Protest and Application for Further Review No 3901-15-100276; Classification of insulated cooler bag

HQ H272690 August 30, 2016 CLA-2 OT:RR:CTF:TCM HQ H272690 NCD CATEGORY: Classification TARIFF NO.: 4202.92.1000 Port Director Service Port Chicago U.S. Customs and Border Protection 5600 Pearl Street Rosemont, IL 60018 Attn: Donna Jirka, Senior Import Specialist Re: Protest and Application for Further Review No: 3901-15-100276; Classification of insulated cooler bag Dear Port Director: The following is our decision as to Protest and Application for Further Review No. 3901-15-100276, timely filed on May 27, 2015 on behalf of Walgreen Co. (“Walgreen” or “Protestant”), concerning classification of an insulated cooler bag under the Harmonized Tariff Schedule of the United States (HTSUS). The merchandise at issue was entered with and liquidated by U.S. Customs and Border Protection (CBP) at the Port of Chicago (“the Port”). Protestant asserts that CBP’s classification of the subject merchandise at liquidation is incorrect. FACTS: The merchandise at issue consists of an insulated cooler bag, designated the Igloo Playmate Gripper 22, that is designed to accommodate food and beverage items. The exterior surface of the bag is made up of a combination of polyester and thermoplastic olefin (TPO). Independent laboratory reports submitted with the protest describe the material composition of the bag’s exterior surface as 49 percent polyester fabric and 51 percent TPO by relative weight, and 51 percent polyester fabric and 49 percent TPO by relative surface area. An additional independent laboratory report appended to Protestant’s June 17, 2015 supplemental submission indicates that polyester fabric accounts for 34 percent of the total value of the bag’s exterior surface, and that TPO accounts for the remaining 66 percent of this value. A report issued by a CBP laboratory (“CBP laboratory report”), dated September 5, 2014, states that the bag’s exterior surface is 50.5 percent textile and 49.5 percent plastic by relative surface area. The subject merchandise was entered on April 21, 2014 in subheading 4202.92.10, HTSUS, which provides for “Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Insulated food or beverage bags: Other.” CBP liquidated the subject merchandise on November 28, 2014 in subheading 4202.92.08, HTSUS, which provides for “Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Insulated food or beverage bags: With outer surface of textile materials: Other.” Protestant claims classification as entered. ISSUE: Whether the subject insulated cooler bag is properly classified in subheading 4202.92.08, HTSUS, as an “other” insulated food or beverage bag with an outer surface of textile materials, or in subheading 4202.92.10, HTSUS, as an “other” insulated food or beverage bag. LAW AND ANALYSIS: Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a) (2) as a decision on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)). Further Review of Protest No. 3901-15-100276 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because Protestant alleges that the decision is inconsistent with a previous CBP decision with respect to substantially similar merchandise. Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes. GRI 1 requires that classification be determined first 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 heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. GRI 2(b) states, in pertinent part, that “[a]ny reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance” and that “classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.” GRI 3 provides that "composite goods consisting of different materials or made up of different components” are to be classified “as if they consisted of the material or component which gives them their essential character,” and where this is not possible, “under the heading which occurs last in numerical order among those which equally merit consideration.” 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 GRIs 1 through 5. 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 2016 HTSUS provisions under consideration in the instant case are as follows: 4202 Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper: Other: 4202.92 With outer surface of sheeting of plastic or of textile materials: Insulated food or beverage bags: With outer surface of textile materials: 4202.92.08 Other 4202.92.10 Other As a preliminary matter, it is undisputed that the subject insulated cooler bag is described as an insulated food or beverage bag with an outer surface of sheeting of plastic or textile materials, and is therefore properly classified at the 4-digit level in heading 4202, HTSUS, and at the 6-digit subheading level in heading 4202.92, HTSUS. At issue is the bag’s proper classification at the 8-digit level, a determination that requires identification of the material making up the bag’s outer surface. Subheading 4202.92.08, HTSUS, provides for insulated food or beverage bags with outer surfaces of textile materials. While the HTSUS does not define textile materials, it makes clear that the term encompasses materials comprised of polyester fibers. See Chapter 54, Note 1(a), HTSUS (establishing, for purposes of classification throughout the HTSUS, that man-made textile materials include materials of polyester fibers). Accordingly, as CBP has consistently held, insulated food or beverage bags with polyester outer surfaces are classifiable in subheading 4202.92.08, HTSUS. See, e.g., Headquarters Ruling Letter (HQ) H248811, dated August 19, 2015, and HQ H018503, dated January 31, 2008. However, where the outer surface of such a bag is made up only in part of polyester fabric or other textile materials, the bag cannot be classified in subheading 4202.92.08 by application of GRI 1. See HQ H088427, dated May 29, 2015; see also Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1292-1356 (Ct. Int’l Trade 2006) (Home Depot I), aff'd 491 F.3d 1334 (Fed. Cir. 2007) (Home Depot II) (holding that light fixtures made up of base metal and glass could be classified