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HQ 955720


May 6 1994

CLA-2 CO:R:C:M 955720 DFC

CATEGORY: CLASSIFICATION

Tariff NO.: 6404.19.35

District Director of Customs
U.S. Customs Service
4430 E. Adamo
Suite 301
Tampa, Florida 33605

RE: Protest 1801-93-100033; Footwear; Soles, wool felt; 19 CFR Part 177; Detrimental reliance; DD 863424; HQ 952935

Dear District Director:

This is in response to Protest 1801-93-100033 covering a shipment of wool felt footwear produced in Germany.

FACTS:

The merchandise involved has been described as footwear having a wool felt upper formed to completely encircle the front portion of the foot, with a low heel portion permitting the foot to slip in and out of the shoe. The formed upper was glued to a sole consisting of three components which themselves are glued together. The outer sole consists of a layer of wool felt glued to a mid-sole consisting of rubber affixed to a molded footbed of composition cork molded and fashioned to orthopedically conform to the contours of the foot.

In DD 863424 dated June 10, 1991, addressed to counsel for the protestant, the District Director of Customs in Chicago ruled that the footwear in issue is classifiable under subheading 6405.20.60, Harmonized Tariff Schedule of the United States (HTSUS), which provides for other footwear with uppers of textile materials, with soles and uppers of wool felt. The applicable rate of duty for this provision is 2.8% ad valorem.

In Headquarters Ruling Letter (HRL) 952935 dated January 6, 1993, addressed to counsel for the protestant, Customs revoked DD 863424 holding that the wool felt footwear is properly classifiable under subheading 6404.19.35, HTSUS, which provides for footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials, footwear with outer soles of rubber or plastics, other, footwear with open toes or open heels, footwear of the slip-on type that is held to the foot without the use of laces or buckles or other fasteners, the foregoing except footwear of subheading 6404.19.20, and except footwear having a foxing or foxing-like band wholly or almost wholly of rubber or plastics applied or molded at the sole and overlapping the upper, other. The applicable rate of duty for this provision is 37.5% ad valorem.

Protestant requests prospective application of HRL 952935 based on its reliance upon DD 863424, evidenced by its contracts, shipping, import and sales of the felt-soled footwear.

Protestant also asks that the entry covered by DD 863424 be reliquidated under subheading 6405.20.60, HTSUS.

ISSUE:

Did the protestant reasonably rely on DD 863425 so as to warrant a delay in the effective date of HRL 952935 pursuant to section 177.9(d)(3), Customs Regulations (19 CFR 177.9(d)(3))?

LAW AND ANALYSIS:

Section 177.9(d), Customs Regulations (19 CFR 177.9(d)), reads in pertinent part, as follows:

(d) Modification or revocation of ruling letters-(1) Generally. Any ruling letter found to be in error or not in accordance with the current views of the Customs Service may be modified or revoked. Modification or revocation of a ruling letter shall be effected by Customs Headquarters by giving notice to the person to whom the ruling letter was addressed and, where circumstances warrant, by the publication of a notice or other statement in the Customs Bulletin.

(2) Effect of modifications or revocations of ruling letters. The modification or revocation of a ruling letter will not be applied retroactively with respect to the person to whom the ruling was issued, or to any person directly involved in the transaction to which that ruling related, Provided:

(i) The request for a ruling contained no misstatement or omission of material facts,

(ii) The facts subsequently developed are not materially different from the facts on which the ruling was based.

Section 177.9(d)(3), Customs Regulations (19 CFR 177.9(d)(3)), reads in pertinent part, as follows:

(3) Effective dates. Generally, a ruling letter modifying or revoking an earlier ruling letter will be effective on the date it is issued. However, the Customs Service may, upon application or on its own initiative, delay the effective date of such a ruling for a period of up to 90 days from the date of issuance. Such a delay may be granted with respect to the party to whom the ruling letter was issued or to any other party, provided such party can demonstrate to the satisfaction of the Customs Service that they reasonably relied on the earlier ruling to their detriment . . . .

Protestant asserts that all five conditions of 19 CFR 177.9(d)(2) were met. We are of the opinion that the first two conditions were not met by the protestant. First, the original request for a ruling dated May 13, 1991, contains a misstatement of a material fact. Specifically, protestant stated that the "outer sole consists of a layer of wool felt glued to a mid-sole consisting of rubber . . . ." In reality the wool felt material has a light adhesive backing rather than being glued to the rubber sole. Underneath the easily removable felt is a 1/8th inch thick rubber sole which is quite sturdy and has been "cross hatched" along its entire surface to ensure good traction. See HRL 952935.

The second condition was not met in that the facts subsequently developed were materially different from the facts on which the ruling was based. Specifically, HRL 952935 comments on this as follows:

In its condition as imported, we do not believe that the shoe is a commercial reality. The felt covered rubber sole would be dangerous when walking on any non- traction surface such as hard wood or tile floors. In this condition, there is no traction and the wearer could easily slip and fall. Moreover, with normal use the flimsy felt material would be easily worn off the sole within a short time. We are of the opinion that the felt layer is "fugitive" and that all, or almost all, of the purchasers will remove the felt if it is present when purchased. Furthermore, regarding the 'commercial reality,' we have a catalog which shows that similar, if not identical, footwear is advertised and sold as wool clogs with rubber soles. Contrary to your assertion, no mention is made of felt outer soles. In view of the foregoing, it is our position that protestant is not entitled to a delay in the effective date of HRL 952935.

Protestant also claims that it relied on a letter dated November 27, 1992, from the Area Director of Customs in New York, wherein it was stated that DD 863424 "will continue to be used by all ports and liquidation of any entries of that merchandise will not be withheld." It is our view that DD 863424 is only applicable to footwear identical to the footwear described therein. See 19 CFR 177.9(b)(2). As stated in HRL 952935, the tariff classification in DD 863424 was based on the description and sample provided in the May 13, 1991 letter, as well as protestant's assertion that "the outer sole is of wool felt." The footwear covered by the entry in issue is not identical to that described in DD 863424.

Protestant claims that pursuant to 19 U.S.C. 1504, the entry involved was deemed liquidated one year after the date of entry, which was November 6, 1991. An examination of the ACS record of extension and liquidation reveals that the entry was properly extended on August 15, 1992.

It remains our opinion that classification of the wool felt footwear under subheading 6404.19.35, HTSUS, is correct for the reasons set out in HRL 952935, HTSUS.

HOLDING:

The protestant is not entitled to a delay in the effective date of HRL 952935.

The footwear covered by the entry in issue is not identical to that described in DD 863424. Therefore, protestant was not justified in relying on a letter from the Area Director of Customs in New York stating that DD863424 "will continue to be used by all ports and liquidation of any entries of that merchandise will not be withheld."

An examination of the ACS record of extension and liquidation reveals that liquidation of the entry in issue was properly extended.

The wool felt footwear is dutiable at the rate of 37.5% ad valorem under subheading 6404.19.35, HTSUS.

The protest should be denied. In accordance with Section 3A(11)(b) of Customs Directive 099 3550, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office to the protestant, through counsel, no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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