Footwear is Fun!

Having made a classification determination regarding the extent of textile fiber on the sole of a client’s shoe recently, I found myself trying on the example the company had sent me. As I admired this shoe on my small foot, I remembered why this case was particularly interesting.

I was exploring the proper classification of footwear which had a sole made out of a rubber and plastic combination. In making this determination, regard is to be given to the material of both the upper sole and the “outer sole,” which, in case it isn’t already obvious, means that part of the footwear (other than an attached heel) which, when in use, is in contact with the ground. [General EN (C) to Ch. 64, HTSUS]

The “outermost sole” of the shoe is the part directly exposed to abrasion and wear. It can consist of any of a variety of materials, inc. leather, rubber, plastic, cork, rope, crepe, wood, etc., have differences in thickness or degrees of flexibility, and have an infinite variety of surface designs. After reading this definition, I took a look at the winter boots I had worn to work and it turned out there was a felt covering on the bottom of the shoe. What a surprise!

Why cover an outermost sole with a textile anyway? Duty savings of course!

A favorable duty rate may be obtained where footwear has an outer sole of textile. In this example of a shoe with a rubber and plastic sole, upon importation it would be dutiable at a rate of 37.5% under HTSUS 6404.19.35. That is, for every $100 worth of shoes imported, $37.50 in taxes, i.e., duties must be paid to US Customs.

Contrast that to a shoe which, upon importation, has a textile material covering the outer sole. This would be dutiable at a rate of 12.5% under HTSUS 6405.20.90, and hence, only $12.50 would need to be paid in duties for every $100 worth of shoes imported. This rule also applies irrespective of the duration for which the textile material will continue to be in contact with the ground.

What matters to US Customs is that the product is introduced into the “stream of commerce” as “entered” (which in everyday language, means brought into the U.S. for consumption, i.e., sale, purchase, use, as opposed to temporarily coming in for say, a trade show), and is a commercial reality in its condition as entered. That is, it is not “entered” as one article in an effort to evade a higher duty rate, only to be modified into something else that will be “consumed.”

For some funny examples, check out Customs ruling HQ 965751 (11/18/02), which is where you will also find some greater detail into the definitions I’ve provided above.

In addition, US Customs is looking at which constituent covers the majority of the outer sole. In Customs ruling HQ 089600 (9/11/91), citing HQ 084713 (8/3/89), US Customs found that the outer sole which had the greatest external surface area in contact with the ground is what should predominate as the outer sole. In the ruling it dealt with plastic "dots" scattered across the sole, which nonetheless comprised the predominant material of the outer sole for tariff purposes due to their ubiquity. The shoe was therefore considered to have a sole made up of a rubber and plastic combination.

I enjoy analyzing footwear. Footwear is fun!

Questions/comments? Post below or email me at clark.deanna@gmail.com.