CLA-2 OT:RR:CTF:TCM H251432 LWF
John Higinbothom
Sr. Manager, Customs & Brokerage
Irwin Industrial Tools Division
Newell Rubbermaid
3 Glenlake Parkway
Atlanta, GA 30328
Re: Modification of New York Ruling Letter (NY) J82340, dated March 25, 2003; tariff classification of hole saw kits for door lockset installation
Dear Mr. Higinbothom:
This letter is in response to your request, dated March 6, 2014, that U.S. Customs and Border Protection (CBP) reconsider New York Ruling Letter (NY) J82340, issued to Irwin Industrial Tool Co. (now doing business as Newell Rubbermaid) on March 25, 2003, concerning the tariff classification of certain hole saw kits for door lockset installation under the Harmonized Tariff Schedule of the United States (HTSUS).
Specifically, you assert that in ruling letter NY J82340, CBP incorrectly classified the hole saw kits under heading 8207, HTSUS, which provides for “Interchangeable tools for handtools, whether or not power-operated, or for machine-tools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screwdriving), including dies for drawing or extruding metal, and rock drilling or earth boring tools; base metal parts thereof.” Your request for reconsideration contains new information concerning the value and material role of the component pieces of the lock installation kits, and you ask that CBP classify the kits, by application of GRI 3(b), under heading 8202, which provides for “Handsaws, and metal parts thereof; blades for saws of all kinds (including slitting, slotting or toothless saw blades), and base metal parts thereof.”
Based on the information contained in your request, CBP has reviewed ruling letter NY J82340 and finds the ruling to be incorrect. Accordingly, for the reasons set forth below, CBP is hereby modifying ruling letter NY J82340 with respect to the classification of hole saw kits for door lockset installation.
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. 33, on August 17, 2016. No comments were received in response to the notice.
FACTS:
In ruling letter NY J82340, CBP described the merchandise at issue as two styles of lock installation kits: the “Metal/Wood Door Lock Installation Kit, Part #17104” and the “Wood Door Lock Installation Kit, Part #17105” (the “Metal/Wood Door Kit” and “Wood Door Kit,” respectively). The Metal/Wood Door Kit consists of 2 bi-metal hole saws, 1 mandrel, 1 router bit, 1 double-sided jig, and 3 plastic templates. Similarly, the “Wood Door Kit” consists of 2 carbon steel hole saws, 1 mandrel, 1 router bit, 1 double-sided jig, and 3 plastic templates. Each Kit is designed to enable a user to cut holes in a wood or metal door, to facilitate the installation of door locksets into the door. The component articles of each Kit are packaged together in a plastic clamshell, and in their condition as imported, the Kits are suitable for sale directly to users without repacking.
In its reconsideration request letter, dated March 6, 2014, Newell Rubbermaid provides additional information concerning the material role and cost of the component pieces of the Metal/Wood Door Kit and the Wood Door Kit. Specifically, Newell Rubbermaid states that among the component pieces of the Metal/Wood Door Kit, the 2 bi-metal hole saws represent approximately 46% of the weight and 57% of the cost of the Kit, while each of the remaining component articles (mandrel, router bit, jig, and templates) individually account for less than 23% of the weight and 24% of the cost of the Kit. Similarly, among the component pieces of the Wood Door Kit, the 2 carbon hole saws represent approximately 34% of the weight and 32% of cost of the Kit, while the remaining component articles (mandrel, router bit, jig, and templates) individually account for less than 28% of the weight and 23% of the cost of the Kit.
ISSUE:
Whether the Metal/Wood Door Kit and the Wood Door Kit are classifiable, by application of GRI 3(b), under heading 8202, HTSUS, as parts of saws, or by application of GRI 3(c), under heading 8207, HTSUS, as tools for power-operated handtools.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the Harmonized Tariff Schedule of the United States. Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). 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 Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
In this case, CBP will reference the following HTSUS headings to determine the proper classification of Newell Rubbermaid’s Metal/Wood Door Kit and Wood Door Kit:
8202 Handsaws, and metal parts thereof; blades for saws of all kinds (including slitting, slotting or toothless saw blades), and base metal parts thereof:
8207 Interchangeable tools for handtools, whether or not power-operated, or for machine-tools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screwdriving), including dies for drawing or extruding metal, and rock drilling or earth boring tools; base metal parts thereof:
* * * * *
As an initial matter, CBP observes that the Metal/Wood Door Kit and Wood Door Kit each consist of a variety of individual component articles that are, prima facie, classifiable in two or more headings. Specifically, the Metal/Wood Door Kit consists, in relevant part, of 2 bi-metal hole saws of heading 8202, HTSUS, and a mandrel of heading 8207, HTSUS. Similarly, the Wood Door Kit includes 2 carbon steel hole saws of heading 8202, HTSUS, as well as a mandrel described by heading 8207, HTSUS. Consequently, because the Kits consist of component articles classifiable under two or more headings, CBP finds that the Kits cannot be classified solely on the basis of GRI 1 and that the remaining GRIs must be applied.
