Classification of applique kits

HQ 083701 April 21 1989 CLA2 CO:R:C:G 083701 DSN CATEGORY: Classification TARIFF NO.: 6001.10.20 Ms. MaryAnne Reid Sew Elegant Fashions 2820 McKenney Crescent Prince George, B.C. Canada, V2K 3X9 RE: Classification of applique kits Dear Ms. Reid: This is in response to your inquiry of January 11, 1989, in which you requested a classification ruling for applique kits under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). A sample produced in Canada was submitted for examination. FACTS: The submitted kit consist of instructions, patterns, two separate pieces of woven fabric composed of manmade synthetic fibers, an irregularly shaped piece of woven cotton fabric, knit pile fabric, toy eyes, imitation pearls and a ziplock plastic bag. The applique is designed to resemble a panda. The user must supply their own backdrop for the fabric, as well as the thread and sewing machine. ISSUE: Whether the kit is considered a set, and if so, how is it classified? LAW AND ANALYSIS: Classification of merchandise under the HTSUSA is in accordance with the General Rules of Interpretation (GRI's), taken in order. The question of what is considered a "set"  2 arises under GRI 3. GRI 3(b) provides that goods put up in sets for retail sale are classified according to the material or component which gives them their essential character. The Explanatory Notes constitute the official interpretation of the tariff at the international level. According to the Explanatory Notes to GRI 3(b), the term goods put up in sets for retail sale means goods which consist of at least two different articles which are classifiable in different headings; that are put up together to meet a particular need or carry out a specific activity; and are put up in a manner suitable for sale directly to users without repacking. With respect to the instant sample, it meets the criteria for "goods put up in retail sets" described above. The articles of the kit are classifiable in different headings by virtue of containing fabric, paper, plastic, toy eyes and imitation pearls. The articles in the kit are designed to meet the particular need of the consumer by providing the necessary articles to complete the applique. The kit is marketed to consumers for sale as is, without any repacking. Therefore, the kit is considered a set and will be classifed accordingly. Since the sample in question is a set pursuant to GRI 3(b) the essential character must be determined. The Explanatory Notes to GRI 3(b), state that essential character may be determined by the nature of the component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods. The essential character cannot be determined for the instant merchandise using the above criteria because when looking at the completed picture of the applique the different fabrics are equally essential. In a situation like this, GRI 3(c) is applicable. GRI 3(c) provides that when goods cannot be classified under GRI 3(a) or (b), they are classified under the heading which occurs last in numerical order among those which equally merit consideration. It is our opinion that the headings providing for toy eyes, imitation pearls and plastic bags, do not merit consideration because these items are an inconsequential part of the kit. In their absence the applique would still resemble a panda. It is the headings for the different fabrics which merit consideration under GRI 3(c). The three woven fabrics are classified in chapters 5055, HTSUSA, while the knit pile fabric is classified in chapter 60, HTSUSA. Therefore, pursuant to GRI 3(c), classification of the applique kit is in chapter 60, HTSUSA. With respect to your question concerninga refund on duty paid for any unsold kits exported to Canada we are enclosing a copy of the applicable regulations pertaining to this situation.  3 You have not provided enough information with respect to whether this merchandise qualifies for the Canadian Free Trade Agreement. You do not indicate the country of origin of the findings, nor the values of the foreign made components relative to the value of the items originating in the United States and Canada. Therefore, we are unable to give you a definitive answer. HOLDING: The applique kit is classified under subheading 6001.10.20, HTSUSA, which provides for pile fabrics, including "long pile" fabrics, knitted or crocheted, of manmade fibers, textile category 224. The rate of duty, if this merchandise is considered "goods originating in the territory of Canada", is 17.5 percent ad valorem under the Special duty rate column. Otherwise, the merchandise is dutiable at 19.5 percent ad valorem. Due to the changeable nature of the statistical annotation and the restraint (quota/visa) categories applicable to textile merchandise, 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, John Durant, Director Commercial Rulings Division Enclosures