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HQ 964235




July 26, 2002
CLA-2 RR:CR:TE 964235 jsj

CATEGORY: CLASSIFICATION

TARIFF NO.: 6302.60.0020

Mr. Lawrence R. Pilon
Hodes Keating & Pilon
33 North Dearborn Street
Suite 2204
Chicago, Illinois 60602-3109

RE: Cotton Terry Towels; Subheading 6302.60.0020, HTSUSA; Toilet Linen; Cleaning Towels; United States v. Carborundum Co.; JVC Company of America v. United States.

Dear Mr. Pilon:

The purpose of this correspondence is to respond to your request of April 20, 2000, directed to the New York office of the U.S. Customs Service. The correspondence in issue requested, on the behalf of your client International Medsurg Connection, Inc. (International Medsurg), a binding classification ruling of four cotton terry towels.

This ruling letter is being issued subsequent to the following: (1) A review of your correspondence dated April 20, 2000; (2) A review of correspondence dated September 6, 2000, submitted in response to a request from this office for additional information; (3) An examination of four International Medsurg samples; and (4) An examination of a twelve pack of “PARTEX 100 % COTTON – ALL TERRY” towels, product number 224520, identified on the packaging as “detail towels,” and purchased by counsel at a Sally Beauty Supply store.

FACTS

The articles submitted for consideration in this request for a binding ruling letter are four 100 percent cotton terry towels. The samples are identified as A-1, A-2, A-3 and A-4. No style numbers were provided.

Sample A-1 is a black towel that measures twenty-four and one-half (24 ½) inches long and thirteen and one-half (13 ½) inches wide. The initial correspondence from counsel notes approximate measurements of twenty-five (25) inches long and thirteen and one-fourth (13 ¼) inches wide. The towel is hemmed on all sides.

Sample A-2 is a green towel that measures twenty-four and three-fourths (24 3/4) inches long and fifteen (15) inches wide. The initial correspondence from counsel notes approximate measurements of twenty-five (25) inches long and fourteen and one-half (14 ½) inches wide. Sample A-2 features drop cam borders or flat woven sections at both the top and bottom of the towel. The drop cam borders are approximately one and one-half (1 ½) inches from the top and bottom of the towel, extend the entire width of the towel and measure approximately one (1) inch wide. The towel is hemmed on all sides.

Sample A-3 is a white towel that measures twenty-five (25) inches long and fourteen (14) inches wide. The initial correspondence from counsel notes approximate measurements of twenty-four and one-half (24 ½) inches long and fourteen (14) inches wide. Sample A-3 features drop cam borders or flat woven sections at both the top and bottom of the towel. The drop cam borders are approximately two and one-half (2 ½) inches from the top and bottom of the towel, extend the entire width of the towel and measure approximately seven-eighths (7/8) of an inch wide. The towel is hemmed on all sides.

Sample A-4 is a blue or aqua towel that measures twenty-five and one-half (25 ½) inches long and fifteen and one-half (15 ½) inches wide. The initial correspondence from counsel notes approximate measurements of twenty-four (24) inches long and fifteen (15) inches wide. Sample A-4 features drop cam borders or flat woven sections at both the top and bottom of the towel. The drop cam borders are approximately one and one-half (1 ½) inches from the top and bottom of the towel, extend the entire width of the towel and measure approximately one (1) inch wide. The towel is hemmed on all sides.

The Customs Service in correspondence dated August 10, 2000, requested additional information regarding the towels in issue. The information requested for each of the samples included: (1) The weight of the fabric; (2) The yarn count; (3) The loops per inch / centimeter; (4) The depth or height of the pile; (5) Whether the towels were considered to be a second or third quality (or any quality other than first quality); (6) The criteria, if any, used to determine the quality of the towels if of a quality other than first quality; and (7) Whether the drop cam borders or flat woven sections on samples A-2, A-3 and A-4 have any significance other than being decorative.

International Medsurg, through counsel, responded in correspondence dated September 6, 2000. The weight of the fabric was stated to be “325 g/m2

.” The yarn count was stated to be “Ground warp – 10’s; Pile warp – 14’s & Weft – 10’s.” The loops per inch and per centimeter were stated to be “266 Nos/inch; 105 Nos/centimeter.” Customs was advised that the pile depth or height was “4mm.” The towels were stated to be first quality, precluding criteria addressing any other quality. The Importer, in response to Customs inquiry as to whether the flat woven borders had any significance other than decorative, responded by stating “Flat Woven Border (Plain Border).”

Counsel’s correspondence of April 20, 2000, indicates that it is the intention of the importer to sell the subject merchandise to barber and beauty supply stores. The towels will subsequently, ultimately, be sold to barber shops and beauty salons.

ISSUE

What is the classification, pursuant to the Harmonized Tariff Schedule of the United States, of the 100 percent cotton terry towels described above and identified as samples A-1, A-2, A-3 and A-4, to be sold to barber and beauty supply stores ?

