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HQ 963453




February 26, 2001

CLA-2 RR:CR:TE 963453 jsj

CATEGORY: CLASSIFICATION

TARIFF NO.: 6307.90.8940

Robert L. Follick, Esq.
Don M. Obert, Esq
Follick & Bessich
513 W. Mt. Pleasant Avenue
Suite 205
Livingston, New Jersey
07039

RE: Classification of a towel, a wood handle brush and a retriever packaged together as “The Club Towel Retriever”; Headings 6307, 7326 and 9603, HTSUSA; General Rule of Interpretation 3 (b); United States – Israel Free Trade Area Implementation Act.

Dear Gentlemen:

The purpose of this correspondence is to respond to your request of August 19, 1999, directed to the New York office of the U.S. Customs Service. The correspondence in issue requested, on the behalf of your client Vision Group, LLC, a binding classification ruling of the items packaged together under the name “The Club Towel Retriever.”

Samples of the items were provided, packaged as they will be sold at retail. The samples included: (1) A wood handle brush, a towel and a retriever; (2) The box in which the items will be sold at retail, identifying the items as “The Club Towel Retriever;” (3) A product catalogue; and (4) Instruction materials for “The Club Towel Retriever.” The samples will be returned in accordance with your request.

This ruling letter is being issued subsequent to the following: (1) A review of your written submission dated August 19, 1999, requesting a binding classification ruling; and (2) A telephone conference conducted on October 10, 2000, between your office and a member of my staff.

FACTS

The articles submitted for consideration consist of a towel, a wood handle brush and a retriever.

The towel measures nineteen and one-half (19 1/2) inches in length and sixteen (16) inches in width. A label indicates that it is composed entirely of cotton and is a product of Belgium. The towel is blue and green with the phrase “GOLFER IMAGE” in two inch print across the top and the bottom. A metal grommet or eyelet is one and one-half (1 1/2) inches from one of the sides of the towel, centered between the top and bottom.

The brush has a wood body advised to be made from American White Oak that measures two and three-eighths (2 3/8) inches in height, one and one-half (1 1/2) inches in width and five-eighths of an inch in depth at its largest point. The brush has two rows of bristles across the bottom advised to be made of “heavy duty nylon” or hard plastic. The bristles are gathered into nine bundles of sixteen bristles each. The bristles extend one-half (1/2) inch from the base of the handle. The handle has a one-eighth (1/8) of an inch diameter hole drilled through one of the upper corners and a circular, open-ended, metal ring devise looped through the hole. The Customs Service is advised that the brush is a product of Israel.

The retriever has a plastic housing that encloses a spring mechanism from which a forty-six (46) inch wire extends and recoils. The housing of the retriever is made of plastic. It measures two and one-fourth (2 1/4) inches in height, two and one-eighth (2 1/8) inches in width and is one-half (1/2) inch from front to back. It is generally circular in shape, but not entirely circular. The housing has a metal clip attached to the back designed to secure the retriever to a belt, golf bag or similar item. The retriever has a U-shaped twisted wire hook which slides open and remains closed by tension on a one (1) inch long and one-fourth (1/4) inch in diameter metal rod. The Customs Service is advised that the retriever is a product of Israel.

The Customs Service received the samples with the towel and the brush attached to the retriever by the U-shaped twisted wire closure.

ISSUES

Do the towel, wood handle brush and retriever constitute “goods put up in sets for retail sale” pursuant to General Rule of Interpretation 3 (b) resulting in their classification pursuant to the Harmonized Tariff Schedule of the United States by the component which gives the set its essential character ?; and

If the towel, wood handle brush and retriever constitute a set pursuant to General Rule of Interpretation 3 (b), what is the component of the set that gives it its essential character for classification purposes?; and

If the towel, wood handle brush and retriever constitute a set pursuant to General Rule of Interpretation 3 (b), does the set qualify for Special Column 1 Rate of Duty treatment pursuant to the United States – Israel Free Trade Area Implementation Act ?

