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HQ 961712




November 12, 1998

CLA-2 RR:CR:TE 961712 GGD

CATEGORY: CLASSIFICATION

Ms. B.J. Underwood
Circle International, Inc.
3275 Alum Creek Drive, Suite 200
Columbus, Ohio 43207

RE: Reconsideration of HQ 959668; Classification and Country of Origin Determination for Cookware Carrying Cases; SGI, Incorporated v. United States, 122 F.3d 1468 (Fed. Cir. 1997); 6307.90, HTSUS; 19 CFR 102.21(c)(2) and (e); Country in Which Fabric Comprising the Good was Formed by Fabric- making Process

Dear Ms. Underwood:

This is in response to your letter dated March 14, 1998, on behalf of your client, Anchor Hocking Corp., requesting reconsideration of Headquarters Ruling Letter (HQ) 959668, issued September 17, 1996, and concerning country of origin and classification determinations under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) of carrying cases for cookware which have been, and will continue to be, imported into the United States on an ongoing basis on or after July 1, 1996. With the request, samples were submitted for examination.

FACTS:

In HQ 959668, issued September 17, 1996, you were advised on behalf of Anchor Hocking Corp., that the insulated carrying cases subject to that ruling were classified in subheading 4202.92.9040 (which has since been fragmented and changed to read 4202.92.9060), HTSUSA, the provision for "Trunks...briefcases... camera cases...holsters and similar containers; traveling bags... backpacks...shopping bags...bottle cases...and similar
containers...: Other: With outer surface of sheeting of plastic or of textile materials: Other: Other, Other: Other." Based on this classification and the fact that the subject merchandise had been wholly assembled in a single country, that being China, the country of origin was determined to be China. You have based your request for reconsideration of HQ 959668 upon a decision by the Court of Appeals for the Federal Circuit (CAFC) in SGI, Incorporated v. United States, 122 F.3d 1468 (Fed. Cir. 1997).

The five insulated cookware carriers at issue, identified as styles Z8196, Z8197, Z8198, Z8199, and Z8387, are either round or rectangular in shape and each is manufactured to contain a casserole dish of a specific size and shape. All of the cases feature woven textile carrying straps and most also have woven textile straps on the interior to secure the dish. Some of the cases feature small interior pockets that are able to contain items such as eating/serving utensils, napkins, etc. Some of the cases have zipper closures while others close by means of hook and loop fabric fasteners. The articles are primarily designed to store and preserve food.

Four of the styles, i.e., Z8196, Z8197, Z8198, and Z8199, are constructed with an outer layer composed of a woven nylon fabric that has been coated, covered or laminated with a non-cellular (compact) plastic identified as polyvinyl chloride (PVC). The plastic surface of this outer layer faces outward and is embossed to resemble a textile material. The middle layer of each case is composed of plastic foam, which functions to insulate and cushion contents. The inner layer is a lining composed of man-made textile materials.

Like the four styles above, style Z8387 has a middle layer composed of plastic foam to insulate and cushion its contents. The style differs from the other four cases, however, in several ways. Style Z8387 is reversible, which creates two options for its outer surface. In one option, the outer layer is composed of a dyed, knit textile fabric that has been coated, covered or laminated with a cellular plastic and the knit fabric is present merely for reinforcing purposes. In the other option, the outer layer is composed only of textile material - a plaid printed, pile fabric of man-made fibers. Style Z8387 closes by means of hook and loop fabric fasteners.

For purposes of determining the country of origin, the manufacturing operations for all five styles are described as follows:

CHINA, TAIWAN, JAPAN, AND HONG KONG

- materials are sourced (exterior flake 600D, interior 210 nylon, PE foam, sponge, PVC patch, clear PVC, thread, ink, webbing, inside PVC label, and either zipper teeth and zipper pull or hook and loop fabric fasteners).

CHINA

- cutting of fabric
- sewing and complete assembly;
- packing.

ISSUES:

1) Whether the insulated cases designed to carry cookware are classified under heading 4202, HTSUS, as containers used to organize, store, protect and carry various items; under heading 3924, HTSUS, as containers of plastics; or under heading 6307, HTSUS, as other made up (textile) articles.

2) What is the country of origin of the cookware carrying cases?

ISSUE 1: CLASSIFICATION

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined 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.

