Application for Further Review of Protest No. 3002-18-100111; Tariff classification of plastic hangers and eligibility for preferential tariff treatment under the Generalized System of Preferences (“GSP”)

HQ H310124 September 22, 2020 OT:RR:CTF:FTM H310124 PJG CATEGORY: Classification TARIFF NO.: 6109.90.10 Center Director Apparel, Footwear and Textiles Center, Team 054-4 8337 NE Alderwood Rd. Portland, OR  97220 Attn: Alicia A. Aguirre, Import Specialist RE: Application for Further Review of Protest No. 3002-18-100111; Tariff classification of plastic hangers and eligibility for preferential tariff treatment under the Generalized System of Preferences (“GSP”) Dear Center Director: This is in reference to the Application for Further Review (“AFR”) of Protest No. 3002-18-100111, timely filed on April 20, 2018, by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP on behalf of Bisma International Corp. (“Bisma” or “Protestant”). The AFR concerns the tariff classification of plastic hangers, model number W340, under the Harmonized Tariff Schedule of the United States (“HTSUS”) and their eligibility for preferential tariff treatment under the Generalized System of Preferences (“GSP”). FACTS: In its submission, the Protestant describes plastic hangers model number W340 as follows, “They are made from sturdy molded plastic and are imported with the apparel with which they are used. They do not easily break and are intended for repeat use.” The Protestant further states that “[t]he hangers were manufactured in Pakistan using Pakistani-origin plastic.” The Protestant also submitted the following photograph of plastic hanger model number W340:
The decision protested is the tariff classification of plastic hangers model number W340, which were entered on April 11, 2017. On March 2, 2018, U.S Customs and Border Protection (“CBP”) liquidated the entries for these products under heading 6109, HTSUS, and specifically in subheading 6109.90.10, HTSUS, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of other textile materials: Of man-made fibers” on the basis of General Rules of Interpretation (“GRI”) 5(b) because the hangers were entered with the garments with which they were used and the hangers were not capable of reuse. Protestant claims that the plastic hangers model number W340 should be classified under heading 3923, HTSUS, and specifically in subheading 3923.90.00, HTSUS, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Other.” The Protestant also claims that the subject merchandise is entitled to GSP treatment. ISSUES: (1) Whether the subject plastic hangers model number W340 are classified in heading 3923, HTSUS, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics,” or whether they are not clearly suited for repetitive use, and are classified alongside the garments they are entered with in heading 6109, HTSUS, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of other textile materials: Of man-made fibers,” and are dutiable at the garment’s duty rate. (2) Whether the subject plastic hangers model number W340 qualifies for preferential tariff treatment under the GSP. LAW AND ANALYSIS: Initially, we note that this matter 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. See 19 U.S.C. § 1514(c)(3). Protestant alleges that Further Review of Protest No. 3002-18-100111 should be accorded pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts. We find that Further Review of Protest No. 3002-18-100111 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b). 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. The 2017 HTSUS provisions under consideration are as follows: 3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: 6109 T-shirts, singlets, tank tops and similar garments, knitted or crocheted: GRI 5(b) provides, in relevant part, as follows: In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: * * * Subject to the provisions of rule 5(a) above, packing materials and packing containers entered with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use. The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the “official interpretation of the Harmonized System” at the international level. See 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). 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 id. The EN to GRI 5(b) states, in pertinent part: This Rule governs the classification of packing materials and packing containers of a kind normally used for packing the goods to which they relate. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use, for example, certain metal drums or containers of iron or steel for compressed or liquefied gas. This Rule is subject to Rule 5 (a) and, therefore, the classification of cases, boxes and similar containers of the kind mentioned in Rule 5 (a) shall be determined by the application of that Rule. The EN to 39.23 states, in pertinent part: This heading covers all articles of plastics commonly used for the packing or conveyance of all kinds of products. In Headquarters Ruling Letter (“HQ”) H280405, dated January 5, 2017, CBP stated that it “has long held that plastic hangers are ordinary packaging for garments and, when imported with garments, they are classifiable with the garments unless, in accordance with GRI 5(b), they are clearly suitable for repetitive use.” Accordingly, the subject hangers are ordinary packaging for garments, but we must determine whether they are clearly suitable for repetitive use. HQ H300587, dated July 5, 2019, states that “CBP has interpreted ‘reuse’ [in the context of Instruments of International Traffic] to mean commercial shipping or transportation purposes, not incidental reuse.” In HQ H258772, dated June 22, 2016, HQ H280405, dated January 5, 2017, and New York Ruling Letter (“NY”) N064681, dated June 22, 2009, CBP consistently stated that to show that they are suitable for reuse, it must be “demonstrated that the subject hangers are clearly suitable for repetitive” commercial reuse. See also HQ H266818 (May 23, 2016) (stating that “[t]he phrase ‘suitable for repetitive use’ does not mean merely that the specific hangers are strong enough to be used repetitively, but also that there exists a commercial viability for that repetitive use”). In HQ H280405, CBP provided the following list of