CLA-2 OT:RR:CTF:TCM H249811 HvB
Mark Romano
Husky Injection Molding Systems, Inc.
132 Cayuga Drive
Suite 2B
Cheektowaga, NY 14225
RE: Revocation of NY N050746; Tariff classification of spare parts/repair kit
Dear Mr. Romano:
This letter is in reference to New York Ruling Letter (“NY”) N050746, issued to you on March 4, 2009, concerning the tariff classification of a spare parts repair kit required to repair a mold or a mold machine under the Harmonized Tariff Schedule of the United States (“HTSUS”). In that ruling, U.S. Customs and Border Protection (“CBP”) classified the kit in subheading 8477.90.85, HTSUS, which provides for “Machinery for working rubber or plastics or for the manufacture of products of products from these materials, not elsewhere specified in this chapter; parts thereof.”
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice of the proposed action was published in the Customs Bulletin, Vol. 50, No. 22, on June 1, 2016. No comments were received in response to the notice.
We have learned new information concerning NY N050746, and found it to be incorrect. For the reasons that follow, we hereby revoke NY N050746.
FACTS:
In NY N050746, we wrote:
Each Husky spare part/repair kit is unique and bears a unique identifying number, i.e., the Husky Part Number ("HPN"). Each component within the kit also bears a unique HPN. The kit is assembled with the specific components required to repair the mold/machine for which it was designed. Any one kit can only repair a mold or a machine, not both, as the two assemblies (mold and machine) differ and require different components for repair and maintenance. Each kit consists of the most common wear and replacement components for a specific mold/machine. Components are not interchangeable with other repair kits.
The kit includes approximately 50 components and typically consists of washers, springs, a cam follower, various seals, thermocouples, O-rings, and screws.
Upon reviewing a separate request by Husky involving a substantially similar scenario, we learned that in order to accommodate its customers, Husky may not necessarily ship all parts listed in the Bill of Materials for a particular kit to the customer, because the customer might already have the necessary part on hand. The assortment of components used in any one spare part/repair kit may therefore vary from customer to customer.
ISSUE:
Whether the subject spare part/repair kit is classifiable pursuant to GRI 1 or GRI 3(b) as a retail set?
LAW AND ANALYSIS:
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. 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 and, unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The HTSUS provisions under consideration are as follows:
4016 Other articles of vulcanized rubber other than hard rubber
7318 Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter-pins, washers (including spring washers) and similar articles, of iron or steel
7320 Springs and leaves for springs, of iron or steel
8477 Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this Chapter
9025 Hydrometers and similar floating instruments, thermometers, pyrometers, barometers, hygrometers and psychrometers, recording or not, and any combination of these instruments.
* * *
In NY N050746, dated March 4, 2009, we classified the articles as a retail set, pursuant to GRI 3(b). In order to meet the requirements of a GRI 3(b) retail set, the collection of articles must meet certain factors. These factors are outlined in the EN to GRI 3(b). EN (X) to GRI 3 states, in pertinent part:
For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to mean goods which:
(a) consist of at least two different articles which are, prima facie, classifiable in different headings. Therefore, for example, six fondue forks cannot be regarded as a set within the meaning of this Rule;
(b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and
(c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).
