HQ 0081373 - Tariff classification of a women's wallet, two wallet/credit card holders, and two brass key rings manufactured in Korea. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1990 HQ Rulings > HQ 0080947 - HQ 0081405 > HQ 0081373

HQ 081373

October 17, 1988

CLA-2 CO:R:C:G 081373 DC

CATEGORY: CLASSIFICATION

TARIFF NO.: 4202.32.2000; 4202.32.4000; 7419.19.5050

Stephen S. Weiser, Esq.
Siegel, Mandell & Davidson
Counsellors At Law
One Whitehall Street
New York, New York 10004

RE: Tariff classification of a women's wallet, two wallet/credit card holders, and two brass key rings manufactured in Korea.

Dear Mr. Weiser:

In a letter dated November 18, 1987, on behalf of Liz Claiborne Accessories, Inc., you inquired as to the tariff classification under the proposed Harmonized Tariff Schedule of the United States Annotated (HTSUSA), of a women's wallet, wallet/credit card holders, and two brass key rings.

FACTS:

The sample designated as style 81631 is a women's wallet measuring approximately 7-3/4 inches by 4 inches by 3/4 inch. The article, which has a zippered closure and several inner compartments for change, credit cards, etc., has a polyvinyl chloride ("PVC") body with leather piping. A strip of leather, approximately 7-1/2 inches long and approximately 1-3/4 inches wide, reinforces the base of the article. A circular leather logo patch, approximately one inch in diameter, has been sewn onto the front of the article near the lower right-hand corner.

The sample designated as style 88921 is a wallet/credit card holder, measuring approximately 4-1/2 inches by 5 inches when closed and 8-3/4 inches by 5 inches when opened and laid flat, on which leather piping borders cotton fabric. An all-leather "change purse" with flap closure (measuring approximately 3-1/2 inches by 3 inches when the flap is closed and 3-1/2 inches by 4 inches when flap is open) has been affixed to one side of the wallet and covers most of that side. A leather tab closure, approximately 1-1/4 inches wide and 3 inches in length, extends
from this outer "change purse" to a snap closure on the other side of the wallet. When fully open, the wallet reveals ten all- leather credit card pockets, no other component material being visible.

The sample designated as style 89021 is a wallet/credit card holder with a snap closure. The wallet measures approximately 4- 1/4 inches by 3-3/4 inches when closed and approximately 4-1/4 inches by 9-1/2 inches when opened and laid flat. The body of the wallet contains cotton fabric bordered by leather piping. A leather flap, approximately 4-1/4 inches by 3-1/4 inches, extends from the rear side of the wallet to the front, where it covers a snap closure. When secured, the leather flap covers more than half of the front side.

The sample designated as style 82551 is a key ring made of brass which is attached to a triangle-shaped ornament by means of a leather loop. One side of the ornament (solid color) is made entirely of leather. The other side of the ornament (patterned) consists of PVC with leather piping and contains a small brass logo.

The sample designated as style 88121 is a key ring made of brass which is attached to a circular leather ornament by a leather loop. A circular brass logo has been affixed to one side of the ornament.

You claim that the essential character of the outer surface of style Nos. 81631, 88921 and 89021 is imparted by the leather component and, therefore, each of these articles is classifiable under subheading 4202.31.6000, HTSUSA, as articles of a kind normally carried in the pocket or in the handbag with outer surface of leather, of composition leather or of patent leather. The rate of duty for this provision is 8 percent ad valorem.

Further, you maintain that the key rings made of brass and designated as style Nos. 82551 and 88121 are classifiable under the provision for other articles of leather or of composition leather, other in subheading 4205.00.8000, HTSUSA, and entitled to free entry.

ISSUE:

Whether the essential character of the women's wallet, wallet/credit card holders and brass key rings is imparted by their leather components.

LAW AND ANALYSIS:

General Rule of Interpretation (GRI) 3(b), HTSUSA, provides as follows:

(b) Mixtures, 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.

The Explanatory Notes for GRI 3(b) state in pertinent part as follows:

(VIII) 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.

You have expressed concern that Customs will determine essential character of the outer surface based solely on a physical measurement of the surface area of the component materials comprising the outer surface area. Thus, if a textile material predominates in area over each other single outer surface material, the article will be considered to have an outer surface of textile materials for tariff purposes.

