CLA-2 RR:CR:GC 963685 GOB
U.S. Customs Service
610 S. Canal Street
Chicago, IL 60607
RE: Protest 3901-99-101497; Lead Acid Storage Batteries
This is our decision regarding Protest 3901-99-101497, filed on behalf of CMP Batteries Ltd. (“protestant”) concerning the classification, under the Harmonized Tariff Schedule of the United States (“HTSUS”), of certain batteries.
The entries at issue were filed between May 6, 1999 and May 28, 1999. The entries were liquidated on August 6, 1999. The protest was filed on October 29, 1999.
The batteries at issue were entered and the entries liquidated under subheading 8507.20.80, HTSUS, which provides for: “Electric storage batteries ... : ... Other lead-acid storage batteries: ... Other.” That provision references subheading 9903.08.14, HTSUS, and provides for a 100% rate of duty for batteries described in subheading 8507.20.80, HTSUS.
What is the tariff classification of the batteries?
LAW AND ANALYSIS:
We note initially that the protest was timely filed under the statutory and regulatory provisions for protests, 19 U.S.C. 1514(c)(3)(A) and 19 CFR 174.12(e)(1).
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI’s”). 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 GRI’s may then be applied.
The Harmonized Commodity Description and Coding System Explanatory Notes (“EN’s”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s 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.
The HTSUS provisions under consideration are as follows:
8507 Electric storage batteries ... :
8507.20 Other lead-acid storage batteries:
8507.20.40 Of a kind used as the primary source of electrical power for electrically powered vehicles of subheading 8703.90
Subheading 8703.90.00, HTSUS provides for: “Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars: ... Other.”
Heading 8702, HTSUS, provides for: “Motor vehicles for the transport of ten or more persons, including the driver.”
Subheading 9903.08.14 provides for a 100% rate of duty for: “Lead-acid storage batteries, other than of a kind used for starting piston engines or as the primary source of electrical power for electrically powered vehicles of subheading 8703.90 (provided for in subheading 8507.20.80).”
Accordingly, for subheading 8507.20.40, HTSUS, to be applicable, the batteries must be of a kind used as the primary source of electrical power for electrically powered vehicles for the transport of fewer than ten persons.
The protestant states as follows in pertinent part:
The batteries are specifically designed as the main source of power in electric vehicles. The batteries are used on vehicles capable of carrying less than 10 people, and vehicles capable of carrying more than 10 people.
However, the technology of the batteries is identical for all types of vehicles. The batteries are mass-produced in standard low voltage size specifically for electric vehicles, but without regard to what type of vehicle. The difference in use is dependent upon the amount of voltage required to power the vehicle. For example, the batteries comprising a low voltage battery system are capable for use in a small passenger vehicle, while the same batteries when connected to additional batteries to obtain a higher amount of voltage would be used to power an electric bus.
Given the only recent developments in economically producing an electric vehicle capable of carrying 10 or more people, the vast majority of the traditional market for batteries of this class or kind has been for vehicles for less than 10 people, such as golf-style carts and converted, or specially built passenger vehicles.
The lead-acid batteries at issue here are of the kind used in electrically powered vehicles classifiable in both subheading 8702.90 and 8703.90. Therefore, regardless of the actual use of the batteries involved here, they meet the test set forth in subheading 9903.08.14 for exemption from the 100% duties. They meet this test because they are “of a kind ... as the primary source of electrical power for electrically powered vehicles of subheading 8703.90 ...” [Emphasis in original.]
In Primal Lite Inc. v. United States, 182 F. 3d 1362 (CAFC 1999), aff’g 15 F. Supp. 2d 915 (CIT 1998), the court construed the “of a kind used” language in a different subheading of the HTSUS. The court stated:
Subheading 9405.30.00 is a “use” provision, because the classification decision turns on whether the imported lighting sets are “of a kind used for Christmas trees.” Additional Rule of Interpretation 1 (ARI 1) of the HTSUS dictates how tariff classifications should be construed when the classification decision is controlled by use.
The court in Primal Lite stated that subheading 9405.30.00, HTSUS, is a principal use provision and is governed by Additional U.S. Rule of Interpretation 1(a), which provides:
1. In the absence of special language or context which otherwise requires-
(a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use[.]
We construe subheading 8507.20.40, HTSUS, as a principal use provision in view of the Primal Lite decision.
Your office advises, as does the protestant, that the subject batteries are used with vehicles of both heading 8702 and 8703, i.e., with vehicles designed for the transport of ten or more persons and with vehicles designed for the transport of less than ten persons.
The protestant has not provided satisfactory evidence with respect to the principal use of the batteries, i.e., that the batteries are principally used with vehicles of less than ten persons.
We find that GRI 6 applies in that two subheadings (subheadings 8507.20.40 and 8507.20.80) appear to apply equally to the subject batteries. Pursuant to GRI 6, we then apply the other GRI.
We are not able to classify on the basis of GRI 1 in that Additional U.S. Rule of Interpretation 1(a) does not resolve the classification, i.e., we are unable to make a determination with respect to the principal use of the batteries. GRI 2 is not applicable. The prefatory language to GRI 3 is applicable in that the “goods are, prima facie, classifiable under two or more headings.” Pursuant to GRI 3(a) neither of the two headings is more specific than the other. GRI 3(b) is not applicable here because the batteries are not mixtures, composite goods, or goods put up for sale in sets for retail sale.
We then turn to GRI 3(c) which provides: “When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Pursuant to GRI 3(c), the batteries are classified in subheading 8507.20.80, HTSUS.
As detailed above, the batteries are classified in subheading 8507.20.80, HTSUS, as: “Electric storage batteries ... : ... Other lead-acid storage batteries: ... Other.”
You are instructed to DENY the protest.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations
and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.treas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
John Durant, Director
Commercial Rulings Division