means of demonstrating suitability for reuse: documentation verifying re-sales of the relevant styles of hangers, after their original use, to garment vendors for use in packing, shipping, and transportation of garments; evidence that the hangers are made entirely of durable molded plastic and are specially designed by the manufacturer for international transit and multiple international reuse cycles; the style number was previously considered by CBP in a ruling to be an Instrument of International Traffic; or the hangers were specifically constructed and tested to be used multiple times during its useful life. “[A]ctual reuse of hangers is not required, so long as it is demonstrated that the … hangers are clearly suitable for repetitive use.” See HQ H280405 (Jan. 5, 2017). The Protestant states that HQ H258772 effectively revoked NY N064681, which also concerned, in part, the classification of a plastic hanger with style number W340. We disagree because HQ H258772 was specifically addressing the plastic hangers that were the subject of NY N255930, dated August 20, 2014. Moreover, according to the Protestant, hanger style W340 in NY N064681 is distinguishable from the hanger style W340 in the instant protest. For NY N064681, CBP considered a sample of W340 and determined that it was of a “flimsy one piece molded construction that is not suitable for repetitive use for the commercial shipment of garments.” See NY N064681 (June 22, 2009). In fact, the hanger in NY N064681 and the instant hanger appear to be similar or the same in their flimsy construction. We note that the sample hanger in style W340 that was provided for the instant protest arrived to the CBP port of entry in broken condition. The Protestant claims that the instant merchandise is suitable for reuse on the basis of a statement submitted by its supplier indicating that the hangers are “recyclable.” A product that is recyclable is not necessarily suitable for reuse. Moreover, the Protestant does not demonstrate such suitability using any of the aforementioned means. Since it has not been demonstrated that the subject hangers are suitable for commercial reuse, then they are classified pursuant to GRI 5(b) together with the garments with which they are used and entered in subheading 6109.90.10, HTSUS, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of other textile materials: Of man-made fibers.” The Protestant also claims that the subject merchandise is subject to the General System of Preferences (“GSP”). General Note 3(a)(iii) addresses special tariff treatment programs, including GSP, and states the following: The “Special” subcolumn reflects rates of duty under one or more special tariff treatment programs described in paragraph (c) of this note and identified in parentheses immediately following the duty rate specified in such subcolumn. These rates apply to those products which are properly classified under a provision for which a special rate is indicated and for which all of the legal requirements for eligibility for such program or programs have been met. Where a product is eligible for special treatment under more than one program, the lowest rate of duty provided for any applicable program shall be imposed. Where no special rate of duty is provided for a provision, or where the country from which a product otherwise eligible for special treatment was imported is not designated as a beneficiary country under a program appearing with the appropriate provision, the rates of duty in the ‘General’ subcolumn of column 1 shall apply. If the “Special” subcolumn opposite the classification of an article contains the letter “A,” A*,” or “A+”, then the article is “eligible” for special tariff treatment under the Generalized System of Preferences. See General Note 3(c)(i). The Protestant states that the merchandise is “manufactured in Pakistan using Pakistani-origin plastic.” While Pakistan is a beneficiary developing country under the GSP, subheading 6109.90.10, HTSUS, is not a GSP-eligible provision. The Protestant claims that CBP should consider the applicability of GSP separately from the classification of the subject plastic hangers under GRI 5(b). However, in that regard, we note that in HQ 956347, dated August 30, 1994, CBP (formerly the U.S. Customs Service) considered the classification of certain glass candle holders without a candle or together with a candle as a set and packaged in a cardboard gift box (product of Italy, which was not a beneficiary developing country) or brown box (product of Poland, which was a beneficiary developing country) and the applicability of GSP. CBP determined that the cardboard gift box and brown box were packing materials that were not designed for repetitive use and, pursuant to GRI 5(b), the boxes were classified with the entered goods under subheading 9405.50.40, HTSUS. In determining whether the product was from a beneficiary developing country for purposes of GSP, CBP considered the origin of the entire set and did not consider the origin of the boxes separately. Similarly, in this instance, while we are not considering a set, we will not bifurcate the consideration of eligibility for GSP from the classification of the product when such product includes plastic materials used to convey the goods. Accordingly, the subject merchandise is not entitled to GSP treatment. HOLDING: The plastic hangers model number W340 are classified under heading 6109, HTSUS, and specifically in subheading 6109.90.10, HTSUS, which provides for “T-shirts, singlets, tank tops and similar garments, knitted or crocheted: Of other textile materials: Of man-made fibers” The 2020 column one, general rate of duty is 32 percent ad valorem. Duty rates are provided for convenience and are subject to change. The plastic hangers are not entitled to GSP treatment. You are instructed to DENY the protest. In accordance with sections IV and VI of the CBP Protest/Petition Processing Handbook, 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 re-liquidation 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 of Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page at http://www.cbp.gov by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, For Craig T. Clark, Director Commercial and Trade Facilitation Division