GRI 3(b) states, in pertinent part, as follows:
3. When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
[…]
(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.
* * * * *
For purposes of tariff classification under GRI 3(b), the term “goods put up in sets for retail sale” carries a specific meaning that is defined in detail by EN (X) to GRI 3(b). Specifically, EN (X) to GRI 3(b) states:
(X) For the purpose 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 . . . ;
(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).
* * * * *
In accord with the definition of “goods put up in sets for retail sale” provided in the ENs, CBP finds that the Metal/Wood Door Kit and Wood Door Kit are properly classifiable as retail sets by application of GRI 3(b), because the Kits satisfy the criteria described by EN (X) to GRI 3(b). First, as described above, each of the Kits consist of at least two different articles which are, prima facie, classifiable in different headings. Second, there is no dispute that the Kits are “put up together” to enable a user to carry out the specific activity of cutting holes in wood and metal doors so that a door locksets can be installed into the door. Third, as described in ruling letter NY J82340, the component articles of each Kit are packaged together in a plastic clamshell, and in their condition as imported, the Kits are suitable for sale directly to users without repacking. As such, the Kits are classifiable by application of GRI 3(b) as “goods put up in sets for retail sale,” and shall be classified as if they consisted of the material or component which gives each Kit its essential character.
Pursuant to the text of GRI 3(b), goods put up in sets for retail sale must be classified as if they consisted of the material or component which “gives them their essential character.” The phrase “essential character” carries specific meaning in the context of tariff classification, and the courts have defined “essential character” as, “that which is indispensable to the structure, core or condition of the article, i.e., what it is.” Structural Industries v. United States, 360 F. Supp. 2d 1330, 1336 (Ct. Int’l Trade 2005).
Moreover, Explanatory Note VIII to GRI 3(b) states that, “[t]he factor which determines essential character will vary as between different kinds of goods,” and may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods. See EN VIII to GRI 3(b). However, among those factors identified in EN VIII to GRI 3(b), recent court decisions concerning “essential character” analysis under GRI 3(b) have primarily focused on the role of the constituent material in relation to the use of the goods. See Estee Lauder, 815 F. Supp. 2d at 1296; see also Structural Industries, 360 F. Supp. 2d 1330; Conair Corp. v. United States, 29 C.I.T. 888 (2005); Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278 (Ct. Int’l Trade 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007).
Consistent with the guidance provided by the courts and the ENs to GRI 3, CBP observes that the essential character of a retail set is informed by the use or role of those component articles that are integral to the overall function of the set. Relevant to the classification of the instant Kits, for example, CBP has previously concluded that among the component articles of a bi-metal hole saw kit (consisting of 6 steel holes saws, 2 mandrels, and 1 mandrel adapter), the steel hole saws imparted the retail set with its “essential character,” based on findings by CBP that the hole saws were integral to the activity of cutting holes for door locksets and predominated the hole saw kit by quantity, value, and bulk. See Headquarters Ruling Letter (“HQ”) H097658, dated December 31, 2013. Accordingly, CBP classified the bi-metal hole saw kit as if it consisted of the 6 steel hole saws and ruled, by application of GRI 3(b), that the kit was properly classified under heading 8202, HTSUS, specifically subheading 8202.99.00.
Similar to the analysis set forth in ruling letter HQ H097658, this office finds that the instant Newell Rubbermaid Metal/Wood Door Kit and Wood Door Kit, each contain separately classifiable articles consisting of 2 hole saws, 1 mandrel, 1 router bit, 1 double-sided jig, and 3 plastic templates. Moreover, insomuch as the Newell Rubbermaid Kits are “put up together” to carry out the same activity as the hole saw kits at issue in HQ H097658—namely, the activity of cutting holes in wood and metal doors so that a door locksets can be installed into the door, CBP observes that the 2 hole saws included in each of the Newell Rubbermaid Kits are integral to the function of the retail sets. Specifically, it is the hole saws that cut material away from doors so that door locksets can be installed therein; each of the remaining component articles—the mandrel, router bit, jig, and template—function in supporting roles that facilitate the cutting operation of the hole saw upon the target door. Accordingly, CBP finds that the role of the hole saws in relation to the use of Kits supports a determination that the hole saws impart the Kits with their essential character. See EN VIII to GRI 3(b).
