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HQ 963745




March 1, 2002

CLA-2 RR:CR:TE 963745 JFS

CATEGORY: CLASSIFICATION COUNTRY OF ORIGIN

TARIFF NO.: 4202.92.0507

Jeffrey A. Meeks, Esq.
Meeks & Sheppard
1735 Post Road
Suite 4
Fairfield, Connecticut 06430

RE: Classification and Country of Origin Determination for Insulated Cooler Bag; 19 CFR 102.21(c)(2); Tariff Shift

Dear Mr. Meeks:

This letter is in reply to your supplemental letter, dated May 7, 1999, on behalf of Gap Inc., requesting a classification and country of origin determination for an insulated cooler bag.

FACTS:

The bag is described as a kid’s lunchbox, style 545834. The bag is a soft-sided insulated lunch container, designed to store and preserve food. The bag is composed of three layers. The outer layer, sourced in Korea, is constructed of nylon woven fabric, the interior of which is coated or laminated with compact plastic. The middle-insulating layer, sourced in the Philippines, is constructed of plastic foam that is ¼ inch thick. The inner layer, sourced in Taiwan, forms the interior lining of the bag and is constructed from nylon woven fabric. The bag has a zipper closure that extends approximately three-quarters of the way around the bag. The front panel of the bag features two pockets covered by a flap that is secured by a plastic buckle. The bag is carried by means of a textile handle that is sewn to the top of the bag.

The raw materials of the bag are sent to the vendor in the Philippines, where the outer surface fabric, foam insulation, inner lining fabric, piping, cardboard, webbing and binding fabric are cut to length and width. The fabric components are then sewn together with the zipper and other components. The plastic buckle is attached.

ISSUES:

What is the Classification of the Textile Cooler Bag?

What is the Country of Origin of the Textile Cooler Bag?

LAW AND ANALYSIS:

1. Classification

Classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), 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 Harmonized Commodity Description and Coding System, Explanatory Notes (EN), represent the official interpretation of the Harmonized System at the international level (for the 4 digit headings and the 6 digit subheadings) and facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI. The EN, although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUSA, and are generally indicative of the proper interpretation of these headings. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUSA was amended, effective 2002, to include provisions for insulated food or beverage bags.

The changes were effectuated by means of Presidential Proclamation 7515 of December 18, 2001, effective January 10, 2002, which inserted the term “insulated food or beverage bags” in the text of heading 4202, HTSUSA, immediately following the term “traveling bags.” The changes consist of adding “insulated food or beverage bags” to the second part of heading 4202, and by adding subheading 4202.92.05, which provides for bags with an outer surface of textile materials, and subheading 4202.92.10, which provides for bags with an outer surface of other materials.

Newly created subheading 4202.92.0507, HTSUSA, specifically provides for:

Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber, or of paperboard, or wholly or mainly covered with such materials or with paper:

Other:
With outer surface of sheeting of plastic or of textile materials: Insulated food or beverage bags:
With outer surface of textile materials,
Of man-made fibers.

The bag under consideration is named in the heading and is specifically described in subheading 4202.92.0507, HTSUSA.

The EN were also modified to reflect the changes to heading 4202 by adding a new eighth paragraph to heading 42.02 (page 661). The new paragraph states: “The expression 'insulated food or beverage bags' covers reusable insulated bags used to maintain the temperature of foods and beverages during transport or temporary storage." The instant insulated cooler bag is designed to maintain the temperature of a child’s lunch during transport to school. Thus, it meets the description of an “insulated food or beverage bag” provided for in the EN.

The subject bag, style 545834, is classified in subheading 4202.92.0507, which provides, in part, for insulated food or beverage bags: with outer surface of textile materials, of man-made fibers. The general column one rate of duty is 7 percent ad valorem. The textile category number is 670.

2. Country of Origin

On December 8, 1994, the President signed into law the Uruguay Round Agreements Act (Act). Section 334 of the Act, codified at 19 U.S.C. 3592, provides rules of origin "for purposes of the customs laws and the administration of quantitative restrictions" for textile and apparel products entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 CFR 102.21), implements section 334. The country of origin of a textile or apparel product is determined by hierarchical application of the general rules set forth in 19 CFR 102.21(c)(1) through (c)(5). A "textile or apparel product" for purposes of these rules of origin is defined in 19 CFR 102.21(b)(5), “as any good classifiable in Chapters 50 through 63, HTSUS, and any good classifiable under one of the following HTSUS headings or subheadings[.]” Because subheading 4202.92.05, HTSUSA, was just recently added to heading 4202, HTSUSA, it has not been added to the list of subheadings listed in 19 CFR 102.21(b)(5). Thus, it must be determined whether articles classified under subheading 4202.92.05, HTSUSA, are textile articles as contemplated by section 334 of the Act, and 19 CFR 102.21.

