CLA-2 OT: RR: CTF: TCM H247586 ERB
Port Director, Service Port-Minneapolis
U.S. Customs and Border Protection
330 2nd Avenue South, Suite 560
Minneapolis, MN 55401
Attn: Kristi L. Johnson, Supervisory Import Specialist
Re: Application for Further Review of Protest No: 3501-2012-100089 and 3501-2012-100099, two styles of round top garages; Revocation of NY 855160; Revocation of NY N115237; Revocation of HQ 086548; Revocation of N019298; Revocation of NY L81895; Revocation of NY H87730
Dear Port Director:
This letter is in reply to the Application for Further Review (AFR) of Protest Nos. 3501-2012-100089 and 3501-2012-100099, timely filed on November 6, 2013, on behalf of Shelter Logic LLC (Shelter Logic or Protestant). The AFR regards ten entries made between August 10, 2011 and August 11, 2011, all of which were liquidated on March 30, 2012. For purposes of this AFR, Protest 3501-12-100089 will be treated as the lead protest. The Protest is against U.S. Customs and Border Protection’s (CBP) classification of the subject shelters under heading 3926 of the Harmonized Tariff Schedule of the United States (HTSUS), as “Other articles of plastic.” Information provided by counsel in its meeting with CBP on July 29, 2014 was considered herein.
FACTS:
The subject merchandise consists of two models of unassembled pre-engineered shelters in kit form for exterior use. They are designed and marketed to offer storage and protection from damage caused by sun, light rain, tree sap, animal or bird excrement and light snow.
Model number 62698 is a round style shelter measuring 15’ x 40’ x 16’, advertised as the RoundTop® Garage. The self-contained kit includes 26 parts, 22 of which are made of iron or steel. The remaining parts are 26 plastic bolt caps, one arc-shaped cover, one “door” consisting of two flaps joined down the center by a zipper, and one solid back panel. The cover is a custom fabric, visibly coated on both sides with polyethylene (plastic) to ensure durability. It covers the steel tube frame skeleton with a coordinated system of ratchets, loops, and hooks, and is designed to fit snugly. The shelter is anchored via augers screwed into the ground.
Model number 62667 is also a round style shelter, also advertised as a RoundTop® Garage, but its measurements are slightly smaller at 13’ x 20’ x 10’. This self-contained kit includes 24 parts, 21 of which are made of iron or steel. The remaining parts are 16 plastic bolt caps, one arc-shaped cover, one “door” consisting of two flaps joined down the center by the zipper, and one solid back panel. This cover is also a custom fabric coated on both sides with polyethylene. It also covers the steel tube frame skeleton with a coordinated system of ratchets, loops, and hooks, and is designed to fit snugly. This shelter includes the same anchor and auger system to attach the shelter to the ground.
There are various tools not included in the kits which are listed as recommended for use in construction of the garages. They include safety goggles, rope, tape measures, wrenches, ladders, hammers, and box cutters.
The assembly instructions that accompany both models contain the following relevant provisions:
Before you start: 3+ individual recommended for assembly, approximate time 2 hr.
This shelter MUST be securely anchored.
Shelter Logic entered the goods in heading 9406, HTSUS which provides for, among other things, “prefabricated buildings.” CBP liquidated the entries on March 30, 2012 under heading 3926, HTSUS, which provides for, “Other articles of plastic.” In its AFR, Shelter Logic argues that heading 9406, HTSUS is the proper classification, or in the alternative, heading 7308, HTSUS which provides for structures of iron or steel.
ISSUE:
Whether the subject shelters are classified as an article of plastic under heading 3926, HTSUS; as a tent, under heading 6306; as a steel structure under heading 7308, HTSUS; or as a prefabricated building under heading 9406, HTSUS.
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, which in this case, was March 30, 2012. (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. 3501-2012-100089 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because Shelter Logic raises questions as to whether inconsistent rulings exist among the Ports regarding the classification of shelters and canopies.
