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HQ 084577


September 8, 1989

CLA-2 CO:R:C:G 084577 HP

CATEGORY: CLASSIFICATION

TARIFF NO.: 3926.90.9050; 6307.90.9050

Mr. David Ackerman
Vice President
Economy Color Card Co., Inc.
1000 S. Elmora Ave.
Elizabeth, NJ 07202

RE: Classification of swatch charts

Dear Mr. Ackerman:

This is in reply to your letters of May 12, 1989, and June 26, 1989, concerning the tariff classification, importation and marking requirements of swatch charts, produced in Mexico from American materials, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

FACTS:

The merchandise at issue consists of small swatches of material glued to cards, creating display cards for various types of fabric and wall coverings. The sample cards are used for soliciting orders. The cards will be produced in Mexico completely from American materials, supplied by the manufacturers. The materials to be supplied are printed paper, glue, and the material that is to be presented.

In Example 1, the swatch card contains 32 pieces of fabric glued to one side. The fabric, paper and glue would be shipped from the U.S. to Mexico. The fabric is sent to Mexico in 54 inch by 72 inch pieces. The folders are sent to Mexico in final form.

The glue is sent in 55 gallon drums. The fabric is then cut length and width to give it serrated edges, and then glued to the card. You state the material values are as follows:

Fabric.......$0.00* (once cut)
Card.........$0.35 per card
Glue.........$0.01 per card
Value added labor in
Mexico.....$0.50 per card

*The fabric swatches on this card are cut from fabric costing 45, if the fabric was sold in 50 yards long by 54 inch wide pieces.

In Example 2, the swatch card contains 31 swatches and two paper strips glued to one side. Each sample has a paper label which must be attached before the fabric is cut to finished size. This causes the fabric and label to be serrated together. Serration is performed to keep the fabric from fraying and looking ragged. The fabric is sent to Mexico in 54 inch by 30 yard pieces. You state the component values are as follows:

Fabric.......$0.00* (once cut)
31 paper labels @

1..........$0.31
2 glue strips @
2..........$0.04
Glue.........$0.03
Backing paper
4 @ 4......$0.16
Printed
Folder......$1.10
Value added labor.......$0.96

*The fabric swatches on this card are cut from fabric that would cost $1.48 if sold as a 50 yard long by 54 inch wide piece.

In Example 3, the swatch card contains 46 swatches of vinyl wall covering. The wall covering samples are first assembled into rows of 2, 3 or 4 colors. These rows are then glued to one side of the folder. To produce the rows, the vinyl is cut into strips. After cutting, the strips are glued together on paper backing. This unit is then cut again into final form. Assembly must take place in this manner to insure all samples are evenly shown. The vinyl is sent to Mexico in 54 inch wide by 10 yard long pieces. You state the component values are as follows:

Vinyl........$0.00* (once cut)
Paper backing$0.08
Printed
Folder......$0.65 each
Glue.........$0.02 each
Value added labor.......$0.62 each

*The vinyl swatches on this card are cut from vinyl that would cost 59 if sold as a piece 54 inches wide by 30 yards long.

ISSUE:

What is the classification of the swatch cards under HTSUSA?

LAW AND ANALYSIS:

Examples 1 and 2

Articles Assembled Abroad From American Components

Heading 9811, HTSUSA, provides for, inter alia, any sample used for soliciting orders. However, this heading also requires the samples to be used for solicitation of orders for products of foreign countries. As you state that the instant merchandise is used to sell products made in the United States, classification in heading 9811 is precluded.

Subheading 9802.00.80, HTSUSA, provides for:

Articles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting. [Merchandise covered by this
subheading was previously covered by heading 807.00, Tariff Schedules of the United States (TSUS).]

As the fabric is sent to Mexico in large pieces, and must be cut to length and width prior to assembly, classification under subheading 9802.00.80, HTSUSA, is precluded. The cutting of the fabric is not an operation which is considered incidental to the assembly process. See section 10.16(c)(2), Customs Regulations (19 C.F.R. 10.16(c)(2)). We are enclosing for your information copy of the Customs Regulations relating to subheading 9802.00.80, HTSUSA.

