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HQ 951155

February 28, 1992

CLA-2 CO:R:C:M 951155 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9004.90.00; 9801.00.10

Ms. Holly E. Hanson
Expeditors International of Washington, Inc. 2612 E. 81st Street
Bloomington, MN 55425

RE: Labsac Kit; T.D. 91-7; GRI 3(c); HQ 950514; Revocation of NY 866500

Dear Ms. Hanson:

We have been asked to review NY 866500, dated September 13, 1991, which classified a Labsac kit under the Harmonized Tariff Schedule of the United States (HTSUS). The merchandise was classified under subheading 9801.00.10, HTSUS, which provides for: "[p]roducts of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad."

FACTS:

The Labsac kit is designed for use in a darkroom to protect against exposure to photographic chemicals used in photofinishing. It is assembled in Canada from articles produced in various countries. The following is a list of the articles including their country of origin:

1. Pair of safety goggles United States
2. PVC coated nylon apron China
3. Pair of nitrile gloves Canada
4. Nylon carrying bag Canada or Korea

The articles do not undergo any manufacturing process in Canada but are merely packaged in the nylon carrying bag. The kit is suitable for sale directly to users without repacking.

ISSUE:

When a set contains U.S. components entitled to duty free treatment and also contains foreign components, are the foreign components also entitled to duty-free treatment?

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

In NY 866500, as noted, the merchandise was classified under subheading 9801.00.10, HTSUS. This ruling was based upon the reasoning in HQ 554935, dated April 10, 1989, and in HQ 085967, dated March 2, 1990, both of which were revoked by HQ 950514, dated December 30, 1991. Both rulings stood for the proposition that, when a United States-origin item qualifying for subheading 9801.00.10, HTSUS, treatment imparts the essential character of a set, in such a case that duty-free treatment should be accorded not only to the United States-origin item but to the foreign- origin items in the set as well.

Note 1 to chapter 98, HTSUS, provides that:

[t]he provisions of this chapter are not subject to the rule of relative specificity in general rule of interpretation 3(a). Any article which is described in any provision in this chapter is classifiable in said provision if the conditions and requirements thereof and any applicable regulations are met.

In T.D. 91-7, dated January 8, 1991, it was stated that "[t]he 'conditions and requirements' of subheading 9801.00.10, HTSUS, are (1) that the article be a product of the U.S.; and (2) that it not be advanced in value or improved in condition by any means while abroad."

In NY 866500, it was decided that, under GRI 3(c), the kit was indeed a set but that no essential character of the set existed. GRI 3(c), HTSUS, requires classification under the last applicable subheading in the HTSUS when the essential character of a set cannot be determined. Because of the reasoning in both HQ 554935 and HQ 085967, it was ruled that the set was classifiable under subheading 9801.00.10, HTSUS, the classification for the United States-origin goggles and the last applicable subheading in the HTSUS with regard to the subject articles.

However, T.D. 91-7 reconsidered the reasoning in HQ 554935 and HQ 085967, and it was "determined that [the reasoning] not only is inconsistent with U.S. Note 1, Chapter 98, HTSUS, but leads to results not intended by GRI 3(b) or 3(c)." Based upon the principles established in T.D. 91-7, only United States- origin products will be entitled to subheading 9801.00.10, HTSUS, treatment.
In HQ 950514, it was stated that "[i]f a United States- origin product, such as the respirator with cartridges, imparts the essential character of a set, then the foreign-origin products will take the chapter 1-97, HTSUS, rate of duty applicable to the respirator with cartridges, as if those articles were ineligible for subheading 9801.00.10, HTSUS, treatment. They will not be subject to 9801.00.10, HTSUS, treatment as previously ruled."

The subject goggles, regardless of origin, are classifiable under subheading 9004.90.00, HTSUS, which provides for: "[s]pectacles, goggles and the like, corrective, protective or other: [o]ther." Under the reasoning provided in T.D. 91-7 and in HQ 950514, the foreign-origin articles of the Labsac kit are classifiable under subheading 9004.90.00, HTSUS, as it is the last applicable subheading in the HTSUS with regard to the subject articles. However, the United States-origin goggles are classifiable under subheading 9801.00.10, HTSUS, and receive duty free treatment.

HOLDING:

The safety goggles are classifiable under subheading 9801.00.10, HTSUS, and receive duty-free treatment. Because, under GRI 3(c), the goggles are classified under the last applicable subheading in the HTSUS with regard to the subject articles, under T.D. 91-7, the remainder of the articles are classifiable under the chapter 1-97, HTSUS, rate of duty applicable to the goggles. That rate is classifiable under subheading 9004.90.00, HTSUS, which provides for: "[s]pectacles, goggles and the like, corrective, protective or other: [o]ther." The general, column one rate of duty is 7.2 percent ad valorem.

Because of the principles established in T.D. 97-1, NY 866500 is revoked. This revocation is issued under Section 177.9(d), Customs Regulations [19 CFR 177.9(d)]. It is not to be applied retroactively to NY 866500 [19 CFR 177.9(d)(2)], and will not, therefore, affect past transactions for the importation of your merchandise under those rulings. However, for the purposes of future transactions in merchandise of this type, the above cited rulings will not be valid precedent. We recognize that pending transactions may be adversely affected by this revocation, in that current contracts for importations arriving at a port subsequent to this decision will be classified pursuant
to them. If such a situation arises, you may, at your discretion notify this office and apply for relief from the binding effects of this decision as may be warranted by the circumstances.

Sincerely,

John Durant, Director
Commercial Rulings Division

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