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HQ 968010




June 28, 2006

RR:CTF:TCM
968010 TMF

Harvey B. Fox, Esq.
Adduci, Mastriani & Schaumberg, LLP
1200 Seventeenth Street, N.W.
Washington, D.C. 20036

RE: Worn Clothing from various sources

Dear Mr. Fox:

This is in reply to the request dated November 23, 2005, on behalf of your client, Secondary Materials and Recycled Textile Association (“SMART”), regarding the classification of used clothing from various sources. You stated in your supplemental submission dated May 8, 2006, that the law firm of Saul Ewing has withdrawn representation of SMART and that your firm is representing them in this matter.

FACTS:

In your submission, you state that your client, an association, is composed of companies from the U.S., Canada, Mexico, South and Central America and Europe. You state they are involved in the sorting and grading of mixed post-consumer textiles for the wiping materials and used clothing markets.

On March 8, 2006, you met with members of my staff regarding the classification of worn clothing that is imported by your client. At the conference, you were granted additional time to provide a supplemental submission for our consideration. In response to our suggestions, you provided the following in your supplemental submission:

-pictures and sizes of bales of the used clothing under consideration; -invoices showing actual prices for used clothing when purchased from collection institutions and when sold in overseas markets; -specific samples of used clothing and their descriptions [Exhibits 3A through 3F]; -three examples of how the European Union classified garments as worn clothing of heading 6309, HTSUSA; -proposed language and letters that endorse criteria for determining what constitutes “appreciable wear.”

ISSUE:

How is appreciable wear established for purposes of classifying merchandise in subheading 6309.00.0010, HTSUSA?

How is worn clothing packed in bales with other garments, that is, commingled goods, under the HTSUSA?

LAW AND ANALYSIS:

You state that CBP relies on subjective guidance in determining whether merchandise has appreciable wear for purposes of classification as worn clothing of subheading 6309.00.0010, Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

We refer to the Explanatory Note (EN) to that heading which states:

(A) They must show signs of appreciable wear, whether or not they require cleaning or repair before use.

New articles with faults in weaving, dyeing, etc., and shop-soiled articles are excluded from this heading.

(B) They must be presented in bulk (e.g., in railway goods wagons) or in bales, sacks or similar bulk packings, or in bundles tied together without external wrapping, or packed roughly in crates.

These articles are normally traded in large consignments, usually for resale, and are less carefully packed than is generally the case with new articles.

As you are aware, the term “appreciable wear” has been addressed previously by CBP in Headquarters Ruling Letter 960577, dated August 7, 1988 [sic] [1998], which states, in pertinent part:

It is evident that the tariff draws a clear distinction between those articles which are beyond recovering in their original state, and therefore useless as they were originally intended (rags, heading 6310, HTSUS), and those articles which although not useless, show considerable deterioration from their original state (worn clothing and other worn articles, heading 6309, HTSUS).

When this distinction is applied in conjunction with the common meanings of the term “appreciable wear” we arrive at a practical understanding of that term. In essence, appreciable wear is descriptive of a garment or other article whose appearance has noticeably changed from its original/new/unused stage. This change in appearance must be the result of the various naturally occurring stages to which a fabric succumbs as a result of continuous use.

In your submission you state that the 1998 ruling relies on a “litany of factors, all of which require subjective evaluation.” Moreover, you claim that this ruling fails to provide objective standards by not considering how the garments can also be “appreciably worn” due to a significant diminution in their value. You propose alternate language that allows for objective criteria of appreciable wear for purposes of qualifying in heading 6309. You indicate that the characteristics of wear are illustrated by the garments identified in your Exhibits 3A through 3F. You describe these characteristics of fabrics and garments as:
visible pilling; fraying; fuzziness or napping on the surface; runs; a thin or threadbare surface; loss of color or fading; holes in the fabric; discoloration; missing; fading, or twisting of the label; curling or abrasion of collar points; delamination of fusibles; visible stresses in stitches between fabric plies; pin holes or puckering along seams; abrasion of edges of cuffs or hems; twisting or curling of waistbands; stressing of elastic; or a threadbare appearance in wear areas (e.g., knees, seat, pockets).

You also indicate in the case of footwear, that some signs of appreciable wear are “worn soles, scuffed uppers, abrasion of interior.”

With respect to the above characteristics of appreciable wear you named above, it is our view that HQ 960577 provides objective guidelines enumerating appropriate criteria for determining whether a garment is appreciably worn for purposes of heading 6309

For example, the following descriptions are indicative that an article has been “appreciably
worn”, that is, the article has been used over an extended period of time such that the
following physical changes can be seen on the fabric (this list is not exhaustive):
fraying the slipping or raveling of yarns at the edges of the garments;
threadbare the nap has worn off enough so that the threads are revealed;
shiny fabric the nap has been worn away, revealing a smooth fabric that reflects light;
fabric worn thin abrasion has caused the yarns to become so thin that the fabric becomes virtually transparent, revealing the skin or undergarment;
loose seams repeated stress on the seams where the components are joined causing the seams to loosen or separate;
torn seams stress of wear over time has caused the seams to tear;
pilling small tangles or balls of fibers formed when the surface of the material is rubbed against itself or another substance (very common with polyester and acrylic fibers);
abrasion loss of appearance, utility, pile or surface due to the destructive action of surface wear and rubbing;
fading fabric’s color dyes lighten due to a chemical reaction to the sun, pollutants, etc.;
shrinkage reduction in the length or width of material caused by certain treatment (e.g., washing);
staining discoloration caused by exposure to sweat or other external sources such as oil, dirt, grease, etc.;
holes, tears, rips resulting from exposure to moths or other insects, or as a result of continuous use.. Therefore, we do not find it necessary to revisit HQ 960577. Furthermore, we note that the Explanatory Notes clearly state that the garments must show signs of appreciable wear.

In your supplemental submission, you also provided samples, photos of bales and invoices that show actual prices of “mixed institutional used clothing.” After careful consideration, we note that none of the samples show signs of considerable deterioration from their original state. With respect to the invoices, although they identify actual prices of used clothing that was sold overseas, we find that they do not represent entries or transactions considered by CBP. Rather, they are mere representations that show purchase price. Although you refer to valuation of a garment, valuation is not a consideration since by their nature, used garments have a diminished value.

You also provided three examples of Binding Tariff Informations (BTIs) from European Union countries, identified as FR-E4-2003-002901; DEF/1949/02-1, and FR-E4-2000-002700. Specifically, we note that although FR-E4-2003-002901 indicates that there were signs of wear on the goods which were in bundles, there is no indication as to how the signs of wear were determined, just the presence of wear. In DEF/1949/02-1, we note that the goods are packed in laundry bags. In FR-E4-2000-002700, it indicates the goods that were in bundles showed significant signs of wear. However, like FR-E4-2003-002901, there is no indication as to how the signs of wear were determined. Therefore, we do not find these decisions to be helpful in your client’s case.

Generally, when goods are entered in bales as worn clothing of heading 6309, they are often commingled with other clothing not classifiable as worn clothing. With regard to commingled goods, we refer to General Note 3(f), which outlines the procedure for determining the duty rate of worn clothing that is packed to the extent that the quantity or value of goods classifiable in heading 6309 and those classifiable in other headings of the tariff schedule cannot be readily ascertained by CBP officers. In that case, assessed duty rate is based on the commingled good requiring the highest duty rate. The importer has the responsibility to determine the quantity and value of the imported merchandise and, when commingled, the quantity and value of each class of goods.

We note that General Note 3(f) provides that CBP may assess duty at the highest rate if the value or quantity of each class of commingled merchandise cannot be determined by one or more of the following:

(A) sampling,
(B) verification of packing lists or other documents filed at the time of entry, or (C) evidence of timely filed commercial settlement tests that are generally accepted in the trade.

Further, if your client is importing bundled merchandise such as those identified in the submitted photographs and your client chooses to make entry under subheading 6309.00.0010, if the goods are commingled, segregation may be required. If CBP personnel cannot determine the quantity or value of each class of goods in the commingled entry, your client has the option of paying the highest rate of duty of any commingled good. We refer to General Note 3(f)(ii), HTSUSA, which states:

Every segregation of goods made pursuant to subdivision (f) of this note shall be accomplished by the consignee or his agent at the risk and expense of the consignee within 30 days (unless the Secretary authorizes in writing a longer time) after the date of personal delivery or mailing, by such employee as the Secretary of the Treasury shall designate, of written notice to the consignee that the goods are commingled and that quantity or value of each class of goods cannot be readily ascertained by customs officers. Each such segregation shall be accomplished under customs supervision, and the compensation and expenses of the supervising customs officers shall be reimbursed to the Government by the consignee under such regulations as the Secretary of the Treasury may prescribe. 19 U.S.C. 1499(a)(1), states, in pertinent part, that which is required by law or regulation to be inspected, examined, or appraised shall not be delivered from customs custody until inspected, appraised or examined and reported by Customs to have been truly and correctly invoiced and found to be in compliance with the laws of the United States. Thus, where the importer makes an entry of goods as articles of subheading 6309.00.0010, the goods may not be released until the inspection is completed. [Emphasis added.]

To avoid segregating the commingled goods, your client may chose either of two alternatives identified in General Notes 3(f)(iii) and (iv), HTSUSA. General Notes 3(f)(iii) and (iv) state:

(iii) The foregoing provisions of subdivision (f) of this note do not apply with respect to any part of a shipment if the consignee or his agent furnishes, in such time and manner as may be prescribed by regulations of the Secretary of the Treasury, satisfactory proof--

(A) that such part (1) is commercially negligible, (2) is not capable of segregation without excessive cost and (3) will not be segregated prior to its use in a manufacturing process or otherwise, and

(B) that the commingling was not intended to avoid the payment of lawful duties.

Any goods with respect to which such proof is furnished shall be considered for all customs purposes as a part of the goods, subject to the next lower rate of duty, with which they are commingled.

(iv) The foregoing provisions of subdivision (f) of this note do not apply with respect to any shipment if the consignee or his agent shall furnish, in such time and manner as may be prescribed by regulations of the Secretary of the Treasury, satisfactory proof--

(A) that the value of the commingled goods is less than the aggregate value would be if the shipment were segregated;

(B) that the shipment is not capable of segregation without excessive cost and will not be segregated prior to its use in a manufacturing process or otherwise; and

(C) that the commingling was not intended to avoid the payment of lawful duties.

Any goods with respect to which such proof is furnished shall be considered for all customs purposes to be dutiable at the rate applicable to the material present in greater quantity than any other material. You have submitted no information as to the applicability of these exceptions to your client’s circumstances.

Your client may also consider a Class 8 Bonded Warehouse for the purpose of segregating the merchandise. See 19 C.F.R. §19.1(a)(8); see also HQ 967814, dated October 13, 2005. However, the segregation remains under the supervision of CBP and at the expense of your client. In addition to a Class 8 Bonded Warehouse, your client may also consider a storage-manipulation warehouse, in which merchandise may be entered into a warehouse, then transferred to a storage-manipulation warehouse for segregation. For further information on this procedure, please see 19 C.F.R.§ 19.11.

If you have further questions, please feel free to contact my office.

Sincerely,

Myles B. Harmon, Director

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