You ask whether slitting or in some other way changing the material to be cut into swatches prior to exportation to Mexico would in some way affect classification. We would need specific details to fully respond to this question.

Classification for Tariff Purposes

Heading 4905, HTSUSA, provides for, inter alia, charts. The Explanatory Notes to the HTSUSA constitute the official interpretation of the tariff at the international level. The Explanatory Note to this heading states that it is intended to include "...maps, charts and plans designed to represent the natural or artificial features of countries, towns, seas, the heavens, etc...." As Examples 1 and 2 do not portray any physical or political geographic features, they clearly are not the type of article intended to be classified under heading 4905, HTSUSA.

Heading 4911, HTSUSA, provides for other printed matter. The Explanatory Notes to this heading indicate that this heading is intended to cover all printed matter not more particularly covered by any preceding heading.

The General Explanatory Notes to Chapter 49, HTSUSA, state:

With the few exceptions referred to below, this Chapter covers all printed matter of which the essential nature and use is determined by the fact of its being printed with motifs, characters, or pictorial representations. [Emphasis added.]

Thus, in considering classification under this heading, we must decide whether the essential character of the sample cards is determined by the fact that they contain printing.

GRI 3 states, in pertinent part:

When by application of Rule 2(b) [goods of more than one material or substance] or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected 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) [which requires that goods be classified, if possible, under the more specific of the competing provisions], 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 factors which determine essential character of an article will vary from case to case. It may be the nature of the materials or the components, its bulk, quantity, weight, value, or the role a material plays in relation to the use of the goods.

In general, essential character has been construed to mean the attribute which strongly marks or serves to distinguish what an article is; that which is indispensable to the structure or condition of an article.

A comparison of the textile portions of the sample cards with the non-textile materials indicates that is the textile portions that impart the essential character of the goods. The cards only serve to support and display the samples, and are of no use in and of themselves. The primary use of the articles is to advertise and sell the textiles. Without the samples, the displays would have nothing to show.

As a result, Examples 1 and 2 are classifiable as other made up textile articles.

Example 3

The "articles assembled abroad" analysis and conclusion and the "classification" analysis for Examples 1 and 2, supra, are incorporated herein as if repeated verbatim.

Note 1 to Section XI, HTSUSA, provides, in pertinent part:

This section [textiles and textile articles] does not cover:

(h) Woven, knitted or crocheted fabrics, felt or nonwovens, impregnated, coated, covered or laminated with plastics, or articles thereof, of

Applying the statutory test to the submitted samples, using normally corrected vision in a well lighted room, we consider the instant merchandise to be fully covered with plastics visible to the naked eye. As a result, the wall coverings swatch card, as represented by Example 3, is not classifiable in Section XI, HTSUSA.

Heading 3918, HTSUSA, provides for, inter alia, wall coverings of plastics. Note 9 to Chapter 39, HTSUSA, states:

For the purposes of heading 3918, the expression "wall or ceiling coverings of plastics" applies to products in rolls, of a width not less than 45 cm, suitable for wall of ceiling decoration, consisting of plastics fixed permanently on a backing of any material other than paper, the layer of plastics (on the face side) being grained, embossed, colored, design-printed or otherwise decorated.

As the instant plastic swatches are not in rolls, and are fixed to paper, classification in heading 3918 would be incorrect.

Heading 3921, HTSUSA, provides for other plates, sheets, film, foil and strips, of plastics. Note 10 to Chapter 39, HTSUSA, states that these articles may be "uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use)." Emphasis added. It is our opinion that, although the swatches prior to
insertion into the swatch cards meet the definition of sheets, the gluing of the sheets into the folders is a further working sufficient to preclude classification in heading 3921. See also HRL 081298 of March 21, 1989 (considering fabric squares and rectangles, when glued into sample folders, no longer fabric but made up articles).