The courts have also examined what constitutes a retail set, for purposes of GRI 3(b). See Dell Products LP v. United States, 714 F. Supp 2d. 1252 (Ct. Int’l Trade 2010) (Dell Products I) aff’d Dell Products LP v. United States, 642 F.3d 1055 (Fed. Cir. 2011) (Dell Products II); See also Estee Lauder, Inc. v. United States, 815 F. Supp. 2d 1287 (Ct. Int’l Trade 2012). At issue in the Dell Products cases was whether secondary batteries for laptop computers, sold as optional accessories to Dell’s retail customers and then packaged with the computer, constituted a “retail set” for purposes of GRI 3(b). The case stems from CBP’s decision in HQ 967364, dated December 23, 2004, in which we wrote: “Even in those cases where the listed price includes an additional battery, if the customer does not want to purchase the additional battery, it can be deleted from the order and the price is adjusted accordingly, and the customer can choose other features of the advertised laptop.” In HQ 967364, we found that the laptop battery packaged with the laptop did not constitute a retail set because the goods did not satisfy the third requirement of EN (X) to GRI 3(b), above. As we stated, “the offer for retail sale took place before prior to the goods being put up.” Ibid. In Dell Products I, The Court of International Trade (CIT) agreed, finding that the contents of a customized order are determined by an individual customer and that the grouping of the goods was not “fixed” when offered for sale. Dell Products I, 714 F. Supp. 2d. 1252 (Ct. Int’l Trade 2010) at 1262. Furthermore, the CIT also determined that the articles did not meet the second requirement of a retail set, as the battery and laptop were not offered or displayed together. Supra at 1261.
We are presented with similar facts with respect to the instant spare parts/repair kit. In the present case, a customer orders a spare parts/repair kit from Husky, which then consults with the customer as to which parts in the kit are actually needed—creating a different and customized Bill of Materials for each kit. Depending on the customer’s needs, the parts actually shipped therefore varies from kit to kit. Thus, no two kits are alike, as each kit is customized to the repair needs of a particular mold or a mold machine.
In Dell Products II, the U.S. Court of Appeals for the Federal Circuit (CAFC) stated that the term “goods put up for retail sale” for purposes of GRI 3(b) “most naturally refers to goods that are offered to customers as a set for purchase rather than to a collection of goods that are assembled into a set after the customer has purchased them.” Dell Products II, 642 F. 3d. 1055 at 1058. The CAFC therefore concluded that the secondary battery and laptop packaged together did not constitute a retail set, stating “set determinations for purposes of GRI 3(b) turn on the seller’s arrangement of good prior to their purchase, not on the seller’s arrangement of goods after the purchase is made.” Dell Products II, supra at 1060. Relevant to the instant kit, the CIT stated: “[t]he contents of a customized order are designated by an individual customer; Dell did not designate which merchandise constituted a set for retail sale.” Dell Products, 714 F. Supp 2d. 1252 at 1262. Similarly, Husky customizes each kit according to the customer’s needs such that no two kits will be the same. As such, GRI 3(b) does not apply. Accordingly, we find that the spare part kit that was classified pursuant to GRI 3(b) in NY N050746 does not qualify as a retail set. Therefore, the components must be classified separately pursuant to GRI 1.
HOLDING:
Under the authority of GRI 1, the individual parts are classified as follows:
The cam follower is classified in subheading 8477.90.85, HTSUS, which provides for “Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter; parts thereof: Parts: Other.” The column one, general rate of duty is 3.1%.
The lock washer is classified in subheading 7318.21.00, HTSUS, which provides for: Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles, of iron or steel (con.): Non-threaded articles: Spring washers and other lock washers.” The column one, general rate of duty is 5.8%.
The springs are classified in subheading 7320.90.50, HTSUS ,which provides for: “Springs and leaves for springs, of iron or steel: Other: Other.” The column one, general rate of duty is 2.9%.
The seals are classified in subheading 4016.93.50, HTSUS, which provides for: “Other articles of vulcanized rubber other than hard rubber: Gaskets, washers and other seals: Other”. The column one, general rate of duty is 2.5%.
The thermocouple J-Type is classified in subheading 9025.19.80, HTSUS, which provides for: “Hydrometers and similar floating instruments, thermometers, pyrometers, barometers, hygrometers and psychrometers, recording or not, and any combination of these instruments; parts and accessories thereof: Thermometers and pyrometers, not combined with other instruments: Other: Other:” The column one, general rate of duty is 1.8%.
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/.
EFFECT ON OTHER RULINGS
NY N050746, dated March 4, 2009, is hereby REVOKED.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division