HQ 0081576 - Decision on Application for Further Review of Protest No. 3001-5-000207. - United States International Trade Commision Rulings

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HQ 081576

June 30, 1988

CLA-2 CO:R:CV:G 081576 DC

CATEGORY: CLASSIFICATION

TARIFF NO.: 700.35; 700.45

District Director of Customs
2039 Federal Office Bldg
909 First Avenue
Seattle, Washington 98174

RE: Decision on Application for Further Review of Protest No. 3001-5-000207.

Dear Sir:

This protest was filed against your decisions in the liquidations on April 5, 1985, of entry No. 84-218334-7 dated April 2, 1984, entry No. 84-221115-4 dated April 24, 1984, and entry Nos. 84-221142-6 and 84-221143-9 dated May 31, 1984.

FACTS:

The above-listed entries covering athletic shoes were liquidated under the provision for other footwear in item 700.95, Tariff Schedules of the United States (TSUS).

The protestant maintains that the footwear is in chief value of leather which requires its classification as leather footwear under item 700.35 or 700.45, TSUS, depending on gender and value per pair.

ISSUE:

Is the footwear in chief value of leather as claimed by the protestant?

LAW AND ANALYSIS:

The protestant claims that the component material cost breakdowns submitted show that the footwear is in chief value of leather. However, our records show that a component material breakdown was submitted only with those shoes covered by entry No. 84-218334-7.

With respect to those shoes covered by entry No. 84- 218334-7, we agree with your conclusion that there is no tangible evidence that the component material cost breakdown showing the shoes to be in chief value of leather is incorrect.

In the case of Mitsubishi International Corp. v. United States, Slip Op. 87-136 (Ct Int'l Trade, decided December 10, 1987), the court held that in component material of chief value determinations, where the competing provisions do not contain the term "rubber or plastics," separate costs for rubber and plastics must be broken out for the rubber/plastics components.

It is our position that in those instances where no cost breakdowns were supplied the shoes will be considered to be in chief value of leather if they are invoiced under $7.00 per pair. Due to administrative realities we have presumed for several years that athletic shoes in which leather was the base material of the upper were in chief value of leather without requiring any component breakdown as authorized by section 141.87, Customs Regulations. We have always recognized that a small percentage of these shoes might not have been in chief value of leather under the Customs interpretation in effect. However, the burden of requiring the needed breakdowns on the tens of millions of pairs that would have been affected greatly outweigh the potential of possible duty increase on a small percentage of them. Likewise, we are confident that the overwhelming majority of the athletic footwear valued under $7.00 per pair in which leather covers more than 50 percent of the upper's exterior surface area is in chief value of leather when rubber and plastics are considered separate component materials. We have determined that the $7.00 cutoff is reasonable because we note that, in the more expensive athletic shoes with leather overlays, the extra cost is caused mostly by improvements and additional sophistication in the rubber/ plastic bottom, which is the principal determinant of the shoe's suitability for serious athletic use.

There were no component material cost breakdowns submitted with those shoes covered by entry Nos. 84-221115, 84-221142-6 and 84-221143-9. However, inasmuch as these shoes were valued at under $7.00 per pair, they are presumed to be in chief value of leather in accord with the reasoning set forth in the preceding paragraph.

HOLDING:

The footwear involved is classifiable as leather footwear under item 700.35 or 700.45, TSUS, depending on gender and value per pair.

The protest should be allowed. A copy of this decision should be attached to the Form 19 Notice of Action to be sent to the protestant.

Sincerely,

John Durant, Director

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