CLA-2-42:OT:RR:NC:N4:441
Mr. John M. Strough
Mohawk Global Logistics
P.O. Box 3065
Syracuse, NY 13220
RE: The tariff classification of a case from China
Dear Mr. Strough:
In your letter dated June 4, 2019, you requested a tariff classification ruling on behalf of your client, New Path Learning. You have submitted a sample, which will be returned to you under separate cover.
The submitted sample is a case constructed with an outer surface of man-made textile material. The case is designed to provide storage, protection, portability, and organization to educational materials during travel. The case has two handles and a zippered closure around three sides. The exterior features one open clear pocket. The interior features two open pockets. Both interior and exterior pockets are specifically sized to contain the demonstration cards, which will be imported separately from the case. The front of the case has the company logo and website permanently printed. The article measures approximately 14 inches (w) by 10 inches (h) by 0.25 inches (d) which corresponds with the size of the large instructional materials it is designed to contain.
You inquired as to whether the case is eligible for special treatment under subheading 9810.00.3500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Articles imported for the use of any public library, any other public institution or any nonprofit institution established for educational, scientific, literary or philosophical purposes, or for the encouragement of the fine arts: Letters, numbers, and other symbols…puzzles and games…all the foregoing, whether or not in sets, fabricated to specification and designed for the classroom instructions of children; and containers or holders fabricated to specification and designed for the storage of such instructional articles when not in use.”
U.S. Note 1 to Subchapter X, Chapter 98, HTSUS, provides in pertinent part: Except as provided in subheading 9810.00.20…, or as otherwise provided for in this U.S. Note, the articles covered by this subchapter must be exclusively for the use of the institutions involved, and not for distribution, sale or other commercial use within five years after being entered. Articles admitted under any provision in this subchapter may be transferred from an institution specified with respect to such articles to another such institution, or may be exported or destroyed under customs supervision, without duty liability being incurred. However, if any such article (other than an article provided for in subheading 9810.00.20 or subheading 9810.00.70) is transferred other than as provided by the preceding sentence, or is used for commercial purposes, within 5 years after being entered, the institution for which such article was entered shall promptly notify customs officers at the port of entry and shall be liable for the payment of duty on such article in an amount determined on the basis of its condition as imported and the rate applicable to it (determined without regard to this subchapter) when entered.
In your request, you claim that the case is imported empty and it will be filled with materials designed for educational purpose in the classroom. In review of submitted purchase orders for the Learning Center sets from two different school districts, we have no dispute that the sale of the case will be used by a public institution, the classroom, or a nonprofit institution for the education of children. In this instance, they will be used in the classroom. Our examination of the sample confirms that the case also meets the definition of “containers or holders fabricated to specification and designed for the storage of such instructional articles when not in use.”
Unlike your position which suggests that the case is indisputably classified in subheading 9810.00.3500, HTSUS, based on the criteria described above, we find this statement not to be true when imported by those for commercial purposes. It is a longstanding practice that 9810.00.3500, HTSUS, cannot be used when imported by commercial entities for warehouse and distribution of articles for future sales, even if those sales are to public or nonprofit institutions, as well as to consumers. An exception to this practice is where the commercial entities act as agents’ on behalf of the public or nonprofit institutions based upon pre-existing sales. See NY 246369 dated October 28, 2013 citing to HQ 555483 dated April 11, 1990. Also, public and nonprofit institutions cannot resell articles to commercial entities for purposes of receiving duty-free treatment under subheading 9810.00.3500, HTSUS. It is unclear from the information provided whether or not the merchandise will be used for warehouse and distribution of articles for future sales.
The applicable subheading for the case, when imported in compliance with U.S. Note 1 to Subchapter X, Chapter 98, HTSUS, will be 9810.00.3500, HTSUS, which provides for “Articles imported for the use of any public library, any other public institution or any nonprofit institution established for educational, scientific, literary or philosophical purposes, or for the encouragement of the fine arts: Letters, numbers, and other symbols … puzzles and games … all the foregoing, whether or not in sets, fabricated to specification and designed for the classroom instructions of children; and containers or holders fabricated to specification and designed for the storage of such instructional articles when not in use.” The rate of duty will be free. The applicable subheading for the case, when not imported in compliance with U.S. Note 1 to Subchapter X, Chapter 98, HTSUS will be 4202.92.9100, HTSUS, which provides for other containers and cases, with outer surface of sheeting of plastics or of textile materials, other, other, with outer surface of textile materials, of man-made fibers (except for jewelry boxes of a kind normally sold at retail with their contents). The general rate of duty will be 17.6 percent ad valorem.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS.
For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). See also “Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (June 20, 2018, 83 F.R. 28710). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 4202.92.9100, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 4202.92.9100, HTSUS, listed above.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Vikki Lazaro at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division