CLA-2 OT:RR:CTF:TCM H011015 HkP
Port Director
Port of Milwaukee
U.S. Customs and Border Protection
4915 S. Howell Avenue, Suite 200
Milwaukee, WI 53207
RE: AFR of Protest No. 3701-07-100005; Kit with cables, hose, pipe and labels
Dear Port Director:
This is our decision regarding the Application for Further Review (“AFR”) of Protest No. 3701-07-100005, timely filed on behalf of General Electric Medical Systems (“GEMS”), concerning the classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of merchandise described as the “Liberty Cable Set”. In reaching our decision we have taken into consideration a submission made by counsel on May 2, 2008, forwarding pictures of the merchandise at issue, as well as a sample of the fiber optic cable provided by the Port for our examination.
FACTS:
The Liberty Cable Set (described in the entry documents as Kit no. 2348854-3) is a collection of various cables of different voltages, a fiber optic cable (individually sheathed, as asserted in a letter to CBP, dated August 5, 2005, and substantiated by the sample), a power cable, a rubber hose reinforced with textile material, a PVC pipe, and labels. According to the entry documents, the described merchandise was entered together in kits in cases measuring
120 x 80 x 80 cm, and with a net weight of 100kg per case.
According to the submitted information, the Liberty Cable Set is used to integrate a particular vascular system into a room at a treatment facility and is used solely for this purpose. Specifically, we have been told that it is packaged to allow a technician to connect the Innova 4100/3100 series vascular x-ray system and to allow it to operate. The cables provide data and power interconnection, the hose provides coolant to the chiller section of the x-ray machine, and the labels are provided to allow the technician to label each cable by function.
The merchandise was entered on various dates between January 25, and June 18, 2005, classified as a set in subheading 8544.70.00, HTSUS, which provides for, in relevant part: “optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors: Optical fiber cables.” These entries were later rate advanced by U.S. Customs and Border Protection (“CBP”) and liquidated on September 8, 2006, under separate HTSUS Annotated (“HTSUSA”) headings: PVC pipe in subheading 3917.32.0010 (other tubes, pipes and hoses of plastics, not reinforced or otherwise combined with other materials, without fittings); plastic labels in subheading 3919.90.5060 (other self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastics, whether or not in rolls); rubber hose in subheading 4009.32.0050 (tubes, pipes and hoses of vulcanized rubber, reinforced or otherwise combined only with textile materials, with fittings); coaxial cable in subheading 8544.20.0000 (coaxial cable and other coaxial electric conductors); cables less than 80V, not fitted with connectors, in subheading 8544.41.8000 (other electric conductors, for a voltage not exceeding 80V); cables of 300 V and 600 V in subheading 8544.51.9000 (other electric conductors, for a voltage exceeding 80 V but not exceeding 1,000, fitted with connectors); and, fiber optic cable in subheading 8544.70.0000 (optical fiber cables, made up of individually sheathed fibers). We note that box 26 on Customs Form 6445A also lists subheading 7326.90.8587, HTSUSA, as a relevant classification but this office found no article listed on the invoice submitted as a part of the entry documents that would be classified under this provision. On July 24, 2008, the Port confirmed that this classification related to the component of a kit that is not the Liberty Cable Set, the kit at issue. Accordingly, this component will be omitted from our analysis. A protest was timely filed on March 9, 2007, in which protestant asserted that the goods at issue were a set, with the appropriate classification being subheading 8544.70.00, HTSUS.
ISSUE:
Whether the Liberty Cable Set is classifiable as a set under the HTSUS.
LAW AND ANALYSIS:
Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification. The protest was timely filed, within 90 days of liquidation of the first entry for entries made before December 18, 2004, and within 180 days of liquidation of the first entry for entries made on or after December 18, 2004. (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. 3701-07-100005 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24 because the decision against which the protest was filed involves questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs courts.