In Headquarters letter 081165 PR dated October 27, 1987, this office took the position that with respect to luggage and related products, a determination of essential character can be based on a measurement of the material of the outer surface. Specifically, an item of luggage or a related product would be considered as having an outer surface of textile materials if the textile material predominates in area over each other single outer surface material.

It is our position that a determination of essential character of the outer surface of luggage and related products cannot be based solely on the material contained therein which predominates by outer surface area over any other single material. Such a result would be contrary to the Explanatory Notes for GRI 3(b), supra, which set forth additional criteria for determining essential character. Consequently, HRL 081165 PR dated October 27, 1987, has been modified by HRL 081374 dated August 8, 1988, to reflect this view.

In support of your position you cite the case of Canadian Vinyl Industries, Inc. v. United States, 76 Cust. Ct. 1, C.D. 4626 (1976), wherein the court found that certain polyurethane skin with a nylon fabric backing was classifiable as flexible sheets "almost wholly of plastics" made in imitation of patent leather in item 771.40 Tariff Schedules of the United States. For tariff purpose the phrase "almost wholly of" means that the essential character of the article is imparted by the named material. In finding that the polyurethane skin supplied the essential character of the article, the court concluded that the essential character of this article is the distinctive visual and tactile quality of the polyurethane "skin." These qualities gave the article its own special nature. The court further elaborated saying that "the polyurethane skin of this importation, in addition to supplying the essential visual and tactile characteristics, also contributes attributes of strength and flexibility in conjunction with the nylon backing."

Following the court's reasoning in the above-cited case you assert that leather imparts the essential character of the outer surface of the women's wallet and the credit card holders for the following reasons:

(1) leather comprises a significant percentage of the outer surface areas of these styles. In fact there appears to be more leather than fabric in the wallet/credit card holder designated as style No. 88921;

(2) the leather portions are integral to the construction and design of these articles as leather is used in all critical parts of the articles where flexibility and durability are essential;

(3) leather, which is softer and more pliable than PVC and longer lasting and less prone to fraying than cotton fabric, is used on these articles at all stress points such as corners, seams and snap closures;

(4) leather shapes the articles more effectively than PVC or fabric;

(5) leather is vital to the effective use of the articles, i.e., their ability to securely store currency, credit cards, change, etc. throughout the day;

(6) leather is invaluable from a marketability standpoint. Consumers perceive a distinct difference between all- textile or all-PVC flat goods and similar articles with
leather trim, unquestionably preferring the appearance of articles with leather to those without;

(7) if the leather portions were replaced by man-made materials, consumers would not find the articles nearly as desirable even though they would be far less expensive;

(8) the articles involved would appeal to a different segment of the consuming public if the leather components were eliminated or substantially diminished;

(9) the importance of leather to the consumers is further illustrated by the fact that for marketing purposes, hangtags stating "Genuine Leather trim" are attached to each of these articles when sold at retail. If such hangtags did not accompany the articles some consumers would not purchase the articles because they would not be certain the leather is genuine;

(10) the fact that leather is in chief value, although no longer dispositive for classification purposes under the Harmonized System, militates toward a finding that leather rather than PVC or fabric imparts the essential character of the outer surfaces of these styles; and

(11) the value of the leather, in and of itself, attracts consumers to these particular articles rather than ones with far less (or no) leather.

Although a determination of essential character of the outer surface of luggage and related products cannot be based solely on a physical measurement of the component materials of the outer surface area, it is our observation that such a measurement is of paramount importance in determining whether the exterior surface is "leather" or "textile" or "plastics". Specifically, when viewing luggage and related products, the materials of the outer surfaces produce a visual impact which in many instances leaves little or no doubt as to what material gives the outer surfaces their essential character.

An examination of the women's wallet, style 81631, reveals that the plastic portion clearly predominates by surface area over that covered by the leather. We note that the leather present is primarily used as a trim. Thus, the presence of the leather is subsidiary to the presence of the plastic material. When one views this sample, the impression given by the outer surface is that of a plastic article.

An examination of the wallet/credit card holder, style 89021, reveals that the textile portion predominates by surface area over that covered by the leather. In this instance leather is used as a part of the closure and also as a trim. Again the presence of the leather is subsidiary to the presence of the textile material. When one views this sample, the impression given by the outer surface is that of a textile article.