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 HTSUS provisions under consideration are the following:
3926 Other articles of plastics…
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6306 Tarpaulins…; tents; sails for boats, sailboards or landcraft; camping goods:
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7308 Structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge sections, lock gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel:
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9406 Prefabricated buildings:
Note 2 to Chapter 39, HTSUS, states, in relevant part, the following:
This chapter does not cover:
(x) Articles of Chapter 94 (for example, furniture, lamps and lighting fittings, illuminated signs, prefabricated buildings) [Emphasis added]
Note 4 to Chapter 94, HTSUS, states, in relevant part, the following:
For the purposes of heading 9406, the expression “prefabricated buildings” means buildings which are finished in the factory or put up as elements, entered together to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages or similar buildings. [Emphasis added]
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
The EN 73.08, states, in relevant part, the following:
For the purpose of this heading, these structures are characterized by the fact that once they are put in position, they generally remain in that position. They are usually made up from bars, rods, tubes, angles, shapes, sections, sheets, plates, wide flats including so-called universal plates, hoop, strip, forgings or castings, by riveting, bolting, welding, etc….[Emphasis added]
The EN 94.06, states, in relevant part, the following:
This heading covers prefabricated buildings, also known as “industrialized buildings,” of all materials. These buildings, which can be designed for a variety of uses, such as housing, worksite accommodations, offices, schools, shops, sheds, garages and greenhouses, are generally presented in the form of:
Complete buildings, fully assembled, ready for use;
Complete buildings, unassembled; incomplete buildings, whether or not assembled, having the essential character of prefabricated buildings.
In the case of buildings presented unassembled, the necessary elements may be presented partially assembled (for example, walls, trusses) or cut to size (beans, joists, in particular) or, in some cases, in indeterminate or random lengths for cutting on the site (sills, insulation, etc.).
The buildings of this heading may or may not be equipped. However, only built-in equipment normally supplied is to be classified with the buildings. This includes electrical fittings…heating and air conditioning equipment…sanitary equipment…kitchen equipment…and items of furniture which are built in or designed to be built in…
Material for the assembly or finishing of prefabricated buildings (e.g., nails, glues, plaster, mortar, electric wire and cables, tubes and pipes, paints, wallpaper, carpeting) is to be classified with the buildings, provided it is presented therewith in appropriate quantities.
Heading 9406, HTSUS
Shelter Logic’s first and primary argument is that the subject merchandise is provided for eo nomine in heading 9406, HTSUS, as a “prefabricated building” because they are “garages,” as delineated in Note 4 to Chapter 94. However, the article must first meet the requirements for a “prefabricated building” before classification under heading 9406, HTSUS, is possible.
The word “garage” is not defined in the Tariff. However, in tariff classification cases, ejusdem generis requires that the merchandise possess the same essential characteristics or purposes that unite the listed examples preceding the general term or phrase. Avenues in Leather, Inc. v. United States, 178 F.3d 1241, 1244 (Fed. Cir. 1999)(citing Totes, Inc. v. United States, 69 F.3d 495, 498 (Fed. Cir. 1995). Further, “classification…is appropriate only if the imported merchandise shares the characteristics or purpose and does not have a more specific primary purpose that is inconsistent with the listed exemplars.” Id. “Buildings,” in the context of Note 4 are houses, worksite accommodations, offices, schools, shops, sheds, garages, or similar buildings; entities which hold one or more persons, performing one or more tasks while operating in the interior. The exemplars are permanent in nature, not temporary and they are not commonly considered to have a single textile cover serving as the roof and walls, which can be removed or replaced, in its entirety, as is the case with the subject merchandise. The ENs elaborate on further criteria to fit within the parameters of the heading. Elements such as walls, trusses, beans, joists, sills, and insulation may be included, or materials for assembly, such as nails, glues, plaster, mortar or electric wire or cable. These are significant building materials, indicating lasting permanence of the final assembled product. The subject shelters do not require building materials such as those listed, let alone accommodate utilities or heavy-duty equipment. The exemplars of heading 9406, HTSUS are permanent, substantial, and do not include lesser articles, such as the subject shelters, which are provided for elsewhere in the tariff.
Shelter Logic relies on Headquarters Ruling (HQ) 958745, dated February 6, 1996, as support for its argument. However the aluminum halls under consideration there were freestanding, rigid fiberglass-reinforced plastic that was molded to shape. Only the roofing membrane was fabric, and it did not need loops and stakes or augers to stay attached to the ground. The structural frame comprised 80% of the cost of the product and it was composed of extruded aluminum box beams with an integrated channel system capable of supporting costly heavy appliances such as lighting and sprinklers. It was even engineered and designed to meet local and national building codes. The subject shelters share almost no characteristics with the aluminum halls. The subject shelters are held together via tension hooks and loops and it must be anchored to the ground in order to stay secure. Reliance on this ruling is misplaced. See also HQ 964230, dated September 28, 2001 (holding that fabric covered greenhouses are not “buildings” of heading 9406, HTSUS).
Heading 6306, HTSUS
The U.S. Court of International Trade (CIT) addressed the scope of “tents” of heading 6306, HTSUS, in the context of imported gazebos, in Target Stores v. United States, 34 I.T.R.D (BNA) 1370, Slip Op. 06-00444 (Ct. Int’l Trade Mar. 22, 2012). The Court, referencing Ero Industries, Inc. v. United States, 24 CIT 1175, 118 F. Supp. 2d 1356 (2000), and citing various lexicographic definitions of the term “tent” found that it is normally a collapsible shelter of canvas or other material stretched and sustained by poles, usually used for camping outdoors (as by soldiers or vacationers); shelters supported by poles and fastened by cord to pegs driven into the ground; “shelter” as used in most definitions of “tent” refers to temporary structures used for protection against the elements, see 24 CIT at 1185, 118 F. Supp. 2d at 1364. Ultimately, the CIT held that the subject gazebos were not marketed, sold, assembled, displayed or enjoyed as tents, and therefore should not be classified as such. See Target Stores v. United States, supra, Slip Op. 06-00444 * 9. In the instant case, given the size, shape and established purpose of the shelter, (that of a carport) it is a feature in a landscape design plan of someone’s home or business. It is not designed, constructed or used as a tent, akin to how a vacationer or solider would use a tent. By application of the analysis provided in Target Stores v. United States, supra, the subject shelters are also not tents, and thus are not classified in heading 6306, HTSUS.
The subject merchandise entered prior to the CIT’s decision in Target Stores v. United States, 34 I.T.R.D (BNA) 1370, Slip Op. 06-00444 (Ct. Int’l Trade Mar. 22, 2012). However, Customs Regulations state in 19 C.F.R. §152.16(e) that the principles of any court decision adverse to the Government “shall be applied to unliquidated entries and protested entries which have not been denied in whole or in part and in which the same issue is involved as soon as the [time for appeal has expired]”. As that is the case with the subject merchandise the CIT’s decision applies.
Further, the following rulings regarding carports, substantially similar to the subject shelters, previously classified as “tents” under heading 6306, HTSUS, are revoked by operation of law by the CIT’s decision in Target Stores v. United States, 34 I.T.R.D (BNA) 1370, Slip Op. 06-00444 (Ct. Int’l Trade Mar. 22, 2012): NY 855160 dated September 5, 1990; N115237 dated July 29, 2010; HQ 086548, dated April 12, 1990; N019298 dated November 7, 2007; NY L81895 dated January 19, 2005; NY H87730 dated February 19, 2002.
