CLA-2-62:S:N:N5:360 898260
Mr. Michael Riley
May Merchandising Company
May Department Stores International, Inc.
615 Olive Street
St. Louis, Missouri 63101
RE: The tariff classification of plastic hangers from Hong Kong
imported with garments from Hong Kong, Korea and Sri Lanka.
Dear Mr. Riley:
In your letter dated May 16, 1994, received by this office on
May 23, 1994, you requested a tariff classification ruling.
Samples of two styles of plastic hangers were submitted. You
state that it was your firm's policy to ship garments on a white,
lightweight hanger. At the distribution center in this country, the
hangers were discarded and replaced with a more substantial clear
plastic hanger with metal wire top hooks. Now, you intend to ship
garments on the more substantial hanger. The hangers will be
imported with garments solely for the purpose of shipping and
handling the garments they support. The hangers will be removed
from these garments at retail, that is, when a garment is sold, the
hanger will be removed and reused to display another garment.
It is your contention that the hangers will have a repetitive
use and are a separate article of commerce. As such, they should
be separately classified from the garments with which they are
imported. To support your claim, you have provided the value of the
hangers. The white lightweight hangers cost less than $0.01 per
hanger and their cost is included in the first cost paid to the
vendor. The clear hangers cost between $0.12 to $0.14 each
depending on the country of origin of the garment. You argue that
the clear plastic hangers are more durable and should be classified
as packing material having a repetitive use.
General Rule of Interpretation (GRI) 5(b) of the Harmonized
Tariff Schedule of the United States (HTS) provides: "...packing
materials...entered with the goods therein shall be classified with
the goods...However, this provision is not binding when such
packing materials...are clearly suitable for repetitive use." In
light of GRI 5(b), you contend that the hangers should not be
subject to the duty of the garment.
You have also cited a NY ruling (823018 dated April 16, 1987)
in which plastic hangers were separately classified under heading
3926.90.90 , HTS. Notwithstanding the information and analysis you
provided, the instant hangers will be classified with the garments
with which they are imported. The ruling letter did not provide
an analysis of the status of hangers classified with garments, and,
in fact, classification of these items separately would be contrary
to precedent established by both Headquarters rulings and the
Court.
Holly Stores, Inc. v. The United States, 534 F. Supp. 818
(1981), aff'd, 697 F.2d 1387 (Fed.Cir. 1982), involved the
classification of plastic and plastic coated wire hangers imported
with garments. In that decision the Court interpreted the meaning
of "reuse" as it appeared in General Headnote 6(b) of the Tariff
Schedules of the United States (TSUS). Customs has relied upon
this interpretation when reviewing the HTS term "repetitive use"
as it appears in GRI 5(b). Each provision addresses the issue of
when containers imported with goods are classifiable with those
goods or classifiable separately.
You state that the hangers at issue are used for more than
the shipping and handling of the garments with which they are
imported. The hangers are reused many times for displaying other
garments in your stores. The hangers in the Holly Stores case were
also reused in the same manner you have described, however, the
Court found that such "reuse" was not sufficient to be considered
"reuse" in the commercial sense as defined in General Headnote
6(b).
The Court went on to define the commercial sense of the term
"reuse" in relation to the hangers as meaning either the hangers
entered the commerce of the U.S., or that it would be reused for
commercial shipping or transportation purposes. The reuse
indicated in the Holly Stores decision was considered to be
"limited to the operation of the plaintiff's own enterprise." The
Court found the reuse of the hangers to be only "incidental and
fugitive relative to the plaintiff's own scale of operations."
While Customs recognizes that the hangers at issue are more
substantial in construction than those at issue in Holly Stores,
their use is very much the same.
The Court concluded in Holly Stores that the hangers did not
enter the mainstream of commerce. The function of the hangers was
for shipment and presentation of garments to the consumer. Reuse
of the hangers to hang other garments was not viewed as a reuse in
the commercial sense intended in General Headnote 6(b).
It is Customs position that the Court's interpretation of the
term "reuse" applies to the interpretation of "repetitive use" in
GRI 5(b) and the correct application of that GRI. "Clearly
suitable for repetitive use" as used in GRI 5(b) is taken to mean
repetitive use in the practical, commercial
sense. This interpretation follows the case law as reflected in
Holly Stores and other various container cases. The reuse of the
hangers at issue is not viewed as a repetitive use in the
commercial sense.
Accordingly, the hangers are correctly classified with the
garments with which they are imported, and therefore dutiable at
the same rate as the garments.
Please be advised that textile garments are subject to quota
and visa arrangements from the countries you specifiy. Without a
specific garment, we cannot provide any information relative to the
specific textile category
applicable nor can we provide any specific classification
information.
This ruling is being issued under the provisions of Section
177 of the Customs Regulations (19 C.F.R. 177).
A copy of this ruling letter should be attached to the entry
documents filed at the time this merchandise is imported. If the
documents have been filed without a copy, this ruling should be
brought to the attention of the Customs officer handling the
transaction.
Sincerely,
Jean F. Maguire
Area Director
New York Seaport