An examination of the wallet/credit card holder, style 88921, reveals that the textile material may predominate only by a small margin of surface area covered over that covered by the leather. In this instance the margin is so small that we are unable to state that the fabric portion of the article imparts its essential character. Consequently, we are compelled to turn to GRI 3(c), and GRI 6, HTSUSA, which provide as follows:

(c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

6. For legal purposes, the classification of goods in the subheadings shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understand- ing that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply unless the context otherwise requires.

The subheadings which equally merit consideration here are subheading 4202.31, HTSUSA, providing for articles of a kind normally carried in the pocket or in the handbag, with outer surface of leather, and subheading 4202.32, HTSUSA, providing for articles of a kind normally carried in the pocket or in the handbag, with outer surface of textile materials. Following GRI 3(c), HTSUSA, classification of the wallet/credit card holder, style 88921, under subheading 4202.32, HTSUSA, is appropriate.

Your claim that chief value should be a factor which militates toward a finding that leather constitutes the essential character of these articles is without merit. The concept of chief value plays no role in the classification of merchandise under the HTSUSA.

The Explanatory Notes to GRI 3(b) state that value may be a factor in determining essential character. Here it is claimed that the value of the leather is greater than the other exterior materials and is the element that attracts the buyer. Value, in either situation as proposed by you, has little or no impact in this case in determining essential character.

You suggest that confirmation of your view that leather imparts the essential character of the articles under the HTSUSA would be in accord with the President's intent that the Harmonized System conversion be duty neutral.

This particular argument is irrelevant in this instance. The President's guidelines for the conversion from the Tariff Schedules of the United States (TSUS), to the Harmonized Tariff Schedules of the United States (HTSUS), do not mandate that every article be subjected to the same rate of duty under the HTSUS as it was under the TSUS.

The key rings designated as styles 82551 and 88121 are currently classifiable under the provision for other objects of personal adornment valued over 20 cents per dozen pieces or parts in item 740.41, TSUS, and dutiable at the rate of 11 percent ad valorem. A similar HTSUSA provision covers other imitation jewelry in subheading 7117.90.5000, HTSUSA, with duty at the rate of 11 percent ad valorem. However, the Explanatory Note to Heading 7117, states:

It is to be noted that articles of personal use of a kind normally carried in the pocket, in the handbag or on the person, such as those listed in paragraph (B) of the Explanatory Note to Heading 71.13 ... [e.g., key rings] are not regarded as imitation jewelry.

Assuming that the key rings are of leather as required by heading 4202, they could not be classified therein because heading 4202 enumerates only articles which are containers and cases.

As to these key rings, we are aware that leather comprises a substantial percentage of the key ring ornaments and indeed may be the dominant feature of the articles in a visual sense. How- ever, the U.S. Customs publication entitled "Harmonized System Handbook" states in pertinent part that "the essential character of a product has generally been construed to mean 'the attribute which strongly marks or serves to distinguish what an article is; that which is indespensable [sic] to the structure, core or condition of the article'". Applying this test to the key rings, we find that the brass portion of the articles which is the key
ring itself is the component which gives the key rings their essential character. Specifically, the metal portion plays a most significant role in the use of the rings and is indispensable to their structure, core or condition.

HOLDING:

The women's wallet, style 81631, is classifiable under subheading 4202.32.2000, HTSUSA, as articles of a kind normally carried in the pocket or in the handbag, with outer surface of plastic sheeting, other, with duty at the rate of 20 percent ad valorem.

The wallet/credit card holder, style 89021, is classifiable under subheading 4202.32.4000, HTSUSA, textile category 369, as articles of a kind normally carried in the pocket or in the handbag, with outer surface of textile materials, of cotton, with duty at the rate of 7.2 percent ad valorem.

The wallet/credit card holders, styles 89021 and 88921 are classification under subheading 4202.32.4000, HTSUSA, textile category 369, as articles of a kind normally carried in the pocket or in the handbag, with outer surface of textile materials, of cotton with duty at the rate of 7.2 percent ad valorem.

The key rings, styles 82551 and 88121, made of brass, are classifiable under subheading 7419.99.5050, HTSUSA, as other articles of copper, other, other, other, other with duty at the rate of 5 percent ad valorem.

These classifications represent the current position of the Customs Service regarding the dutiable status of the merchandise under the HTSUSA which will be effective on January 1, 1989. If there are changes before that date, this advice may not continue to be applicable.

Sincerely,

John Durant, Director

Previous Ruling Next Ruling

See also: