Request for Reconsideration of NY N058471; Tariff Classification of Footwear from China

HQ H081684 November 26, 2010 CLA-2 OT:RR:CTF:TCM H081684 TNA CATEGORY: Classification TARIFF NO.: 6402.99.40 Mr. David M. Murphy Grunfeld, Desiderio, Lebowitz, Silverman, & Klestadt, LLP Counselors at Law 399 Park Avenue, 25th Floor New York, NY 10022-4877 RE: Request for Reconsideration of NY N058471; Tariff Classification of Footwear from China Dear Mr. Murphy: This is in response to your request for reconsideration, dated October 20, 2009, made on behalf of Crocs, Inc. (“Crocs”), of New York Ruling Letter (“NY”) N058471, dated May 11, 2009, which pertains to the classification of footwear under the Harmonized Tariff Schedule of the United States (HTSUS). In reaching our decision, we have taken into consideration your original submission, dated October 20, 2009, your supplemental submission, dated May 13, 2010, your arguments during a conference with us on June 3, 2010, and your arguments in a second supplemental petition, dated June 14, 2010. FACTS: NY N058471 classified two different models of footwear, one named Gretel and the other named Polar Fleece Mammoth (“Mammoth”). Only the classification of the Mammoth is at issue in this reconsideration. A sample of the Mammoth was received and examined by this office. The Mammoth is open-heeled footwear made of rubber soles and rubber uppers. It has ventilation/drainage holes along the top of the upper that are covered on the inside by a fleece lining that covers the inside of the shoe. The top portion of the lining also folds over a portion of the upper and covers part of the upper around the upper’s opening for the wearer’s foot. The lining can be removed from the rest of the shoe to be washed or replaced. The lining is attached to the shoe by two rivets which match up to slots in the liner. The Mammoth is imported with the liner attached, but the liner can also be imported separately for purchase as a replacement for the original lining. In NY N058471, U.S. Customs and Border Protection (“CBP”) classified the Mammoths under subheading 6402.99.40, HTSUS, as footwear with outer soles and uppers of rubber or plastics of the slip-on type having open heels that is held to the foot without the use of laces or buckles or other fasteners. In your request for reconsideration, you requested classification under subheading 6402.99.31, HTSUS, which provides for other footwear with outer soles and uppers of rubber or plastics having uppers of which over 90 percent of the external surface area is rubber or plastics. In the June 3 conference and in your June 13 supplemental petition, you also argued against classification in subheading 6402.99.33, HTSUS, contending that the Mammoth was not protective footwear within the meaning of this subheading. ISSUE: Whether the external surface area of the uppers (ESAU) calculation includes the Mammoth’s liner, thereby classifying the subject footwear in subheading 6402.99.40, HTSUS, as other footwear, or whether the Mammoth’s liner makes the subject footwear more protective than other footwear of this nature, thus classifying the merchandise in subheading 6402.99.33, HTSUS, or whether the good is a set classified in subheading 6402.99.31, HTSUS, as having uppers of over 90% plastic? LAW AND ANALYSIS: Classification under the HTSUS 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 GRIs may then be applied. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and, mutatis mutandis, to the GRIs. GRI 3(b) states that: When, by application of Rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification shall be effected as follows: … Mixtures, composite goods consisting or different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. The HTSUS provisions under consideration are as follows: 6307 Other made up articles, including dress patterns: 6307.90 Other Other: 6307.90.98 Other 6402 Other footwear with outer soles and uppers of rubber or plastics: Other footwear: 6402.99 Other: Other: Having uppers of which over 90 percent of the external surface area (including any accessories or reinforcements such as those mentioned in note 4(a) to this chapter) is rubber or plastics (except footwear having a foxing or a foxing-like band applied or molded at the sole and overlapping the upper and except footwear designed to be worn over, or in lieu of, other footwear as a protection against water, oil, grease or chemicals or cold or inclement weather): Other 6402.99.31 Other Other: 6402.99.33 Footwear designed to be worn over, or in lieu of, other footwear as a protection against water, oil, grease, or chemicals or cold or inclement weather 6402.99.40 Footwear with open toes or open heels; footwear of the slip-on type, that is held to the foot without the use of laces or buckles or other fasteners, the foregoing except footwear of subheading 6402.99.20 and except footwear having a foxing or a foxing-like band wholly or almost wholly of rubber or plastics applied or molded at the sole and overlapping the upper Other: 6406 Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable insoles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof: Chapter Note 4(a) to Chapter 64, HTSUS, states: Subject to note 3 to this chapter: The material of the upper shall be taken to be the constituent material having the greatest external surface area, no account being taken of accessories or reinforcements such as ankle patches, edging, ornamentation, buckles, tabs, eyelet stays or similar attachments. The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). The EN to heading 6307, HTSUS, states, in pertinent part, the following: This heading covers made up articles of any textile material which are not included more specifically in other headings of Section XI or elsewhere in the Nomenclature. The EN to heading 6402, HTSUS, states, in pertinent part, the following: This heading covers footwear with outer soles and uppers of rubber or plastics, other than those of heading 64.01.   