LAW AND ANALYSIS

The classification of imported merchandise pursuant to the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification decisions are to be “determined according to the terms of the headings and any relative section or chapter notes.” If the towel, brush and retriever in issue are individual items and properly classified individually with reference to only the HTSUSA headings and section or chapter notes, the examination of the GRI’s should conclude with the application of GRI 1. Since the towel, brush and retriever may not be classified solely by reference to the HTSUSA headings and section or chapter notes, GRI 1 instructs that the merchandise should be classified pursuant to the subsequent GRI’s, in their sequential order.

A review of GRI 2 leads to the conclusion that its provisions will not prove beneficial in classifying the articles that comprise “The Club Towel Retriever.” The articles under consideration in this ruling letter do not constitute incomplete, unfinished, unassembled or disassembled articles that are addressed in GRI 2 (a). The towel, brush and retriever are, in accordance with GRI 2(b), “goods consisting of more than one material” and should be classified according to GRI 3.

An examination of the dictates of GRI 3 becomes appropriate when goods are prima facie classifiable under two or more headings. The towel, brush and retriever, if classified individually, would respectively be classified according to the following HTSUSA headings: (1) The towel, heading 6307, HTSUSA; (2) The brush, heading 9603, HTSUSA; and (3) The retriever, heading 7326, HTSUSA.

GRI 3(a) provides that the articles should be classified according to the heading which affords the most specific description, unless the multiple headings refer to only part of the materials or substances contained in goods that are mixed or composite, or to only part of “items in a set put up for retail sale.” The towel, brush and retriever are not mixed or composite goods, warranting inquiry into the issue of whether they cumulatively constitute “items in a set put up for retail sale.”

The General Rules of Interpretation do not define the phrase “items in a set put up for retail sale.” The Explanatory Notes (EN) of the Harmonized Commodity Description and Coding System do, however, offer guidance. The EN’s represent the official interpretation of the HTSUSA at the international level, but are not binding law of the United States and the Customs Service is not legally obligated to follow the Explanatory Notes’ interpretation of the GRI’s. The Treasury Department has, however, acknowledged the interpretative value of the EN’s. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989).

The precise phrase in GRI 3(a) “items in a set put up for retail sale” is not addressed in the EN’s. The EN’s do however address a similar phrase employed in GRI 3(b). The phrase employed in GRI 3(b) and discussed in the EN’s is “goods put up in sets for retail sale.” Explanatory Note (X), Gen. Rule of Interpretation 3 (b). It is the conclusion of the Customs Service that the two phrases address the same issue.

Explanatory Note (X) of GRI 3(b) provides three factors to be considered when determining whether goods have been put up in sets for retail sale. The factors are:

The goods consist of at least two different articles that are, prima facie, classifiable in different headings;

The goods consist of articles put up together to “meet a particular need or carry out a specific purpose”; and

The goods are “put up in a manner suitable for sale directly to users without repacking.” Explanatory Note (X) (a) – (c), Gen. Rule of Interpretations 3 (b).

A review of the HTSUSA and an examination of “The Club Towel Retriever” leads to the conclusion that the towel, brush and retriever are prima facie classifiable in different headings and are packaged in a manner suitable for sale directly to users. The issue that remains, the second of the three factors, is whether the towel, brush and retriever are put up together to “meet a particular need or carry out a specific activity.” Explanatory Note (X) (b), Gen. Rule of Interpretation 3 (b).

The Explanatory Notes do not define the phrase “meet a particular need or carry out a specific activity.” Id. The EN’s do, however, offer examples of items put up together for sale directly to the user which constitute sets. The initial example consists of “a sandwich made of beef, with or without cheese, in a bun,packaged with potato chips (French Fries).” The second example consists of items to be used together to prepare a spaghetti meal. The components include: (1) A packet of uncooked spaghetti; (2) A sachet of grated cheese; and (3) A small tin of tomato sauce, put up in a carton. The third example is a hairdressing set. The items in this set include: (1) A pair of electric hair clippers; (2) A comb; (3) A pair of scissors; (4) A brush; (5) A towel of textile material; and (6) A leather case to store and carry the items. The final example of a set is a drawing kit. The drawing kit includes five items put up together in a case of plastic sheeting. The items are: (1) A ruler; (2) A disc calculator; (3) A drawing compass; (4) A pencil; and (5) A pencil-sharpener. See Explanatory Note (X) (1) – (3), Gen. Rule of Interpretation 3 (b).

