CLA-2 OT:RR:CTF:TCM H259349 DSR
Mr. Daniel E. Waltz
Squire Patton Boggs (US) LLP
Washington, DC 20037
Re: Steel tube fittings; New York Ruling E83408; 19 U.S.C. 1516; 19 C.F.R. Part 175; Domestic Interested Party; Subheading 7307.99.50, HTSUS; Subheading 8412.90.90, HTSUS
Dear Mr. Waltz:
The purpose of this correspondence is to respond to the October 29, 2014 submission of a domestic interested party petition on behalf of Brennan Industries, Inc. (“Petitioner”), which manufactures various hydraulic connectors, fittings and adapters in Solon, Ohio. Petitioner meets all of the requirements of a domestic interested party set forth in 19 U.S.C. 1516(a)(2) and section 175.3(a) in Title 19 of the Code of Federal Regulations (CFR). This is our notification to you, in accordance with 19 U.S.C. §1516(c) and 19 C.F.R. 175.22(b), that we believe the classification in New York Ruling Letter (“NY”) E83408 (July 8, 1999) is correct.
In NY E83408, steel tube fittings from Taiwan are described as possessing “cold forged nonalloy steel male threaded connector bod[ies] having a center hex nut, one flare tube end and one male pipe end. These tube fittings connect a piece of rigid tubing to a valve, manifold or another piece of rigid tubing in a hydraulic system.” U.S. Customs and Border Protection (CBP) classified the steel tube fitting in subheading 7307.99.50, Harmonized Tariff Schedule of the United States (HTSUS), as a tube or pipe fitting of iron or steel, other, other, other. Petitioner contends that the proper classification for the fitting is subheading 8412.90.90, HTSUS, which covers “Other engines and motors, and parts thereof: Parts: Other.” In 1999, the column one, general rate of duty for subheading 7307.99.50 was 4.3 percent ad valorem, and for heading 8412, HTSUS, it was “Free” (the current duty rates are respectively 4.3% ad valorem and “Free”). Those duty rates remain unchanged in the 2016 HTSUS.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI’s). 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 be then applied in that order.
Applying GRI 1, CBP classified the fitting of NY E83408 in subheading 7307.99.50, HTSUS, which provides for tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel, other, other, other. Petitioner maintained that the classification is incorrect by first presuming that because the fitting consists of more than one material or substance, GRI 2(b) and GRI 3 were implicated. Petitioner asserted that the fitting is prima facie classifiable as both a “tube or pipe fitting” of heading 7307, HTSUS, and an “other hydraulic engine or motor part” of heading 8412, HTSUS. Petitioner then concluded that GRI 3(a) cannot determine classification of the fitting because the competing headings are equally specific, and GRI 3(b) is inapplicable as well because the essential character of the fitting cannot be determined. Thus, applying GRI 3(c), Petitioner asserted that heading 8412, HTSUS, is the proper heading because it is last in numerical order behind heading 7307, HTSUS.
Notice of the domestic interested party petition was published in the Federal Register on Tuesday, February 9, 2016. See 81 Fed. Reg. 6880. The notice invited written comments on the petition from interested parties. The comment period closed on April 11, 2016.
Petitioner has submitted the only comment regarding the published notice of petition, asserting that CBP has “adopted a rule that only hydraulic connectors that attach to flexible hose will be classified as parts of hydraulic systems under 8412.90.9005 HTSUS.” In support, Petitioner takes issue with CBP’s stated position in the Notice that the subject fitting is a part of general use that can connect tubes and pipes, and is thus classified under heading 7307, HTSUS, and compares its fittings by stating that its fittings are solely imported, sold and specifically designed for use in hydraulic systems. Petitioner asserts that the holding of E83408 is incorrect because (1) the fittings of E83408 are parts used solely or principally in hydraulic engines or motors of heading 8412, HTSUS and are substantially similar to Petitioner’s fittings; and (2) given such use, application of GRI 3(b) to the subject fittings in E83408 should result in a finding that the fittings are not parts of general use of heading 7307, HTSUS. Petitioner also comments that NY E83408 and two additional CBP rulings cited in the Notice do not address the “specific use distinction” between headings 8412, HTSUS, and 7307, HTSUS. See HQ 088393 (March 26, 1991), and NY 87021 (February 7, 1992).