As you have noted, the classification of certain portable, soft-sided, insulated cooler bags with outer surface of plastics, was examined by the Court of Appeals for the Federal Circuit in SGI, Incorporated v. United States, 122 F.3d 1468 (Fed. Cir. 1997). The CAFC focused on whether food or beverages were
involved with the eo nomine exemplars set forth in the tariff provisions at issue and, without discussion of heading 4202 exemplars that organize, store, protect, and/or carry food or beverages, the CAFC held that the appropriate classification for the cooler bags was subheading 3924.10.50, HTSUS, the provision for "Tableware, kitchenware, other household articles...of plastics: Tableware and kitchenware: Other." The Court stated that this classification "does encompass exemplars that are ejusdem generis with the coolers because their purpose is to contain food and beverages." The exemplars (specifically enumerated in subheading 3924.10.10) which the Court noted in particular were the "various household containers for foodstuffs such as salt, pepper, mustard, and ketchup dispensers and serving pieces for food."

This office concluded that the CAFC's decision in SGI should be implemented. Instructions were issued to Customs field personnel on November 7, 1997, on March 18, 1998, and on September 10, 1998 (and approved for dissemination to members of the importing community), by which the principles of the CAFC's decision were expressly extended to portable, hard or soft-sided, insulated coolers and similar insulated containers (whose primary purpose is to store and preserve food and/or beverages), with outer surface of plastics, with outer surface of textile materials (classified in subheading 6307.90.9905, 6307.90.9907, or 6307.90.9909, HTSUSA, depending upon whether the outer surface is composed of cotton, man-made fibers, or other textile materials, respectively), and with an exterior layer composed of a textile fabric that is coated, covered or laminated with compact plastics, with the plastic surface facing outward (classified in subheading 6307.90.9989, HTSUSA).

In HQ 960938, issued November 14, 1997, this office reconsidered HQ 960184, dated September 4, 1997, in which an "insulated casserole dish caddie bag" had been classified under heading 4202.92.9060, HTSUSA. Since the insulated bag was designed to carry a food container and a removable cold pack, we concluded that the article was covered by the decision in SGI, and that by operation of law, the CAFC's decision in SGI had revoked HQ 960184. (We have recently become aware that the outer layer of the "insulated casserole dish caddie bag" is composed not of 100 percent PVC as had been claimed, but of a textile fabric that is coated with PVC plastics, with the plastic surface facing outward. Steps are currently being taken to modify HQ 960938 to reflect proper classification of the "insulated casserole dish caddie bag" in subheading 6307.90.9989, HTSUSA.)

We find that each of the subject five styles of cookware carriers is also covered by the principles of the SGI decision and the instructions noted above. By operation of law, the CAFC's decision in SGI effectively revoked HQ 959668. Accordingly, the four cases whose outer layers are composed of fabric-backed compact plastics, identified as styles Z8196, Z8197, Z8198, and Z8199, are classified in subheading 6307.90.9989, HTSUSA, the provision for "Other made up articles, including dress patterns: Other: Other: Other, Other: Other." The provision is currently not subject to quota/visa requirements.

With respect to reversible style Z8387, we first consider the article when fabric-backed cellular plastics comprises its optional outer layer, and whether this particular plastics/ textile combination constitutes a textile material for classification purposes. The EN to chapter 39, HTS, state that (except for certain wall or ceiling coverings) "the classification of plastics and textile combinations is essentially governed by Note 1(h) to Section XI, Note 3 to Chapter 56 and Note 2 to Chapter 59." Among other goods, chapter 59, HTSUS, covers impregnated, coated, covered or laminated textile fabrics. In pertinent part, Note 2(a) to chapter 59, HTSUS, states that heading 5903 applies to:

Textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square meter and whatever the nature of the plastic material (compact or cellular), other than:

(5) Plates, sheets or strip of cellular plastics, combined with textile fabric, where the textile fabric is present merely for reinforcing purposes (chapter 39)

Based upon the explanatory and legal notes above, the material which comprises the optional outer layer of cellular plastics backed by textile fabric that is present merely for reinforcing purposes, is classifiable under heading 3921, HTSUS, not as a textile material, but as a sheet of cellular plastics (combined with textile materials). In light of the decision in SGI, the instructions implementing that decision, and HQ 960938, which concluded that an insulated casserole dish was covered by the decision in SGI, style Z8387 is prima facie classifiable as a food container under heading 3924, HTSUS.