A review of each of the examples of sets in EN (X) indicates that the components of sets share at lease one common trait. See HQ 953472 (Mar. 21, 1994). The fact that the drafters of EN (X) did not explain when goods put up together “meet a particular need or carry out a specific purpose” suggests that resolution of the issue must be determined by analogy on a case-by-case basis.

The items that comprise each example of a set in EN (X) are related to one another in such a fashion that they interact together to serve a distinct purpose or function to enable a singular result to be achieved. The items in examples one and two are used in conjunction with one another to complete a sandwich meal and prepare a spaghetti meal. The articles in example three are used together for the purpose of hair grooming and the items in example four function with one another to enable the user to draw.

The Customs Service in prior ruling letters has addressed the issue of whether items packaged together constitute sets. The issue in HQ 955714 (Mar. 31, 1994) was whether a ring holder, jewelry box and perfume bottle constituted a vanity set. The ruling concluded that the articles, as packaged, served the particular need of decorative storage and display of vanity items. See also HQ 951902 (Jan. 29, 1996) (addressing a set of kitchen towels) modified by HQ 958198 (Aug. 28, 1992) (modification not changing “essential character” analysis).

Pistol cleaning equipment were the items of consideration in HQ 087432 (Oct. 2, 1990). The articles packaged together included a pistol grip, a base steel bar with a bronze joint and muzzle protector, an extension bar, a bronze bit, a phosphor bronze brush and a cotton bristle. The Customs Service concluded that these items functioned together to carry out the specific activity of cleaning a pistol.

The Explanatory Notes, in addition to offering examples of items that constitute sets, also provides examples of collections of articles which do not function with one another to the degree necessary to establish a set. The initial accumulation of items in EN (X) consists of a can of shrimp, a can of pate de foie, a can of cheese, a can of sliced bacon and a can of cocktail sausages. See Explanatory Note (X) (1), Gen. Rule of Interpretation 3 (b). The second example includes a bottle of spirits and a bottle of wine. See id. The items in the first example, although related to one another and usable together, do not “interact with one another so as to comprise a single dish.” HQ 953472, Id. It was concluded in the same ruling that the wine and spirits example did not constitute a set because they would not be used together for the mixing of a single drink nor suitable for serving together on a particular occasion.

It should be noted that the Explanatory Notes of the Harmonized Commodity Description and Coding System is an international document that employs words, phrases and understandings which are intended to have a universal international meaning that may be different from the domestic meaning or understanding of a particular member or members of the World Customs Organization. See HQ 953472, Id.

It is the conclusion of the Customs Service that the towel, brush and retriever, as packaged for sale to the user, constitute a set. The items serve to enable a golfer to maintain his or her golf clubs while playing golf. The brush and towel permit the clubs to be cleaned after use and before return to the golf bag. The retriever functions to make the towel and brush readily accessible. No distinction is being offered as to whether the articles also serve the particular need or carry out the specific purpose of maintaining the golfer’s shoes. The towel, brush and retriever function in both capacities.

It was suggested in the request for a binding ruling that no component of a set could have any purpose other than to further the purpose of the set. The request additionally suggested that for items to constitute a set the items could have but one singular purpose. A review of the examples in the EN’s does not support these positions.