While a “specific use distinction” may not have been addressed, we find that the rulings are correct. First, NY E83408 states that the fittings connect a piece of rigid tubing to a valve, manifold or another piece of rigid tubing in a hydraulic system. That description is not conclusive as to whether the fittings can be used in other applications. In HQ 088393, the products in question are described as hose fittings made of steel and no samples, descriptions or catalogs were submitted with the ruling request. The products in question in NY 870421 are described as electro-plated steel hydraulic hose fittings and adaptors that are “fitted to the ends of a length of hydraulic hose (generally laminated rubber hoses) and are used in a wide variety of industrial applications: on machine tools, on road transport, on earthmoving equipment and on aircraft, for example.” In both HQ 088393 and NY 870421, there is no indication that the hose fittings at issue are parts that are solely or principally used with hydraulic motors or engine. Therefore, there was no mandate to consider what Petitioner has termed the “specific use” distinction between headings 7307 or heading 7326, and heading 8412, HTSUS.
Furthermore, there is a distinction between hose fittings, and pipe and tube fittings. Pipe and tube fittings are parts of general use as defined by Note 2 to Section XV, HTSUS, whereas hose fittings which are classifiable in heading 7326, HTSUS, are not. A hose fitting may therefore be classified as a part of a good for which it is solely and principally used. See HQ 956743 January 24, 1995.
Additionally, Petitioner misinterprets the exclusionary effect of Note 1(g) to Section XVI and thus misapplies GRI 3(b). Petitioner states that “if … parts [of general use] are classified under heading 8412, HTSUS, the exclusionary rule does not apply” and concludes that GRI 3(b) can be applied. In order for classification by application of GRI 3(b) to be appropriate, a good must be unable to be classified by application of GRIs 1 or 2, and the good must be prima facie classifiable in two or more headings. Note 1(g) to Section XVI states that Section XVI excludes “[p]arts of general use, as defined in note 2 to section XV, of base metal (section XV), or similar goods of plastics (chapter 39); …” In relevant part, Note 2 to Section XV, HTSUS, defines “parts of general use” as articles of heading 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metals. Additionally, and subject to Note 1 to Section XVI, Note 2(b) to Section XVI, HTSUS, states that parts that are suitable for use solely or principally with a particular kind of machine of Section XVI are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. Therefore, proper analysis of the matter at hand dictates that we first consider whether a good is a part of general use of heading 7307, HTSUS, per Note 1(g) to Section XVI. If it is a part of general use, that good is simply excluded from Section XVI because a good cannot simultaneously be a part of general use of Section XV and also be prima facie classifiable as a part in Section XVI. See The Container Store v. United States, 145 F. Supp. 3d 1331 (Ct. Intl Trade 2016). In The Container Store, the Court of International Trade decided that parts of general use are not classified as parts of goods in other headings, specifically where parts of general use are excluded from classification in the alternative Section or Chapter. In The Container Store, it was not disputed that the articles at issue were designed only to work with the furniture at issue. If a good is not a part of general use of Section XV, then, and only then, is it appropriate to consider whether that good is described in Note 2 to Section XVI. NY E83408 held that the good at issue is a part of general use of heading 7307, HTSUS. Therefore, we reject Petitioner’s argument that the fittings of NY E83408 were subject to a GRI 3(b) analysis. In order to find that it’s merchandise is not classified as a part of general use in heading 7307, HTSUS, the Petitioner would be required to establish that its fittings are not capable of being used with ordinary pipe classifiable in Section XV.
NY E83408 is affirmed. Pursuant to 19 U.S.C. § 1516(c), Petitioner may file notice of its desire to contest this decision not later than thirty days from the date of issuance of this letter. See 19 C.F.R. § 175.23.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division