Headings 3926 and 7308, HTSUS
The subject garages are comprised of two elements: a polyethylene plastic cover (chapter 39), and steel tubes used to construct the frame, as well as hundreds of steel connectors, foot plates, auger anchors, screws and other miscellaneous steel pieces (chapter 73). It is thus, a composite good and classification cannot be determined by GRI 1 or GRI 2. GRI 3 (b) states the following:
(b) Mixtures, composite goods consisting of 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 EN (VIII) to GRI 3(b) states the following:
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.
The application of the “essential character test” requires a fact-intensive analysis. See Home Depot U.S.A., Inc. v. United States, 491 F.3d 1334, 1337 (Fed. Cir. 2007). But in addition to the those listed in the EN (VIII) to GRI 3(b), other factors should be considered, including the article’s name, primary function, and the “attribute which strongly marks or serves to distinguish what it is. Its essential character is that which is indispensable to the structure, core or condition of the article, i.e. what it is.” A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378, 383 (1971).
The steel tubes and related accoutrements (bends, pipes, wind braces, cross rails, half-clamps, stabilizers, ribs, foot plates, bolts, nuts, augers, etc.) of the subject shelters comprise the majority of the weight, quantity, and bulk of the product as compared to the polyethylene cover. This weighs in favor of the steel components as imparting the product’s essential character. Shelter Logic did not provide pricing data for the components, and therefore the relative value of each piece does not weigh in favor of either the steel components or the plastic cover as the product’s essential character. The role of the plastic cover, in relation to the good as a whole, is to protect items stored inside. It is durable, in that it is plastic and waterproof, and it zippers closed to perfect protection. However, Counsel noted in its meeting with CBP that the cover is easily removed from the steel frame and is replaceable when worn or damaged. Conversely, the steel frame is the component which creates and supports the shelter’s shape, ensures durability, and withstands weather elements. Lastly, given the size, shape and established purpose of the shelter, it is a feature in a landscape design plan of someone’s home or business. Consumers would look to the frame’s construction and longevity when considering the purchase. Thus, taken together the factors weigh in favor of the steel components imparting the essential character.
Though, “there is no precise definition of the term ‘structure,’ ” the common meaning of a tariff description has frequently be applied. See S.G.B. Steel Scaffolding & Shoring Co., Inc. v. United States, 82 Cust. Ct. 197, 211 (Cust. Ct. 1979). To ascertain that, Customs may consult dictionaries, scientific authorities, and other reliable lexicographic sources. See Rocknel Fastener, Inc. v .United States, 267 F.3d 1354, 1356 (Fed. Cir. 2001). Accordingly, CBP has determined that the term “structure” refers to “a complex system consisting of a number of different parts or sections.” See HQ 967415, dated August 1, 2005, citing The American Heritage Dictionary of the English Language, (4th Ed. 2000): “1. Something made up of a number of part that are held or put together in a particular way” and Merriam-Webster’s Dictionary Online, “1. Something built as a dwelling, shelter, or place for human activity…2. Something put together by arranging or connecting an array of parts.” The instant shelters satisfy these definitions because they are a complex system of pieces held in place. Its intended function is to serve as a shelter. Further, as the ENs explain, “structures are characterized by the fact that once they are put in position, they generally remain in that position.” The subject shelters weigh hundreds of pounds and if secured properly will remain in that position for extended periods of time.
CBP thus concludes that the essential character of the subject merchandise is imparted by the steel components. It comports with the EN to 73.08 and has characteristics of a “structure” because it is a complex system consisting of steel parts that are heavy, durable, and once put in a position it will generally remain there. It follows that the subject merchandise is classified under heading 7308, HTSUS.
HOLDING:
By application of GRI 3(b), the subject merchandise is classified in heading 7308, HTSUS, and specifically provided for in subheading 7308.90.95, HTSUS, which provides for “Structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge sections, lock gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron or steel; plates, rods, angles, shapes, sections tubes and the like, prepared for use in structures, of iron or steel: Other: Other.” The column one, general rate of duty is free.
You are instructed to GRANT the protest.
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 Home Page on the World Wide Web 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