CLA-2 RR:CR:TE 965499 jsj
Port Director
U.S. Customs Service
10 Causeway Street
Suite 603
Boston, Massachusetts
02222
Re: Request for Internal Advice; Cork Ring; Natural Cork; General Rule of Interpretation 2(a); Incomplete or Unfinished Article; Essential Character of Complete or Finished Article; Fishing Rods; Parts and Accessories; HQ 958392 (Oct. 20, 1998) Incorporated by Reference; Subheading 4503.90.6000, HTSUS.
Dear Port Director:
The purpose of this correspondence is to respond to the request for Internal Advice from Meeks & Sheppard, on the behalf of their client REC Components, a division of Edge Water International, LLC (REC). The correspondence in issue requested internal advice concerning the classification of natural cork rings.
This advice, requested pursuant to 19 C.F.R. 177.11, is being issued subsequent to a review of the following, among other information and file documents: (1) The submission of Meeks & Sheppard dated December 21, 2001, which included the 2001 REC Rod Components Catalogue and other REC merchandise information; (2) A facsimile from REC to its Customs Broker, Atlantic Customs Brokers, dated November 30, 2000; and (3) A sample cork ring.
A telephone conference was conducted between a member of my staff and counsel for REC Components on September 10, 2002. Customs Headquarters specifically addressed this matter with the appropriate National Import Specialists in New York.
FACTS
The articles in issue, identified by counsel for the importer as “cork disks” and referred to in the trade and by REC as “cork rings,” are used in the manufacture of fishing rod handles or grips. The REC cork articles are made of natural cork and measure one and one-fourth (1 ¼) inches in diameter and one-half (½) inch in thickness.
The cork rings will have a hole drilled in the center. The rings will be imported with the same diameter and thickness, but will have fifteen (15) different center bore diameters. The sample provided the Customs Service had a center bore diameter of one-fourth (¼) of an inch.
The Customs Service is advised of the following processes to manufacture the cork articles into finished fishing rod grips: (1) The requisite number of cork rings are placed on a mandrel and glued together; (2) The glued rings are turned on a lathe to achieve the desired outer shape; (3) Voids in the grips are filled and the grips are sanded and buffed to a smooth finish; (4) The grips are counter bored on the butt end to enable them to accept the reel seat hood manufactured by REC; and (5) In most instances, the grips are through bored to fit the fishing rod blank as desired by REC’s customer.
The Customs Service is advised that the country of manufacture is Portugal.
ISSUE
What is the classification, pursuant to the Harmonized Tariff Schedule of the United States Annotated, of the above-described natural cork articles ?
LAW AND ANALYSIS
The federal agency responsible for initially interpreting and applying the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is the U.S. Customs Service. The Customs Service, in accordance with its legislative mandate, classifies imported merchandise pursuant to the General Rules of Interpretation (GRI) and the Additional U.S. Rules of Interpretation.
General Rule of Interpretation 1 provides, in part, that classification decisions are to be “determined according to the terms of the headings and any relative section or chapter notes.” General Rule of Interpretation 1. General Rule of Interpretation 1 further states that merchandise which cannot be classified in accordance with the dictates of GRI 1 should be classified pursuant to the other General Rules of Interpretation, provided the HTSUSA chapter headings or notes do not require otherwise. According to the Explanatory Notes (EN), the phrase in GRI 1, “provided such headings or notes do not otherwise require,” is intended to “make it quite clear that the terms of the headings and any relative Section or Chapter Notes are paramount.” General Rules for the Interpretation of the Harmonized System, Rule 1, Explanatory Note (V).
The Explanatory Notes constitute the official interpretation of the Harmonized System at the international level. See Joint Explanatory Statement supra note 1, at 549. The Explanatory Notes, although neither legally binding nor dispositive of classification issues, do provide commentary on the scope of each heading of the HTSUS. The EN’s are generally indicative of the proper interpretation of the headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989); Lonza, Inc. v. United States, 46 F. 3rd 1098, 1109 (Fed. Cir. 1995).
Commencing classification of the natural cork rings, in accordance with the dictates of GRI 1, the Customs Service examined the headings of the HTSUSA. Heading 4503, HTSUS, provides for “Articles of natural cork.” The REC natural cork rings meet the terms of heading 4503, HTSUS, as articles of natural cork.
Continuing the classification of the REC natural cork rings, the articles are classified in subheading 4503.90.6000, HTSUSA. Subheading 4503.90.6000, HTSUSA, provides for the classification of:
Articles of natural cork:
Other:
4503.90.6000 Other.
Counsel for the importer maintains that the cork articles are parts of fishing rods properly classified in subheading 9507.10.00, HTSUS, or in the alternative, as a natural cork disk, classified in subheading 4503.90.20, HTSUS. The Customs Service will address both of counsel’s contentions.