As an initial matter, we note that there is no disagreement between the Port and Protestant about where the individual components of the Liberty Cable Set are classified. What is at issue is whether or not these components can be classified as a set. For this reason, we will proceed straight to that determination.
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 2 through 6 may then be applied in order.
GRI 3 provides:
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:
The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings refer to only part of the materials or substances contained in mixed or composite goods or to part only on the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to the goods, even if one of them gives a more complete or precise description of the good.
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.
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.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not legally binding or dispositive, the ENs 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, 54 Fed. Reg. 35127 (August 23, 1989).
Explanatory Note X to GRI 3(b) provides, in relevant part:
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).
CBP previously found that the merchandise as imported did not constitute a set for classification purposes and classified each component individually as detailed in the FACTS section above. Specifically, the Port based its decision on the fact that the components all had separate functions and did not carry out a specific activity or meet a single need. In addition, the Port found that the merchandise as imported was sent to company technicians or to a treatment facility and was not sold at retail.
Protestant argues that the merchandise at issue qualifies as a set because it consists of components that are classifiable in two or more headings and that are packaged together to carry out a specific activity. Specifically, all of the components of the set are necessary to connect and operate the vascular
x-ray system. Further, each component is equally important. Therefore, in accordance with GRI 3(c), the merchandise should be classified in subheading 8544.70.00, HTSUS, because it is among the articles that merit equal consideration and it occurs last in numerical order in the tariff. In addition, Protestant argues that CBP has previously classified similar groupings of parts as sets. For example, in Headquarters Ruling letter (“HQ”) 953919, dated September 22, 1993, CBP classified a fuel system conversion kit (made up of fuel injector lines, vacuum hoses, and a variety of clips and other hoses) as a set under subheading 8409.91.91, HTSUS, and in New York Ruling Letter (“NY”) G84922, dated January 22, 2001, CBP classified a speaker upgrade kit (containing speakers, speaker housings, speaker grille, a frequency crossover, a sound absorber, an amplifier, a fuse and plastic mount parts) as a set under subheading 8518.40.20, HTSUS.
We agree. Based on the description of the merchandise at issue and the way in which it is used, we find that the Liberty Cable Set is a set for classification purposes. First, the components are classified in different headings, as liquidated. Second, the cables, pipe and hose together carry out the specific activity of connecting the x-ray system to the treatment room to allow the machine to operate by providing data and power, and coolant to keep the machine from overheating and malfunctioning. The labels serve to identify the different cables. Third, the kit was entered in a manner suitable for sale directly to users without repacking, that is, each kit was entered in its entirety, packed in crates with no extraneous components for direct delivery to a technician or treatment facility. It has been a long-standing position of CBP that “there is no requirement that sets actually be sold at retail.” HQ 083968, dated July 6, 1989. In that ruling, CBP found that an installation kit comprised of a variety of retaining clips, hoses, clamps, brackets, connectors, tee fittings, fuel line covers and valve covers with gaskets, and delivered directly to an automobile dealer for installation into a recalled vehicle free of charge was “put up in a manner suitable for sale directly to users” and was therefore classifiable as a set (all other conditions being satisfied). See also HQ 953919 and HQ 962339, dated June 29, 1999.
In this instance, we find that we are unable to determine the essential character of the set because based on their functions, the cables, pipe and hose are equally important. Applying GRI 3(c), we find that, of these components, the fiber optic cable is classified in the subheading which occurs last in numerical order, subheading 8544.70.00, HTSUS; consequently, the set must be classified in that subheading.
HOLDING:
By application of GRI 3(c), the Liberty Cable Set is classified as a set under heading 8544, HTSUS. It is specifically provided for in subheading 8544.70.00, HTSUS, which provides for, in relevant part: optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electrical conductors or fitted with connectors: Optical fiber cables.” The 2006 column one, general rate of duty is “Free”.
Since reclassification of the merchandise as indicated above will result in a lower rate of duty than the liquidated rate, you are instructed to allow the protest in full. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), 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.
No later than 60 days from the date of this letter, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP homepage 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