LAW AND ANALYSIS

The federal agency responsible for initially interpreting and applying the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is the U.S. Customs Service. See 19 U.S.C. 1500 (West 1999) (providing that the Customs Service is responsible for fixing the final appraisement, classification and amount of duty to be paid); See also Joint Explanatory Statement of the Committee of Conference, H.R. Conf. Rep. No. 100-576, at 549 (1988) reprinted in 1988 U.S. Code Cong. and Adm. News 1547, 1582 [hereinafter Joint Explanatory Statement]. The Customs Service, in accordance with its legislative mandate, classifies imported merchandise pursuant to the General Rules of Interpretation (GRI) and the Additional U.S. Rules of Interpretation. See 19 U.S. C. 1202 (West 1999); See generally, What Every Member of The Trade Community Should Know About: Tariff Classification, an Informed Compliance Publication of the Customs Service available on the World Wide Web site of the Customs Service at www.customs.gov, search “Importing & Exporting” and then “U.S. Customs Informed Compliance Publications.”

General Rule of Interpretation 1 provides, in part, that classification decisions are to be “determined according to the terms of the headings and any relative section or chapter notes.” General Rule of Interpretation 1. General Rule of Interpretation 1 further states that merchandise which cannot be classified in accordance with the dictates of GRI 1 should be classified pursuant to the other General Rules of Interpretation, provided the HTSUSA chapter headings or notes do not require otherwise. According to the Explanatory Notes (EN), the phrase in GRI 1, “provided such headings or notes do not otherwise require,” is intended to “make it quite clear that the terms of the headings and any relative Section or Chapter Notes are paramount.” General Rules for the Interpretation of the Harmonized System, Rule 1, Explanatory Note (V).

The Explanatory Notes constitute the official interpretation of the Harmonized System at the international level. See Joint Explanatory Statement supra note 2, at 549. The Explanatory Notes, although neither legally binding nor dispositive of classification issues, do provide commentary on the scope of each heading of the HTSUS. The EN’s are generally indicative of the proper interpretation of the headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989); Lonza, Inc. v. United States, 46 F. 3rd 1098, 1109 (Fed. Cir. 1995).

Commencing classification of the cotton terry towels, in accordance with the dictates of GRI 1, the Customs Service examined the headings of the HTSUSA. Heading 6302, HTSUSA, provides for the classification of “Bed linen, table linen, toilet linen and kitchen linen.” Explanatory Note 63.02, paragraph (3), addressing toilet linen offers guidance as to some of the merchandise properly classified in heading 6302, HTSUSA. The EN describes toilet linen as “e.g., hand or face towels (including roller towels), bath towels, beach towels, face cloths and toilet gloves.” Explanatory Note 63.02.

Counsel for the importer suggests that the towels are properly classified in heading 6307, HTSUSA. Heading 6703, HTSUSA, provides for the classification of “Other made up articles, including dress patterns.” The expression “made up,” pursuant to Section XI, note 7, means:

Cut otherwise than into squares or rectangles; Produced in the finished state, ready for use (or merely needing separation by cutting dividing threads) without sewing or other working (for example, certain dusters, towels, tablecloths, scarf squares, blankets); Hemmed or with rolled edges, or with a knotted fringe at any of the edges, but excluding fabrics the cut edges of which have been prevented from unraveling by whipping or by other simple means; Cut to size and having undergone a process of drawn thread work; Assembled by sewing, gumming or otherwise (other than piece goods consisting of two or more lengths of identical material joined end to end and piece goods composed of two or more textiles assembled in layers, whether or not padded); or Knitted or crocheted to shape, whether presented as separate items or in the form of a number of items in the length.

The Explanatory Notes to heading 6307, HTSUSA, indicate that this heading is intended to include made up articles of any textile material, provided the articles are “not included more specifically in other headings of Section XI or elsewhere in the Nomenclature.” Explanatory Note 63.07. Paragraph (1) to EN 63.07 provides, in part, that made up articles for the purposes of heading 6307, HTSUSA, include “[f]loor-cloths, dish-cloths, dusting cloths and similar cleaning cloths.” Explanatory Note 63.07 (1).

The difficulty confronting Customs in this instance, a situation which Customs has encountered for some time, is that low-end or lesser quality toilet linen of heading 6302, HTSUSA, is very similar to cleaning cloths classified in heading 6307, HTSUSA. The size, fabric, yarn count and other features of both toilet linen and cleaning towels are similar, if not identical.

The Customs Service, because of the similarities that make lesser quality toilet linen difficult to distinguish from cleaning towels of heading 6307, HTSUSA, will turn to the Court of Customs and Patent Appeals decision in United States v. Carborundum Co., 536 F.2d 373 (1976). The court in Carborundum set forth criteria for determining whether imported merchandise was of a particular class or kind. The factors considered by the court included: (1) The general physical characteristics of the merchandise; (2) The expectation of the ultimate purchasers; (3) The channels, class or kind of trade in which the merchandise moves; (4) The environment of sale, which include accompanying accessories and the manner in which the merchandise is marketed; (5) The use, if any, in the same manner as the merchandise which defines the class or kind of merchandise; and (6) The economic practicality and recognition in the trade of using the imported merchandise in a particular manner. See id. at 377.