On May 23, 1995, Customs published in the Federal Register (60 FR 27378) a notice of proposed rulemaking setting forth proposed amendments to the Customs Regulation to implement the rules of origin principles of section 334(b) of the Act. Because the term “textile or apparel product” was not defined by Congress, Customs addressed the term, as contemplated by the principles of section 334(b) of the Act. Customs determined that the rules set forth in 19 CFR 102.21(c)(1) through (c)(5) should apply to “(1) all goods classifiable in Section XI of the HTSUS and (2) with one exception, all goods classifiable under any subheading outside Section XI that is listed in the Annex to the Agreement on Textiles and Clothing of the WTO Agreement.” 60 FR 27380-81. In the proposed rulemaking notice dated May 23, 1995, Customs stated that it “believes that it would be inappropriate to treat clearly nontextile goods as falling within the scope of ‘textile or apparel article’ as used in section 334(b) of the Act.” Accordingly, it is doubtful that insulated cooler bags with an outer surface of sheeting of plastic would be a “textile or apparel product” for the purposes of determining the country of origin. The determination to utilize the Annex to the Agreement on Textiles and Clothing of the WTO Agreement was finalized in the final amendments to 19 CFR 102.21, published on September 5, 1995, 60 FR 46188, T.D. 95-69.

The tariff provisions enumerated in the Annex are at the six digit international level and include subheadings 4202.12, 4202.22, 4202.32, and 4202.92, HTS. Customs, in promulgating part 102.21, further narrowed the articles covered by these subheadings to exclude those articles that were clearly not textile products as contemplated by the Agreement on Textiles and Clothing of the WTO Agreement. Customs has demonstrated a consistent intent to treat articles of heading 4202, HTSUSA, that are classified under one of the four subheadings listed in the Annex, and that have an outer surface of textile, as being “textile products” and subject to the rules of 19 CFR 102.21. The instant cooler bag is classified under subheading 4202.92, HTSUSA, and has an outer surface of textile materials. Thus, it is properly subject to the rules set forth in 19 CFR 102.21.

Paragraph (c)(1) states that "[t]he 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." As the subject cooler bag is not wholly obtained or produced in a single country, territory, or insular possession, 19 CFR 102.21(c)(1) is not applicable.

Paragraph (c)(2) states that "[w]here 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 "[t]he 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.” Paragraph (e) lists HTSUSA numbers and provides the applicable tariff shift rule applicable to that HTSUSA number. Once again, because subheading 4202.92.05, HTSUSA, was only just recently added to the HTSUSA, it is not provided for in paragraph (e). However, this is merely a technical omission that is in the process of being corrected. All of the textile articles that are classified in heading 4202, HTSUSA, have the same tariff shift rule applied to them. That rule states that:

A change to subheading 4202.__.__ through 4202.__.__ from any other heading, provided that the change is the result of the good being wholly assembled in a single country, territory, or insular possession.

Moreover, there is no other tariff shift rule that is applied to textile goods classified in heading 4202, HTSUSA. Accordingly, the above tariff shift rule is applicable to goods classified in the newly created subheading 4202.92.05, HTSUSA. The instant insulated cooler bag, which has an outer surface of textile materials, is wholly assembled in the Philippines. The country of origin is the Philippines.

The omission of subheading 4202.92.05, HTSUSA, in Part 102.21, is a technicality that Customs will address and correct by publication of notice of rulemaking in the near future.

HOLDING:

The subject bag, style 545834, is classified in subheading 4202.92.0507, HTSUSA, which provides, in part, for Insulated food or beverage bags: With outer surface of textile materials, Of man-made fibers. The general column one rate of duty is 7 percent ad valorem. The textile category number is 670.

The country of origin of the subject insulated cooler bag, referenced style number 545834, is the Philippines, the country in which the bag was wholly assembled.

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 section 19 CFR 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished 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. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2.

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 negotiations and changes, we suggest that the importer check, close to the time of shipment, the Status Report On Current Import Quotas (Restraint Levels), an issuance of the U.S. Customs Service, which is updated weekly and is available for inspection at the local Customs office. The Status Report On Current Import Quotas (Restraint Levels), is also available on the Customs Electronic Bulletin Board (CEBB) which can be found on the U.S. Customs Service Website at www.customs.gov.

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

Sincerely,

John Durant
Director, Commercial Rulings Division

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