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HQ 967248




December 22, 2004

CLA-2: RR:CR:TE: 967248 BtB

CATEGORY: CLASSIFICATION

TARIFF NO.: 8215.20.0000

Ms. Susan R. McCabe
The Hipage Company, Inc.
P.O. Box 3158
Custom House Station
Norfolk, VA 23514

RE: Dinnerware set from China; NY 875541 revoked

Dear Ms. McCabe:

This is in reference to New York Ruling Letter (NY) 875541, dated July 13, 1992, issued to you by the Bureau of Customs and Border Protection (CBP), formerly known as the U.S. Customs Service, regarding the classification, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), of a certain dinnerware set made in China. We have reconsidered NY 875541 and have determined that the rate of duty set forth for the dinnerware set in the ruling is incorrect. This ruling revokes NY 875541 and advises how the duty rate for merchandise classified under subheading 8215.20.0000, HTSUSA, is calculated.

The records relating to the dinnerware set, previously stored in our former 6 World Trade Center office in New York City, were destroyed as a result of the terrorist incident on September 11, 2001. The only information regarding the dinnerware set that we currently have is the text of NY 875541. Due to our current lack of product information, we are unable to issue a revised duty rate for the dinnerware set at this time.

Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of NY 875541 was published in the Customs Bulletin, Volume 38, Number 42, on November 3, 2004. No comments were received in response to this notice.

FACTS:

The instant dinnerware set is a 52-piece dinnerware set packaged for retail and consisting of stoneware, flatware, and glassware. The set includes four pieces of each of the following stoneware: dinner plates, dessert plates, soup bowls and mugs. It includes a flatware set with four pieces of each of the following: knives, forks, spoons, and teaspoons. The flatware has plastic handles. The set also includes four pieces of each of the following glassware: 12 oz. tumblers and 8 oz. tumblers.

In NY 875541, we classified the dinnerware set under subheading 8215.20.0000, HTSUSA, which provides for “Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter-knives, sugar tongs and similar kitchen or tableware; and base metal parts thereof: Other sets of assorted articles.” The ruling states that “The rate of duty [for the set] will be the rate applicable to that article in the flatware set subject to the highest rate of duty.” The knife (determined to be classifiable under subheading 8211.91.5060, HTSUSA) was found to be the article in the flatware set subject to the highest rate of duty and its duty rate (1¢ + 5.7% ad valorem at the time) was held to apply to the dinnerware set. The ruling notes that the specific rate (1¢ each) is to be assessed on each article in the dinnerware set.

ISSUE:

What is the rate of duty applicable to the dinnerware set?

LAW AND ANALYSIS:

Classification under the HTSUSA is made in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the Harmonized System is such that virtually all goods are classified by GRI 1, that is, according to the terms of the headings and any relative Section or Chapter Notes. In the event that goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied, in order.

In understanding the language of the HTSUSA, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUSA, and are the official interpretation of the Harmonized System at the international level. CBP believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

In NY 875541, we held that the articles in the instant dinnerware set were goods put up in a set for retail sale. We ruled that the set was without an essential character

While not stated in the ruling, the set was found to be without an essential character because all articles in the set were determined to be functionally equivalent. Compare HQ 950833, dated January 17, 1992, in which we found a substantially similar dinnerware set to be without a component which imparts an essential character, finding that all the articles in the set to be “functionally equivalent” and classifying the set pursuant to GRI 3(c). and, therefore, classifiable pursuant to GRI 3(c) which provides that: “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.”

In NY 875541, the heading occurring last in numerical order among those which equally merited consideration was heading 8215, HTSUSA (applicable to the flatware set). While not stated in the text of NY 875541, the stoneware in the set was classifiable in heading 6912, HTSUS (which provides for, among other articles, “Ceramic tableware, kitchenware “), and the glassware was classifiable in heading 7013, HTSUS (which provides for, among other articles, “Glassware of a kind used for table, kitchen “). Accordingly, we classified the instant dinnerware set in subheading 8215.20.0000, HTSUSA. The general rate of duty applicable to merchandise classified in subheading 8215.20.0000 is set forth in the HTSUSA as: “The rate of duty applicable to the article in the set subject to the highest rate of duty.”

However, in regard to the rate of duty applicable to the dinnerware set classified in subheading 8215.20.0000, HTSUSA, NY 875541 states:

The rate of duty will be the rate applicable to that article in the flatware set subject to the highest rate of duty. (Emphasis added).