The Customs Service, in this instance, places significant emphasis on the manner in which the cotton terry towels are marketed, the channels of trade in which the towels move and the expectations of the ultimate purchasers. The cotton terry towels to be imported by International Medsurg, according to counsel, will be marketed to barber and beauty supply stores. They will then be sold to and used by barber shops and beauty salons. The ultimate purchasers will be the operators of barber shops and beauty salons, who will use these towels in their businesses.

Customs decision also takes notice of the drop cam borders. The drop cam borders, in the language of the Carborundum decision, physical characteristics, offer a decorative feature, although minimal, that one would associate with toilet linen. The drop cam borders are of no value to cleaning towels. Since the towels manufactured and imported by International Medsurg are similar to cleaning towels of heading 6307, HTSUSA, Customs relies on the Carborundum decision to distinguish toilet linen from cleaning towels. The Carborundum decision dictates that the instant merchandise be classified in heading 6302, HTSUSA, as toilet linen.

International Medsurg’s cotton terry towels are further classified at the subheading level in subheading 6302.60.0020, HTSUSA. Subheading 6302.60.0020, HTSUSA, provides for:

Bed linen, table linen, toilet linen and kitchen linen:

Toilet linen and kitchen linen, of terry toweling or similar terry fabrics, of cotton;

Towels:
6302.60.0020 Other.

The Customs Service is aware that the reasoning set forth in this ruling may result in substantially similar merchandise being classified in different headings based on the Carobundum factors. This situation may arise when substantially similar merchandise is marketed in different manners, sold to different ultimate users and flows in different channels of trade.

Customs is of the opinion that this is not inconsistent with the classification principles of the Harmonized Tariff Schedule of the United States. The HTSUS, in this particular instance, provides different headings, as well as different textile quota categories, for toilet linen and cleaning towels. It would be erroneous for Customs not to follow its congressional mandate. Congress in enacting the HTSUS determined that toilet linen of heading 6302, HTSUSA, should be treated differently from cleaning towels of heading 6307, HTSUSA. Customs, although understanding the reality that merchandise with substantially similar physical characteristics may be classified differently, is strictly adhering to its obligation to classify merchandise pursuant to law.

The Customs Service, although utilizing the factors set forth in the Carobundum decision because Carobundum is currently the law, is aware of the decision of the Court of Appeals for the Federal Circuit in JVC Company of America v. United States, 234 F. 3d 1348 (Fed. Cir. 2000). The court in JVC Company of America, the successor court to the Court of Customs and Patent Appeals, held that the “more than” doctrine, another doctrine developed to interpret the Tariff Schedule of the United States (TSUS), was superceded by the General Rules of Interpretation of the HTSUSA and that it does not apply to cases arising under the HTSUSA. The court in JVC Company of America further held that the General Rules of Interpretation are a “statutorily-prescribed, comprehensive, and systematic method of classification” that supplanted judicially-created TSUS interpretative doctrine. Id. at 1354.

The Customs Service issues this ruling cognizant of HQ 960648 (Oct. 17, 1997) in which substantially similar merchandise was classified in subheading 6307.10.0000, HTSUSA. Customs specifically notes that the requesting party in HQ 960648 advised Customs that the towels were “auto detail” towels and supported that position by providing marketing information. Headquarters ruling 960648 is applicable to the towels addressed in that ruling, provided they are imported as “auto detail” towels. Any importation of towels other than as “auto detail” towels is contrary to HQ 960648 and would render that ruling letter inapplicable. Each ruling letter issued by the Customs Service is “issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.” 19 C.F.R. 177.9 (b)(1).

Headquarters ruling letter 960648 is applicable, as are all tariff classification ruling letters, “only with respect to transactions involving articles identical to the sample submitted with the ruling request or to articles whose description is identical to the description set forth in the ruling letter.” 19 C.F.R. 177.9 (b)(2). The Customs Service, relying on the Carborundum decision, is of the opinion that if the merchandise in HQ 960648 or any merchandise of the same class or kind is imported as one type of towel, but subsequent to importation is marketed, sold and flows in the channels of trade as another type of towel, then the importer may have failed to use reasonable care in the classification of its merchandise.

HOLDING

The cotton terry towels to be imported by International Medsurg Connections, Inc. are classified in subheading 6302.60.0020, Harmonized Tariff Schedule of the United States Annotated.

The General Column 1 Rate of Duty is nine and three-tenths (9.3) percent, ad valorem.

The textile quota category for merchandise classified in subheading 6302.60.0020, HTSUSA, is category 363.

The designated textile and apparel category may be subdivided into parts. If subdivided, the quota and visa 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, to obtain the most current information available, we suggest 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 updated weekly and is available for inspection at your local Customs Service 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 Web site 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, you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.

Sincerely,

Myles B. Harmon, Acting Director
Commercial Rulings Division

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