If style Z8387 was not reversible, however, and its outer surface was the other optional outer layer, i.e., the layer composed only of textile materials of man-made fibers, then
pursuant to the instructions implementing the decision in SGI, style Z8387 would be classified in subheading 6307.90.9907, HTSUSA. Therefore, reversible style Z8387 is also prima facie classifiable under heading 6307, HTSUS. Since the case is classifiable under both headings 3924 and 6307, it cannot be classified solely by reference to GRI 1. We therefore look to GRI 2(b), which in pertinent part states:

* * * The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.

When goods are prima facie classifiable under two or more headings, GRI 3(a) directs, in pertinent part, that the headings are regarded as equally specific when each heading refers to part only of the materials or substances contained in mixed or composite goods. Therefore, we next look to GRI 3(b), which states in pertinent part:

Mixtures, composite goods consisting of different materials...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 article, we look to 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.

We find that the optional outer layers of style Z8387 are equally significant in nature, and in the role each material plays in relation to the complete cookware carrying case. Therefore, we next consider GRI 3(c), which states:

When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

Since the heading which occurs last is heading 6307, reversible style Z8387 is classified thereunder, specifically in subheading 6307.90.9907, HTSUSA, textile category 670, the provision for

"Other made up articles, including dress patterns: Other: Other: Other, Cooler bags with an outer surface of textile materials: Of man-made fibers."

ISSUE 2: COUNTRY OF ORIGIN

LAW AND ANALYSIS:

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act. Section 334 of that Act provides new rules of origin for textiles and apparel entered, or withdrawn from warehouse, for consumption, on or after July 1, 1996. On September 5, 1995, Customs published Section 102.21, Customs Regulations, in the Federal Register, implementing Section 334 (60 FR 46188). Thus, effective July 1, 1996, the country of origin of a textile or apparel product shall be determined by sequential application of the general rules set forth in paragraphs (c)(1) through (5) of section 102.21.

Paragraph (c)(1) states that "The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." Since none of the merchandise is wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) is not applicable.

Paragraph (c)(2) states that "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each foreign material incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section."

Paragraph (e) states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section:"

6307.90...The country of origin of a good classifiable under subheading 6307.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

At the six digit subheading level, all five styles of cookware carrying cases are classified in subheading 6307.90, HTSUS. According to the information supplied by the importer in the "FACTS" section above, all materials (including the fabrics)
are sourced in China, Taiwan, Japan, and Hong Kong. The country of origin of the cookware carrying cases is therefore either China, Taiwan, Japan, or Hong Kong, depending upon the single specific country in which the textile fabric comprising each article was formed by a fabric-making process.

HOLDING:

The cookware carrying cases identified by style nos. Z8196, Z8197, Z8198, and Z8199, are classified in subheading 6307.90.9989, HTSUSA, the provision for "Other made up articles, including dress patterns: Other: Other: Other, Other: Other." The general column one duty rate is 7 percent ad valorem.

The cookware carrying case identified by style no. Z8387, is classified in subheading 6307.90.9907, HTSUSA, textile category 670, the provision for "Other made up articles, including dress patterns: Other: Other: Other, Cooler bags with an outer surface of textile materials: Of man-made fibers." The general column one duty rate is 7 percent ad valorem.

The country of origin of the cookware carrying cases identified by style nos. Z8196, Z8197, Z8198, Z8199, and Z8387, is either China, Taiwan, Japan, or Hong Kong, depending upon the single country in which the fabric was formed.

The designated textile and apparel category may be subdivided into parts. If so, visa and quota requirements applicable to the subject merchandise may be affected. Since part categories are the result of international bilateral agreements which are subject to frequent renegotiations and changes, to obtain the most current information available, we suggest that you check, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels), an internal issuance of the U.S. Customs Service, which is available for inspection at your local Customs office.

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

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in 19 CFR 177.9(b)(1), which states that each ruling letter is issued on
the assumption that all of the information furnished and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.

Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. A change in the facts previously furnished may affect the determination of country of origin. Thus, if there is any change in the facts provided to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

Sincerely,

John Durant, Director
Commercial Rulings Division

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