This statement in NY 875541 is not correct. The rate of duty applicable to merchandise classified in subheading 8215.20.0000, HTSUSA, is the highest rate of duty applicable to an article in the set subject to the highest rate of duty, not the highest rate of duty applicable to an article in a flatware set in the set. In ascertaining the highest rate of duty applicable to a set classified in subheading 8215.20.0000, HTSUSA, one must consider the duty rate of each and every article in the entire set, not just the duty rates applicable to articles in a flatware set. We note that it is possible for an article in a flatware set to be the article in the set with the highest rate of duty.

When a set classified in subheading 8215.20.0000, HTSUSA, consists solely of articles that all have ad valorem rates of duty, those rates are simply compared against each other and the rate of duty applicable to the article in the set subject to the highest rate of duty applies to the entire set. When a set classified in subheading 8215.20.0000, HTSUSA, consists completely or partially of articles with compound duty rates, the compound duty rates must be converted to equivalent ad valorem rates. Once all the rates have been converted to ad valorem rates, they are compared against each other and the rate of duty applicable to the article in the set subject to the highest rate of duty applies to the entire set. If an article with a compound duty rate is determined to be the article in the set subject to the highest rate of duty, the compound duty rate (not the compound duty rate converted to an ad valorem rate) is applied to the set. When assessing compound duty rates on a set, the ad valorem part of the rate of duty is assessed on the total value of the set and the specific duty is assessed on each article in the set. See HQ 088521, dated May 13, 1991.

To convert a compound duty rate to an equivalent ad valorem rate, one (i) obtains the unit value of each article, (ii) applies the article’s listed compound rate of duty, and (iii) calculates the “equivalent ad valorem rate” by computing the percentage of the article’s value that the compound rate of duty amounts to. For example, suppose that a set classified in subheading 8215.20.0000, HTSUSA, includes a knife that is separately classifiable in subheading 8211.91.5000, HTSUSA. The applicable rate of duty for the knife is “0.7¢ + 3.7%,” a compound duty rate that must be converted to an equivalent ad valorem rate to determine if the knife’s rate is the highest rate of duty for articles in the set. Suppose that there are four knives included in the set and their total value is 32¢. To obtain the unit value of a knife (i.e., the value of one knife), we divide 32¢ by 4 which equals 8¢. Now, we apply the knife’s listed compound duty rate. Plugging 8¢ into the duty rate, we get 0.7¢ + 3.7%(8¢). This equals .996¢ per knife, which amounts to 12.45% of the knife’s value (i.e., .996 is 12.45% of 8¢). Therefore, 12.45% is the knife’s equivalent ad valorem rate. The knife’s rate of duty would then have to be compared against the rates of duty applicable to the other articles in the set to determine if it is the highest duty rate in the set, and thus applicable to the entire set.

In NY 875541, we erroneously failed to consider the duty rate of each and every article in the dinnerware set when searching for the rate of duty applicable to the dinnerware set. Instead, we only considered the rates of duty for articles in the flatware set. As a result, the knife (determined to be classifiable under subheading 8211.91.5060, HTSUSA) was found to be the article in the flatware set subject to the highest rate of duty and its duty rate (1¢ + 5.7% ad valorem at the time) was held to apply to the dinnerware set.

While the only information that we have about the dinnerware set is the text of NY 875541, using the rate of duty applicable to the knife as the rate of duty for the dinnerware set is erroneous. While we cannot calculate the rate of duty in effect in 1992 for every item in the dinnerware set due to our lack of information (i.e., it is impossible to convert compound duty rates to equivalent ad valorem rates without knowing an article’s value), certain articles in the set were subject to such high duty rates (e.g., the glassware in the set was subject to a 38% ad valorem rate of duty in 1992), that it is unlikely that the knife was the article in the set subject to the highest rate of duty.

HOLDING:

Due to our current lack of information about the dinnerware set (specifically, the value of articles in the set), we are unable to provide a rate of duty for the dinnerware set at this time. We invite you to request a new ruling on the dinnerware set pursuant to Part 177 of the Customs Regulations to obtain a ruling that sets forth the effective rate of duty on the merchandise.

NY 875541, dated July 13, 1992, is hereby revoked. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.

Sincerely,

Myles B. Harmon, Director

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