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HQ 958759




March 21, 1996

CLA-2 RR:TC:TE 958759 GGD

CATEGORY: CLASSIFICATION

TARIFF NO.: 6404.20.4060

Ms. Sandra Tovar
CST, Inc.
Post Office Box 2329
Peachtree City, Georgia 30269

RE: Slippers in Pouch; Composite Goods; Eligibility for Duty- Free Treatment, U.S. Note 2(b), Subchapter II, Chapter 98

Dear Ms. Tovar:

This letter is in response to your request of November 1, 1995, concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of a travel pouch and women's slippers, all made of U.S.-cut components and imported from the Dominican Republic. Samples were submitted with your request.

FACTS:

The samples consist of one travel pouch and two styles of women's slippers. All items are white in color and essentially composed of the same material, which is 80 percent cotton and 20 percent polyester terry cloth. All items have a satin-like, polyester fabric bow and trim. The outer soles of the slippers are composed of pigsplit suede, and their vamps and soles are filled with polyester fiberfill.

The pouch (no style number assigned) measures approximately 8 inches in length by 6-1/2 inches in height, and has a hook and loop type of closure. Slipper style no. 97625, described as a "women's travel ballerina," has an elastic textile band around the top of the slipper's opening. The upper of slipper style no. -2-

97626, described as a "women's travel scuff," covers mainly the front portion of the slipper and the wearer's heel would be exposed.

All raw materials are of U.S. origin and are cut in the U.S. The cut materials are shipped directly to the Dominican Republic where they are assembled into slippers and pouches before being returned directly to the U.S. Each pouch is designed to hold one pair of slippers and the components are imported together as a unit.

ISSUES:

1) Whether the slippers and pouch are separately classified.

2) Whether the slippers and/or pouch are eligible for duty- free entry.

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). The systematic detail of the harmonized system is such that virtually all goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied. The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRI.

Applying the GRI, we find that the pouch and slippers are composite goods that are described by both headings 6404 and 4202, HTSUS. In pertinent part, Explanatory Note IX to GRI 3(b) indicates that:

[f]or purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the -3-
other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.

In this case, the components are separable and adapted to be used together. The pouch, which closely resembles its contents, is only slightly larger than a pair of folded slippers and would not easily accommodate additional items. It would not likely be sold as an independent product for carrying various other personal effects (as would be a back pack, fanny bag, or shoulder bag). Although slippers are not always sold with pouches, placement of the slippers in the pouch during travel will keep the pair together and protect other personal effects from dirt that the slippers pick up. Since the pouch and slippers together form a composite article which cannot be classified solely by reference to GRI 1, we look to GRI 2(b), which in pertinent part states that:

[t]he classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.

GRI 3(a) directs that the headings are regarded as equally specific when each heading refers to part only of the materials contained in composite goods. Therefore, to determine under which provision the goods will be classified, we look to GRI 3(b), which states in pertinent part that:
composite goods...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.

In order to determine the essential character of the composite article, we next view Explanatory Note VIII to GRI 3(b), which provides the following guidance:

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.

The pouch's role of containing the slippers and the dirt acquired is outweighed by that of the slippers, which warm and protect the wearer's feet. The value of each style of slippers -4-
is also significantly greater than that of the pouch. Therefore, the slippers provide the composite goods with the essential character. In the absence of duty-free treatment, the pouch and slippers would be classified in subheading 6404.20.4060, HTSUSA, the provision for "Footwear...: Footwear with outer soles of leather or composition leather: Not over 50 percent by weight of rubber or plastics and not over 50 percent by weight of textile materials and rubber or plastics with at least 10 percent by weight being rubber or plastics: Valued over $2.50 per pair, For women," with an applicable duty rate of 10 percent ad valorem.

With respect to whether the pouch and slippers are eligible for duty-free treatment, we look to U.S. Note 2(b) to Subchapter II of Chapter 98, HTSUS. Specifically, Note 2(b) states that:

No article (except a textile article, apparel article, or petroleum, or any product derived from petroleum, provided for in heading 2709 or 2710) may be treated as a foreign article, or as subject to duty, if--

(i) the article is--

(A) assembled or processed in whole of fabricated components that are a product of the United States, or

(B) processed in whole of ingredients (other than water) that are a product of the United States, in a beneficiary country; and

(ii) neither the fabricated components, materials or ingredients, after exportation from the United States, nor the article itself, before importation into the United States, enters the commerce of any foreign country other than a beneficiary country.

As used in this paragraph, the term "beneficiary country" means a country listed in general note 7(a).

Although Note 2(b)(i)(A) and (B) are separated by the word "or," it is our opinion that Congress did not intend to preclude free treatment under this provision to an article created in a beneficiary country (BC) both by assembling and processing U.S. fabricated components and by processing U.S. ingredients.

Pursuant to General Note 7(a), HTSUS, the Dominican Republic is a designated BC for purposes of the Caribbean Basin Economic Recovery Act (CBERA). U.S. Note 2(b) specifies four categories -5-
of products which are excluded from duty-free treatment under this provision: textile articles, apparel articles, petroleum, and certain products derived from petroleum. We have previously held that footwear and footwear parts, including footwear and parts made of textile materials, do not constitute apparel or textile articles as contemplated by U.S. Note 2(b) and, therefore, are eligible for duty-free treatment under this provision, provided that all other requirements are satisfied. See Headquarters Ruling Letters (HRLs) 555742, issued November 5, 1990; 555788, issued September 9, 1991; and Treasury Decision (T.D.) 91-88, issued November 6, 1991.

The assembly operations performed in the Dominican Republic to produce the pouches and slippers consist of stitching together all of the components. Stitching together U.S. materials in the Dominican Republic in order to produce finished pouches and slippers constitutes operations specified in U.S. Note 2(b). See HRL 555742. Therefore, if, in fact, all materials are of 100 percent U.S.-origin, the slippers and pouches are shipped directly to the U.S. without entering into the commerce of any foreign country other than a BC, and the applicable documentation requirements are satisfied, the pouches and footwear will be entitled to duty-free treatment under U.S. Note 2(b) to Subchapter II of Chapter 98, HTSUS.

HOLDING:

The travel pouches are classified with the slippers (style nos. 97625 and 97626) they are designed to carry. Provided that all requirements of U.S. Note 2(b) to Subchapter II of Chapter 98, HTSUS, are satisfied, the composite goods are entitled to duty-free treatment.

Sincerely,

John Durant, Director

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