Footwear remains in this heading even if it is made partly of one and partly of another of the specified materials (e.g., the soles may be of rubber and the uppers of woven fabric with an external layer of plastics being visible to the naked eye; for the purpose of this provision no account should be taken of any resulting change of colour).   The heading covers, inter alia: … (b)   Clogs without quarter or counter, the uppers of which are produced in one piece usually attached to the base or platform by riveting. The EN to heading 6406, HTSUS, states, in relevant part, the following: This heading covers:   (A)  The various component parts of footwear; these parts may be of any materials except asbestos.   Parts of footwear may vary in shape according to the types or styles of footwear for which they are intended. They include:   (1)  Parts of uppers (e.g., vamps, toecaps, quarters, legs, linings and clog straps), including pieces of leather for making footwear cut to the approximate shape of uppers…. EN IX to GRI 3(b) states that: For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole, but also those with separable components, provided these components are adapted one to the other and are mutually complementary, and that together they form a whole which would not normally be offered for sale in separate parts… As a general rule, the components of these composite goods are put up in a common packing. EN VIII to GRI 3(b) provides: The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods. EN X to GRI 3(b) states: For the purposes of this Rule, the term “put up in sets for retail sale” shall be taken to mean goods which: consist of at least two different articles which are, prima facie, classifiable in different headings… consist of products or articles 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. The subject footwear contains a sole of rubber and an upper that is predominantly rubber as well imported with a removable textile liner. On page 3 of its original submission , Crocs states, “there is no dispute that the Mammoth is classified under [subheading] 6402.99,” HTSUS. Yet, on page 4 of its original submission, Crocs argues that the Mammoth consists of materials of different headings, i.e., heading 6402, HTSUS, and heading 6307, HTSUS, and is therefore a set under GRI 3(b). As an initial matter, regarding the heading classification of the items purported to belong to the set, Crocs argues that the Mammoth’s liner, if imported separately, should be classified under heading 6307, HTSUS, as a made up article. In support of its argument, the company cites to HQ 963535, dated June 1, 2000, and HQ 963531, dated June 1, 2000. In each of those cases, however, the liner fit snugly around the foot and was meant to be taken out of the shoe when the wearer removed the shoe from his foot. In the present case, the liner remains attached to the Mammoth and lines the inside of the shoe rather than the wearer’s foot. As such, we find that the Mammoth’s liner is designed specifically to be worn with the Mammoth, which is indisputably a type of footwear. As a result, we find the liner to be a part of footwear. Furthermore, heading 6307, HTSUS, is a basket provision. Merchandise is classified there only if it cannot be classified in another heading. See EN 63.07. As a result, we find that the liner, if imported separately, is classified in heading 6406, HTSUS, specifically in subheading 6406.10.90, HTSUS, as uppers and parts thereof. This conclusion is consistent with prior CBP rulings. See, e.g., HQ 955541, dated May 18, 1994. In support of its argument that the Mammoth constitutes a set, Crocs cites HQ 952170, dated December 23, 1992. While we acknowledge that HQ 952170 does classify its merchandise as a set, it does so by way of a simple conclusory statement with no reasoning. As a result, we have no way of knowing whether that conclusion is applicable to the present case. We do not agree that the merchandise as imported meets the “particular need” criteria to be classified as a set. The need that Crocs proffers, of obtaining warm and comfortable footwear, is hardly particular in the sense conveyed in the ENs. It is no different than the observation that consumers need footwear to protect their feet generally. Instead, the two components that comprise the subject footwear are mutually complementary and together they form the imported merchandise. The liner is not capable of being worn without the footwear’s clog portion, and is imported attached to it. While the clog can be worn without the liner, its snap buttons would make it appear incomplete if worn this way. As a result, the Mammoth is a composite good. This conclusion is consistent with prior CBP rulings. See, e.g., HQ 955541, dated May 18 1994. But whether a set