Additionally, Newell Rubbermaid has provided information showing that the hole saws predominate the other component articles of the Metal/Wood Door Kit and Wood Door Kit by both weight and cost. Among the component pieces of the Metal/Wood Door Kit, the 2 bi-metal hole saws represent approximately 46% of the weight and 57% of the cost of the Kit, while each of the remaining component articles (mandrel, router bit, jig, and templates) individually account for less than 23% of the weight and 24% of the cost of the Kit. Similarly, among the component pieces of the Wood Door Kit, the 2 carbon hole saws represent approximately 34% of the weight and 32% of cost of the Kit, while the remaining component articles (mandrel, router bit, jig, and templates) individually account for less than 28% of the weight and 23% of the cost of the Kit. Based upon an analysis of the weight and cost of the component pieces in relations to the Kits as a whole, CBP finds that the hole saws impart the Kits with their essential character, because the hole saws are the heaviest and most valuable component articles included in the Kits.
Insomuch as the component article bi-metal and carbon steel hole saws are integral to the function of the Metal/Wood Door Kit and Wood Door Kit and predominate both Kits by both weight and cost, CBP finds that the hole saws impart the Kits with their essential character. Accordingly, by application of GRI 3(b), the Kits are classifiable as if they consisted of the hole saws, which are described under the terms of heading 8202, HTSUS, as saw blades.
In classifying the instant Newell Rubbermaid Kits under heading 8202, HTSUS, by application of GRI 3(b), CBP observes that this decision is distinguishable from several previously published CBP ruling letters in which CBP applied GRI 3(c) to classify a variety of lock installation kits because it did not possess sufficient information to determine the essential character of the kits by application of GRI 3(b). For example, in ruling letter HQ 963775, dated November 21, 2000, CBP classified a lock installation kit consisting of a hole saw for cutting a hole for the lock mechanism, a wood spade bit for cutting a hole for the latch mechanism, and a mandrel pilot drill bit—under heading 8207, HTSUS, the heading which comes last in numerical order amongst those headings that merit equal consideration, because CBP was unable to determine whether the hole saw, wood spade bit, or mandrel imparted the lock installation kit with its essential character. Similarly, in ruling letters NY H80305, dated May 23, 2001, and NY J87960, dated August 26, 2003, CBP classified hole saw kits for door lockset installation under 8207, HTSUS, by application of GRI 3(c), because the importer did not provide sufficient information for CBP to make a determination as to which of component articles imparted the sets with their essential characters. Here, by contrast, importer Newell Rubbermaid has provided CBP with a detailed description of the instant Kits and their component articles, thereby enabling CBP to determine that the hole saw component articles impart each Kit with their essential character under a GRI 3(b) analysis.
CBP additionally notes that it is declining to revoke ruling letter NY E84551, dated July 28, 1999, because the ruling does not involve merchandise that is substantially similar to the instant Newell Rubbermaid Kits at issue in ruling letter NY J82340. Unlike the Newell Rubbermaid Kits, the lock installation kit identified in ruling letter NY E84551 consisted of a single bit, hole saw, and mandrel. Moreover, as NY E84551 does not contain a material or value breakdown description of the component articles, CBP does not possess sufficient information to determine the essential character of the merchandise under a GRI 3(b) analysis. Consequently, CBP finds that the facts presented in ruling letter NY E84551 substantially differ from those contained in NY J82340. Accordingly, CBP observes that the conclusions reached in ruling letter NY E84551 do not conflict with the analysis set forth in this decision, and CBP therefore declines to revoke ruling letter NY E84551.
HOLDING:
By application of GRI 1 and 3(b), the Newell Rubbermaid Metal/Wood Door Kit and Wood Door Kit are classified under heading 8202, HTSUS, specifically subheading 8202.99.00, which provides for “Handsaws, and metal parts thereof; blades for saws of all kinds (including slitting, slotting or toothless saw blades), and base metal parts thereof: Other saw blades, and parts thereof: Other (including parts).” The 2016 column one, general rate of duty is free.
Duty rates are provided for convenience only and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at http://www.usitc.gov.
EFFECT ON OTHER RULINGS:
In accordance with the above analysis, ruling letter NY J82340, dated March 25, 2003, is hereby MODIFIED.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial Trade and Facilitation Division