neither in the subheading providing for lighting fittings of base metals nor in the subheading providing for “other” lighting fittings per GRI 1). Here, the exterior surface of the subject cooler bag is made up primarily, but not entirely, of polyester fabric, while the remainder is made up of TPO. The independent laboratory report furnished by Protestant describes the surface area of the bag as 51 percent polyester fabric and 49 percent TPO. This is consistent with the CBP laboratory report, which states that the bag’s exterior surface is 50.5 percent textile and 49.5 percent plastic. Consequently, the bag’s outer surface can be described only partially, and not wholly, as “of textile material” for purposes of classification in subheading 4202.92.08. As such, it cannot be classified in the subheading solely by application of GRI 1. We accordingly consider subheading 4202.92.10, HTSUS, which provides for insulated food or beverage bags with outer surfaces of materials other than textile. Because classification in the subheading requires an outer surface of non-textile materials, insulated food or beverage bags whose outer surfaces incorporate both textile and non-textile materials are only partly described by the subheading. See HQ H088427, supra, and HQ 962817, dated January 14, 2002; see also Home Depot I, 427 F. Supp. 2d at 1292-1356; Home Depot II, 491 F.3d at 1336. In the instant case, the outer surface of the subject insulated cooler bag is made up of both TPO, a non-textile, and polyester fabric, a textile within the meaning of subheading 4202.92.10. As such, the subject bag is only partly described by the subheading, and cannot be classified there solely by operation of GRI 1. As articles described in part by subheading 4202.92.08, HTSUS, and in part by subheading 4202.92.10, HTSUS, the subject cooler bag is classified, pursuant to GRIs 3(b), 3(c), and 6, as if it consisted of the material which imparts its essential character or, failing this, under the heading which occurs last in numerical order. With respect to “essential character” for purposes of GRI 3(b), EN (VIII) to GRI 3(b) states as follows: 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. While application of the “essential character test” requires a fact-intensive analysis, courts have consistently applied some or all of the factors listed in the above-cited EN in identifying various articles’ essential characters. See Alcan Food Packaging (Shelbyville) v. United States, 771 F.3d 1364, 1367 (Fed. Cir. 2014); see also Home Depot I, 427 F. Supp. 2d at 1295-1356. Notably, in a decision upheld by the U.S. Court of Appeals for the Federal Circuit, the Court of International Trade has emphasized the importance of component materials’ relative weights, values, and surface areas as determinants of the material imparting a given composite article’s essential character. See Home Depot I, 427 F. Supp. 2d at 1292-1356; Home Depot II, 491 F.3d at 1336. Consistent with this, CBP has previously relied on these factors in applying GRI 3(b) to determine the proper classification of insulated cooler bags composed of diverse materials. See HQ H088427, supra (examining relative surface area, bulk, and value in identifying the outer surface materials that impart the essential character of insulated cooler bags). However, where application of these and other factors do not conclusively indicate the constituent component that imparts the essential character, the composite article at issue cannot be classified in accordance with GRI 3(b). See HQ H179843, dated March 14, 2012 (determining that lighted floral arrangement could not be classified pursuant to GRI 3(b) because constituent components accounted for relatively similar values, bulks, and surface areas, and played equally important roles with respect to the use of the arrangement). Here, according to both the pertinent independent laboratory report and the CBP laboratory report, polyester fabric accounts for 50-51 percent of the subject cooler bag’s total surface area, while TPO accounts for the remaining 49-50 percent. The polyester portion thus slightly predominates the outer surface by surface area. According to the other laboratory reports proffered by Protestant, the TPO accounts for a slight majority, i.e., 51 percent, of the outer surface’s total weight and for a large majority, i.e., 66 percent, of its total value. However, these reports have not been substantiated by a CBP laboratory or by the bag’s manufacturer. Given that neither TPO nor polyester is particularly predominant, and that none of the other factors listed in EN (VIII) to GRI 3(b) weighs in favor of finding either of these materials to be that which imparts the subject bag’s essential character, we are unable to classify the bag by application of GRI 3(b). We accordingly apply GRI 3(c), which, in combination with GRI 6, requires classification of the subject cooler bag under the subheading which occurs last in numerical order. Of the two subheadings at issue in the instant case, subheading 4202.92.10, HTSUS, occurs last in numerical order. The subject cooler bag is therefore classified in subheading 4202.92.10, HTSUS. We note that this outcome is supported by HQ H088427, supra, in which an insulated cooler bag was classified by application of GRI 3(c) where application of the GRI 3(b) factors did not weigh definitively toward classification in either of the subheadings at issue. See also HQ H179843, supra. HOLDING: By application of GRIs 3(c) and 6, the subject insulated cooler bag is classified in heading 4202, HTSUS, specifically in heading 4202.92.1000, HTSUSA (Annotated), which provides for “Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper: Other: With outer surface of sheeting of plastic or of textile materials: Insulated food or beverage bags: Other.” The 2016 general column one rate of duty for subheading 4202.92.1000, HTSUSA, is 3.4% ad valorem. 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/. You are instructed to ALLOW the Protest. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division