CLA-2 RR:CR:TE 962592 GGD
Ms. Ludene Murphree
Gap, Incorporated
One Harrison Street
San Francisco, California 94105
RE: Handbags with Coin Purse/Key Rings; Sets; Not Composite Goods
Dear Ms. Murphree:
This is in response to your request dated February 3, 1999, for assistance in resolving certain alleged classification inconsistencies which may have arisen from a misinterpretation of Port Ruling Letter (PD) D82557, a binding ruling issued to you October 8, 1998, by the U.S. Customs Port of Philadelphia, Pennsylvania. In that ruling, merchandise consisting of a tote bag and coin purse (similar to each other in material composition and design and identified by style 545636) was classified in subheading 4202.92.3031, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), the provision applicable to the tote bag component, which was found to impart the essential character. In Headquarters Ruling Letter (HQ) 964793, issued April 3, 2001, this office reviewed PD D82557, clarified the discussion contained therein, and (despite the fact that the ruling contained the word "composite") emphasized the fact that the merchandise constituted a "set," the components of which were subject to quota and visa requirements. In further response to your request for
assistance, this letter provides a binding ruling as to the tariff classification of two additional combinations, each made in China and consisting of a handbag with an attached coin purse/key ring.
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FACTS:
The merchandise at issue in this ruling, identified by style numbers 545503 and 545504, is described as "Old Navy kids cotton handbags and coin purse key rings," and is further described as "100% Cotton Velvet Woven Bags & Coin purse/key chain." Each coin purse/key ring is imported suitable for retail sale attached to the strap of its corresponding handbag. Each of the coin purse/key ring components is substantially similar to its corresponding handbag component in design and in the material composition of its cotton outer surface.
ISSUE:
Whether the components of the "Old Navy kids cotton handbags and coin purse key rings" are classified as composite goods or as goods put up in sets.
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 GRI may then be applied. The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI.
The word "composite," standing alone, would appear only to suggest something made from other things. For example, Merriam-Webster’s Deluxe Dictionary, Tenth Collegiate Edition (1998), defines the adjective “composite” as: “1 : made up of distinct parts...." A determination as to whether merchandise constitutes a "composite good" or a "set" is aided by an examination of how the GRI distinguish between the two tariff terms.
Styles 545503 and 545504 - each of which consists of a handbag and a coin purse/key ring - cannot be classified solely by reference to GRI 1. Although the components of each style are classifiable under heading 4202, classification of the complete good cannot be determined according to the terms of that heading because the components are classifiable in different subheadings, i.e., 4202.22 and 4202.32, HTSUSA.
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GRI 6 is, by necessity, examined out of order here because it addresses the classification of goods in the subheadings of a heading. In pertinent part, GRI 6 states:
For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules [i.e., GRI 1 through GRI 5], on the understanding that only subheadings at the same level are comparable....
In pertinent part, Explanatory Notes (I) and (II) to GRI 6 state:
(I) Rules 1 to 5 above govern, mutatis mutandis [meaning in generally the same manner, but are to be altered when necessary], classification at subheading levels within the same heading.
(II) For the purposes of Rule 6, the following expressions have the meanings hereby assigned to them:
(a) "subheadings at the same level" : one-dash subheadings (level 1) or two-dash subheadings (level 2).
Thus, when considering the relative merits of two or more one-dash subheadings within a single heading in the context of Rule 3(a) [below], their specificity or kinship in relation to a given article is to be assessed solely on the basis of the texts of the competing one-dash subheadings. When the one-dash subheading that is most specific has been chosen and when that subheading is itself subdivided, then, and only then, shall the texts of the two-dash subheadings be taken into consideration for determining which two-dash subheading should be selected.
We thus continue classification analysis of the two component good using the remaining applicable GRI. In pertinent part, GRI 2(b) states:
The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.
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GRI 3(a) directs that the headings [and by operation of GRI 6 above, the subheadings] are regarded as equally specific when they each refer to part only of the materials contained in composite goods, or of the items in a set put up for retail sale.
Since each of the one-dash subheadings refers to part only of the materials or items, however, GRI 3(a) requires that the subheadings be regarded as equally specific despite any disparity in their texts. For this reason, we next look to GRI 3(b).
GRI 3(b) states, in part, that:
...composite goods...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.
As with GRI 3(a) above, the applicability of GRI 3(b) is somewhat dependent upon whether the complete article is deemed to comprise a composite good or a set. In pertinent part, Explanatory Note IX to GRI 3(b) indicates that:
For 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.
Neither of the handbag/coin purse/key ring styles at issue forms a whole which would not normally be offered for sale in separate parts. Each component is of a kind that is normally offered for sale separately. Therefore, neither of the styles comprises a composite good.
With respect to whether the handbag with coin purse/key ring styles are classifiable as sets, Explanatory Note X(b) to GRI 3(b) provides, in pertinent part, the following guidance:
For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to mean goods which:
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(a) consist of at least two articles which are, prima facie, classifiable in different headings [or, by operation of GRI 6 above, different subheadings]....
(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).
The handbags and coin purse/key rings are classifiable in different subheadings, are put up together to meet the need of carrying various items of personal effects, and are imported suitable for retail sale without repacking. The components therefore constitute goods put up in sets for retail sale. GRI 3(b) by application of GRI 6.
At GRI 3(b), the handbag and coin purse/key ring sets are each classified as if they consisted of the article that gives the set its essential character. The terms of the competing subheadings suggest that "handbags" more specifically describes each of the sets, and that the handbag is likely the component which imparts the essential character. The basis for finding that the handbag component imparts each set's essential character is contained in Explanatory Note VIII to GRI 3(b), which states:
The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
The handbag is the component of greatest bulk, weight, and value. Its ability to contain and carry numerous personal effects, including the coin purse/key ring component, further indicates that it imparts each set's essential character. Styles 545503 and 545504 are therefore classified in subheading 4202.22.8030, HTSUSA, textile category 369. The handbag and the coin purse/key ring components of each set are subject to quota and visa requirements and, for this purpose only, the coin purse/key ring components are classified in subheading 4202.32.9530, HTSUSA, textile category 369, the provision for "Trunks...and similar containers; traveling bags...: Articles of a kind normally carried in the pocket or in the handbag: With outer surface of...textile materials: Other: Other, Of cotton."
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HOLDING:
The "Old Navy kids cotton handbags and coin purse key rings" identified by style numbers 545503 and 545504 are classified in subheading 4202.22.8030, HTSUSA, textile category 369, the provision for “Handbags, whether or not with shoulder strap, including those without handle: With outer surface of sheeting of plastic or of textile materials: With outer surface of textile materials: Other: Other: Other, Of cotton.” The general column one duty rate is 18.3 percent ad valorem.
The designated textile and apparel category may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information
available, we suggest that you check, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.
Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories applicable to textile merchandise, you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.
Sincerely,
John Durant, Director
Commercial Rulings Division