Items in a set must meet a particular need or carry out a specific purpose, but no aspect of the General Rules of Interpretation nor the Explanatory Notes supports the position that items which constitute a set may have no use other than the furtherance of the purpose of the set. The unifying features of the example sets in the EN’s are the manner in which items were presented for sale directly to the user and the fact that the items interact with one another to “meet a particular need or carry out a specific purpose.” The examples do not lend support to the position that items of a set may not have other functions beyond that which establishes the set. The fact, for instance, that the towel may serve to wipe the golfer’s brow or that the retriever may have non-golf uses does not preclude the towel, brush and retriever from being a set when put up together for sale directly to the user and the items function in unison to serve a particular purpose.

Counsel for Vision Group also suggests that the retriever does not serve a cleaning purpose as do the towel and the brush. It is the conclusion of the Customs Service that this position interprets the second factor of EN (X), GRI 3 (b), “meeting a particular need or carrying out a specific activity,” too narrowly. The retriever, when put up for retail sale with the towel and the brush, functions as part of the set of merchandise that enables a golfer to clean his or her golf clubs while on the golf course. The retriever alone serves to clean the golfer’s clubs as well as a sachet of grated cheese alone serves as a spaghetti meal. See Explanatory Note (X) (1)(b), Gen. Rule of Interpretation 3 (b).

The designation or decision to decline to designate a particular accumulation of items as a set by an importer or manufacturer is not determinative of whether the items are a set for classification purposes. The Customs Service in NY 884690 (April 23, 1993) addressed twelve articles grouped together under the name “Golfer’s Care Kit.” The items in the “Golfer’s Care Kit” included a nylon travel bag, a spike wrench, a brush with nylon bristles on one end and metal bristles on the other, five golf tees, five divet marks, a divet tool, two pencils, five golf shoe spikes, a pencil sharpener, a towel, two moist towelettes and five Band Aids. Although packaged together, it was concluded that the items did not constitute a set for classification purposes. The items related to one another in a manner similar to the items in the shrimp and pate EN example. They are not, however, used together in a manner that meets a particular need or carries out a specific purpose. While the items in NY 884690 may meet a number of the needs of a golfer, they do not cumulatively meet, at least one “particular” need. The divit marks and Band Aids, for example, do not inter-relate in a manner so as to constitute elements of a set.

Having concluded that the towel, bush and retriever are items in a set put up for retail sale, the classification analysis continues with a review of GRI 3(b). GRI 3 (b) provides that goods put up in sets for retail sale which cannot be classified by reference to GRI 3(a) shall be classified as if they consisted of the component of the set which gives it its “essential character.” The goods that comprise “The Club Towel Retriever” fall under three HTSUSA headings and may not be classified according to GRI 3 (a).

The General Rules of Interpretation do not define the phrase “essential character,” but the Explanatory Notes offer a non-exhaustive list of factors which may be considered. These factors include: (1) The nature of the component; (2) Its bulk; (3) Its quantity; (4) Its weight; (5) Its value; and (6) The role of the component in relation to the use of the goods. See EN (VIII). Explanatory Note (VIII) specifically states that the essential character of a set will vary between different kinds of goods.

A review of judicial precedent and prior Customs Service Headquarters Ruling Letters also serves to highlight the meaning of “essential character.” The Court of International Trade in Better Home Plastics Corp. v. United States, 916 F. Supp. 1265 (C.I.T. 1996) referencing United States v. United China & Glass, 293 F. Supp. 734, 737, 61 Cust. Ct. 386 (1968) stated that essential character is that attribute “which is indispensable to the structure, core or condition of the article, i.e. what it is.” Headquarters Ruling Letter 955714, elaborating on the decision in United China, stated that “[i]n general, essential character has been construed to mean that attribute which strongly marks or serves to distinguish what an article is.” HQ 955714 supra. See also, Pillowtex Corp. v. United States, 171 F.3d 1370 (Fed. Cir. 1999); HQ 951902 supra.

It is the conclusion of the Customs Service that the component of “The Club Towel Retriever” which gives the set its “essential character” is the towel. The particular need or specific purpose that the set serves is the maintenance of the golfer’s clubs and equipment. The towel is indispensable to this need or purpose. It is the towel that performs the most integral role of the set, that of cleaning the golfer’s clubs and equipment. The brush and the retriever complement the towel, but neither the brush nor the retriever, individually or jointly, satisfactorily serves the role of cleaning the golfer’s clubs or other equipment without the towel.