Marking of the Swatch Cards

You have requested a waiver of the requirement to mark each sample card with Mexico as the country of origin. You state, however, that the cartons in which the cards will be imported will be clearly marked with Mexico as the country of origin. You indicate that the imported swatch cards will be used by your customers, who are manufacturers or distributors of fabric and wall coverings, to demonstrate the qualities of their products. The sample cards are only to be used in the solicitation of business and are distributed by your customers free of charge to those individuals or firms that may have the need to see the product. You also indicate that your customers ship the U.S. materials directly to the Mexican manufacturer of the swatch charts.

Section 304 of the Tariff Act of 1930, as amended, provides, in general, that all articles of foreign origin imported into the U.S. shall be legibly, conspicuously and permanently marked to indicate to an ultimate purchaser in the U.S. the English name of the country of origin of the article.

Section 134.1, Customs Regulations, defines ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported.

Section 134.32, Customs Regulations, lists the general exceptions to the marking requirements, providing, in pertinent part:

(d) Articles for which the marking of the containers will reasonably indicate the origin of the articles;

(f) Articles imported for use by the importer and not intended for sale in their imported or any other form;

(h) Articles for which the ultimate purchaser must necessarily know the country of origin by reason of the circumstances of their importation or by reason of the character of the articles even though they are not marked to indicate their origin;

(m) Products of the U.S. exported and returned.

Before we can determine whether any of the above exceptions apply, we must decide who is the ultimate purchaser. In HQ 732082 of March 14, 1989, we ruled on the country of origin
requirements of imported articles to be used by the importer as samples to be shown to prospective customers to solicit sales of similar articles. We determined that the ultimate purchaser was the importer who uses the samples in his business, and not the prospective customer. As such, we determined that the imported samples may be excepted from marking under either section 134.32(d) or 134.32(f).

In the instant matter, the ultimate purchasers of the imported swatch charts are also the companies that use the cards to solicit sales of fabric and wall coverings; i.e., your customers. As such, two exceptions from marking may apply. First, as long as the charts are imported in properly marked cartons, and Customs officials at the port of entry are satisfied that the swatch charts will reach the ultimate purchasers in their original marked containers, the charts may be excepted from individual marking under section 134.32(d). Alternatively, if you submit satisfactory evidence at the time of importation which shows that the ultimate purchasers sent the U.S. materials to the Mexican manufacturers, the swatch charts and their containers are excepted from marking under section 134.32(h). In such circumstances, the ultimate purchasers would "necessarily know from the circumstances of the importation" that the swatch charts were manufactured in Mexico.

The exception in section 134.32(f) is not applicable in this case, since the importer is not the ultimate purchaser. Finally, the exception for U.S. goods exported and returned, provided in section 134.32(m) does not apply, since the Mexican processing substantially transforms the U.S. materials into a product of Mexico for purposes of 19 U.S.C. 1304.

HOLDING:

As a result of the foregoing, the instant merchandise is classified as follows: Examples 1 and 2, under subheading 6307.90.9050, HTSUSA, as other made up articles, including dress patterns, other, other, other. There are currently no visa or textile category restrictions for this merchandise. Articles classified under subheading 6307.90.90, when imported from designated beneficiary countries, are entitled to a Free duty rate under the Generalized System of Preferences, provided the requirements for that special tariff treatment program set forth in sections 10.171 - 10.178, Customs Regulations (19 C.F.R. 10.171 - 10.178), are satisfied. Otherwise, the General rate of duty is 7 percent ad valorem.

Example 3 is classified under subheading 3926.90.9050, HTSUSA, as other articles of plastics and articles of other materials of headings 3901 to 3914, other, other, other. Articles classified under subheading 3926.90.90, when imported from designated beneficiary countries, are entitled to a Free duty rate under the Generalized System of Preferences, provided the requirements for that special tariff treatment program set forth in sections 10.171 - 10.178, Customs Regulations (19 C.F.R. 10.171 - 10.178), are satisfied. Otherwise, the General rate of duty is 5.3 percent ad valorem.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories, you should contact your local Customs office prior to importing the merchandise to determine the current applicability of any import restraints or requirements.

Sincerely,

John Durant, Director
Commercial Rulings Division


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