or composite good, the essential character is imparted by the clog portion, which gives the whole its essential character, as it accounts for the greater weight, bulk, volume and role of the article. Therefore, we agree with Crocs that there is no dispute that the good is classified in heading 6402, HTSUS, and more specifically in subheading 6402.99. In NY N058471, we determined that the fleece covered more than 10% of the upper based on a visual estimate of the materials. Crocs challenges this estimate on the grounds that the liner should not be a component of the external surface area of the footwear’s upper. At the same time, however, Crocs does not provide actual measurements of the upper’s materials. As per Note 4(a) to Chapter 64, HTSUS, the constituent material having the greatest external surface area constitutes the material of the upper. CBP has consistently held that when material forms a visible part of the upper, it is included in the calculation of the external surface area of the upper. See, e.g., HQ 965818, dated November 6, 2002; HQ 953219, dated February 9, 1993; HQ 955705, dated March 1, 1994; HQ 088348, dated February 26, 1991; HQ 084013, dated March 26, 1990. In the present case, the Mammoth’s liner is exposed in areas of the upper and extends past the inside of the shoe to form a part of the upper. Therefore, the fleece liner constitutes a visible portion of the upper and should be included it in the calculation of the ESAU. After a visual inspection of both the pictures that you included in your submission, and the sample submitted during the June 3 conference, we find that the liners make up more than 10% of the ESAU. As such, the Mammoth is not described by the terms of subheading 6402.99.31, HTSUS. In its second supplemental submission, Crocs argues that the liner is not meant to protect against cold or inclement weather, thereby precluding classification in subheading 6402.99.33, HTSUS. In support of its argument, the company cites T.D. 93-88 for the proposition that “footwear is designed to be a protection against water, oil or cold or inclement weather only if it is substantially more of a protection against those items than the usual shoes of that type.” See T.D. 93-88, dated October 25, 1993 (internal quotation marks omitted). Crocs argues that even with the liner, the Mammoth’s design is such that it offers less protection against cold or inclement weather than either regular shoes or oxford height-slip on footwear. While CBP originally considered classification in subheading 6402.99.33, HTSUS, we now agree with Crocs that the Mammoth is not protective enough to be classified there. First, the holes in the Mammoth’s upper ensure that water will penetrate it. Secondly, the footwear’s open-heeled design means that it is better-ventilated and therefore cannot protect against the cold in the same way as footwear with closed heels. As a result, the Mammoth cannot be classified in subheading 6402.99.33, HTSUS. Because we determined that the liner constitutes more than 10% of the upper, the Mammoth is classified in subheading 6402.99.40, HTSUS, as “Other footwear with outer soles and uppers of rubber or plastics: Other footwear: Other: Other: Other: Footwear with open toes or open heels.” Crocs argues that the Mammoth’s liner, if imported separately, should be classified under heading 6307, HTSUS, as a made up article. In support of its argument, the company cites to HQ 963535, dated June 1, 2000, and HQ 963531, dated June 1, 2000. In each of those cases, however, the liner fit snugly around the foot and was meant to be taken out of the shoe when the wearer removed the shoe from his foot. In the present case, the liner remains attached to the Mammoth and lines the inside of the shoe rather than the wearer’s foot. As such, it is left inside the Mammoth when the wearer takes it off. As such, we find that the Mammoth’s liner is designed specifically to be worn with the Mammoth, which is indisputably a type of footwear. As a result, we find the liner to be a part of footwear. Furthermore, heading 6307, HTSUS, is a basket provision. Merchandise is classified there only if it cannot be classified in another heading. See EN 63.07. As a result, we find that the liner, if imported separately, is classified in subheading 6406.10.90, HTSUS, as uppers and parts thereof. This conclusion is consistent with prior CBP rulings. See, e.g., HQ 955541, dated May 18, 1994. HOLDING: Under the authority of GRI 3(b), the Mammoth is provided for in heading 6402, HTSUS. More specifically, it is classified under subheading 6402.99.40, HTSUS, which provides for “Other footwear with outer soles and uppers of rubber or plastics: Other footwear: Other: Other: Other: Other: Footwear with open toes or open heels.” The general, column one duty rate is 37.5%. If imported separately, the liner is classified in heading 6406, HTSUS, and more specifically under subheading 6406.10.90, HTSUS, which provides for “Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable insoles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof: Uppers and parts thereof, other than stiffeners: Other: Other: Other: Other.” The general, column one, duty rate is 14.9%. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/. EFFECT ON OTHER RULINGS: NY N058471, dated May 11, 2009, is AFFIRMED. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division