The final issue that remains to be addressed is whether the merchandise which comprises “The Club Towel Retriever” qualifies for Special Column 1 Rates of Duty pursuant to the United States – Israel Free Trade Area Implementation Act (U.S. – Israel FTA). See United States – Israel Free Trade Area Implementation Act, P.L. 99-47, 99 Stat. 82, 19 U.S.C. 2112 note. The U.S. – Israel FTA provides that in order for merchandise to be eligible to receive Special Column 1 Rates of Duty the merchandise must be: (1) The growth, product or manufacture of Israel; (2) Imported directly from Israel; and (3) The sum of (a) the cost or value of materials produced in Israel and (b) the direct cost of processing operations performed in Israel is not less than 35 percent of the appraised value of each article at the time it is entered See U.S. – Israel FTA; General Note 8, HTSUSA.

When an article is produced from materials imported into Israel, as is the instant case, the article is only considered to be a “product of Israel” if those materials are substantially transformed into a new or different article of commerce. A substantial transformation occurs when an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United State, 69 C.C.P.A. 152, 156, 681 F.2d 778, 782 (1982).

It is the conclusion of the Customs Service that “The Club Towel Retriever” is not a “product of Israel.” Id. “The Club Towel Retriever” does not meet the initial requirement of being “a growth, product or manufacturer of Israel.” Id.

“The Club Towel Retriever” is comprised of the towel, the brush and the retriever. The brush and retriever are, according to counsel for the importer, products of Israel. The towel is, however, a product of Belgium. Since the “The Club Towel Retriever” is a collection of merchandise classifiable under one subheading pursuant to the General Rules of Interpretation and not all of the items that comprise the set are considered “products of Israel,” the set as a whole is not eligible to receive Special Column 1 Rates of Duty provided for by the U.S. – Israel FTA. See Treasury Decision 91-7 (T.D. 91-7). See also HQ 556451 (Jan. 28, 1992) (declaring that an entire set which included some components that did not meet the requirement of being “products of Israel” in accordance with the Generalized System of Preferences (GSP) was not eligible to receive GSP duty-free treatment). It is also specifically noted that “mere packaging” of the towel with the brush and retriever does not “substantially transform” the towel into a “product of” Israel. T.D. 91-7 supra.

HOLDING

The towel, brush and retriever that comprise “The Club Towel Retriever” are a set for the purposes of classification pursuant to the Harmonized Tariff Schedule of the United States Annotated.

The item that affords the set its essential character is the towel.

“The Club Towel Retriever” is classified in subheading 6307.90.8940, HTSUSA, “Other made up articles, including dress patterns: Other: Other: Surgical towels; cotton towels of pile or tufted construction; pillow shells, of cotton; shells for quilts, eiderdowns, comforters and similar articles of cotton; Cotton towels of pile or tufted construction.”

“The Club Towel Retriever” is not a “product of Israel” and is not eligible to receive Special Column 1 Rates of Duty as a “product of Israel” pursuant to the United States – Israel Free Trade Area Implementation Act.

The General Column 1 Rate of Duty is seven (7) percent, ad valorem.

The textile quota category for the towel is 363.

It is recommended that you contact your local Customs Service office prior to importation of this merchandise to determine the current status of any restraints or requirements due to the changeable nature of the statistical annotation, the ninth and tenth digits of the HTSUS, and the restraint (quota/visa) categories applicable to textile merchandise.

The designated textile and apparel category may be subdivided into parts. If subdivided, the quota and visa requirements applicable to the merchandise may be affected. It is recommended that you review, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels), since part categories are the result of international bilateral agreements and subject to frequent change. The Status Report is an internal issuance of the U.S. Customs Service and is available for inspection at your local Customs Service office.

Sincerely,

John Durant, Director
Commercial Rulings Division


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