Counsel’s initial position suggests that the natural cork rings are parts of fishing rods. Heading 9507, HTSUS, provides for the classification of: “Fishing rods,…; parts and accessories thereof.” Customs does not concur with counsel’s position because the cork rings are not “parts” of a “fishing rod” and, additionally, are not incomplete or unfinished “parts” of fishing rods properly classified as completed or finished “parts” pursuant to General Rule of Interpretation 2 (a).
Chapter 95, Note (3) provides, subject to those items specifically excluded from classification in Chapter 95 pursuant to Note (1), that “parts and accessories” are items which are “suitable for use solely or principally with articles of” Chapter 95. The test of whether an article is classifiable as a “part” or an “accessory” of an article of Chapter 95, and thereby in heading 9505, HTSUS, is whether it is suitable for use solely or principally with the article of which it is a part or an accessory. In this instance, the issue of whether the “cork ring” is a part of a “fishing rod” is whether it is “suitable for use solely or principally” with fishing rods.
It is the determination of the Customs Service that the cork rings are not suitable for use solely or principally with fishing rods. The cork rings, according to the importer, will be used as parts of a part of a fishing rod, in this instance, in the manufacture of fishing rod grips. The Customs Service, from its examination of the sample and from the lack of information addressing other uses, is not able to state that the cork rings are suitable for use solely or principally to manufacture fishing rod grips.
The Customs Service specifically directs counsel’s attention HQ 958392 (Oct. 20, 1998). The Customs Service in HQ 958392 addressed the classification of substantially similar articles of cork. The cork rings in the referenced ruling were of both natural and agglomerated cork. They were of a thickness from one-eighth (1/8) of an inch to one (1) inch and had diameters that ranged from one-fourth (1/4) of an inch to one and one-half (1 ½) inches. The rings were being imported with and without center-drilled holes. Customs specifically noted in protest decision HQ 958392 that “[t]he products have been stated to have various industrial uses, such as for spacers and decorations in the hobby industry and for making handles on ski poles, hiking staffs, and fishing rods.”
Counsel’s submission suggests that HQ 958392 is not applicable to the instant classification matter because “the facts in that case involved many different cork articles and was based on the varied uses specified by the importer. Here, the discs in question are for fishing rod use only.” Customs does not concur in counsel’s conclusion. Headquarters Ruling Letter 958392 is applicable because the items subject to classification consideration are substantially identical.
Counsel for the importer directs Customs attention to two decisions of the Court of International Trade interpreting the Tariff Schedule of the United States. Counsel cites Doherty-Barrow of Texas, Inc. v. United States, 3 C.I.T. 228 (Ct. Int’l Trade 1982) and Heraeus-Amersil, Inc. v. United States, 640 F. Supp. 1331 (Ct. Int’l Trade 1986) for the proposition that items imported in advanced states of manufacture that are dedicated to a particular use at the time of importation and only require minor processing subsequent to importation constitute unfinished parts. REC’s counsel suggests that the cork rings in issue are advanced in manufacture, dedicated for a particular use upon importation and only require minor processing subsequent to importation. The Customs Service disagrees with REC’s counsel.
Returning to Note (3) of Chapter 95, the issue is whether the cork rings are suitable for use solely or principally in the manufacture of fishing rods. The proposition set forth in Doherty-Barrow and Heraeus-Amersil may assist Customs in determining whether the cork rings are suitable for use solely or principally in the manufacture of fishing rod grips, but the test remains as stated in the chapter notes to Chapter 95.
It is Customs conclusion that the cork rings are not advanced in manufacture such that they are dedicated for use in the manufacture of fishing rod grips with only minor processing. Customs specifically notes the processing steps outlined by REC as being required to manufacture a fishing rod grip from the cork rings. The steps in the process, in the opinion of this office, are not minor. The REC cork rings, in the language of the tariff schedule, are not “suitable for use solely or principally” as parts of a fishing rod.
Counsel for the importer additionally directs Customs attention to the decision of the CIT in Ludvig Svensson (U.S.) Inc. v. United States, 62 F. Supp. 1171 (Ct. Int’l Trade 1999). The court in Ludvig Svensson was called on to interpret Additional U.S. Rule of Interpretation of 1(c) as applicable to heading 8436, HTSUS, providing for the classification of parts of agricultural machinery. The test utilized by the Ludvig Svensson court in determining whether something is a “part” was two-fold: (1) Whether the imported item is “an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article;” and (2) “[W]hether the imported item is dedicated solely for use with the article in question.” Ludvig Svensson, Id. at 1179 quoting United States v. Willoughby Camera Stores, 21 C.C.P.A. 322, 324 (1933).
