the documentary requirements of 19 CFR 10.24 are
satisfied.
Sincerely,
John Durant, Director
Commercial Rulings Division