It is Customs determination that the test set forth in the Ludvig Svensson decision does not result in the conclusion that the cork rings are “parts” of fishing rods. The cork rings are not integral, constituent or component parts of fishing rods. They are integral, constituent or component parts of fishing rod grips, which are themselves “parts” of fishing rods. The cork rings, following the analysis in Ludvig Svensson are parts of parts, not a specific part of a particular article. Customs, as previously addressed, does not conclude that the cork rings are dedicated solely, or principally, for use with fishing rods. The Customs service does not interpret the decision of the court as intending to broadly encompass material to be “parts” of a finished article.
Counsel for REC further suggests that since no particular parts of fishing rods are provided for in the tariff schedule, only “parts and accessories,” that the merchandise in issue should be classified as a part of a part. Counsel states that Note (3) to Chapter 95 confirms that “parts” of fishing rods is a use provision and the issue, pursuant to Additional U.S. Rule of Interpretation 1 (a), is whether the principal use of the cork rings of the dimensions imported by REC are as parts of fishing rod grips, and, therefore, as parts of fishing rods.
Customs does not agree with the position of REC’s counsel. It is Customs interpretation of the tariff schedule that there is a distinction between the principal use of the cork rings and whether the cork rings are suitable for use solely or principally as a part or an accessory of a part of a fishing rod. The relevant distinction is that “parts or accessories” of heading 9570, HTSUS, must be identifiable as being a part or accessory of, in this case, a fishing rod. Material which will be further manufactured in to a part of an article of heading 9507, HTSUS, is too distant in relationship from the finished article to be a part of the article designated by name in heading 9507, HTSUS.
Customs does note, in accordance with its statements to counsel, that the National Import Specialists (NIS) for articles of cork and for sporting equipment were contacted. The NIS’s offered no basis for concluding that the cork rings were principally used in the manufacture of parts of fishing rods. The NIS for Chapter 45 specifically disagreed with the position of REC that the cork rings in issue are principally used in the manufacture of fishing rod grips.
General Rule of Interpretation 2 (a) provides that any reference in a tariff schedule heading to an article “shall be taken to include a reference to that article incomplete or unfinished.” GRI 2 (a) requires, however, that the incomplete or unfinished article have the “essential character” of the complete or finished article.
The General Rules of Interpretation do not define the phrase “essential character,” however, its meaning may be understood from an examination of the Explanatory Notes to GRI 2(a). The EN’s to GRI 2 (a) draw a distinction between a “blank” which possesses the essential character of an article and a “semi-manufacture[d]” item that does not have the essential character of an article.
A “blank,” as defined in the EN’s, is an article “not ready for direct use, having the approximate shape or outline of the finished article or part.” The EN continues stating that a “blank” is an article “which can only be used, other than in exceptional cases, for completion into the finished article or part.” A plastic bottle preform is offered in the EN as an example of a blank. Bottle preforms of plastic are “intermediate products having tubular shape, with one closed end and one open end threaded to secure a screw type closure, the portion below the threaded end being intended to be expanded to a desired size and shape.”
“Semi-manufactures” are items that do not yet have the essential shape or character of the finished articles. Examples of semi-manufactures set forth in the EN’s are: “bars, discs, tubes, etc.” Semi-manufactures are specifically not regarded as “blanks.”
Customs examination of the REC natural cork rings in the condition in which they will be imported, reveals semi-manufactured articles, rather than blanks. The cork rings do not have the essential character of a finished article, in this case, fishing rod grips that are “parts” of fishing rods. The cork rings do not have the approximate shape or outline of a fishing rod grip. They are similar to the examples of semi-manufactured articles set forth in the EN’s, the “bars, discs, tubes, etc.”
Counsel’s alternative argument suggests that the cork rings are cork “disks” and are properly classified in subheading 4503.90.20, HTSUS. Subheading 4503.90.20, HTSUS, provides for the classification of “Articles of natural cork: Other: Disks, wafers and washers.” It is Customs determination that the “rings” are not “disks” and, therefore, are not classifiable in subheading 4503.90.20, HTSUS.
The Customs Service in HQ 958392 classified substantially similar articles of natural cork in subheading 4503.90.6000, HTSUSA. The reasoning and analysis employed in HQ 958392 is incorporated into this ruling letter by reference. Headquarters Ruling Letter 958392 is attached to and made a part of this ruling letter.
HOLDING
The REC Components, a division of Edge Water International, LLC, natural cork rings are classified in subheading 4503.90.6000, Harmonized Tariff Schedule of the United States Annotated.
The General Column 1 Rate of Duty is fourteen (14) percent, ad valorem.
The reasoning and analysis in HQ 958392 (Oct. 20, 1998) is incorporated
into this ruling letter by reference. Headquarters Ruling Letter 958392 is attached to
and made a part of this ruling letter.
Sincerely,
Myles B. Harmon, Acting Director
Commercial Rulings Division
Attachment