OT:RR:CTF:VS H304235 JMV
John A. Bessich
Follick & Bessich
33 Walt Whitman Road, Suite 310
Huntington Station, NY 11746
Re: Reconsideration of HQ H301769, dated April 10, 2019; Section 301 Measures; Tool sets
Dear Mr. Bessich:
This is in response to your request, on behalf of your client, Stanley Black & Decker Inc. (“Stanley”), for reconsideration of Headquarters Ruling (“HQ”) H301769, dated April 10, 2019, in which the rate of duty applicable to the 170-piece mechanic’s tool set from China was determined to be 38.9%. We reviewed your request and we believe that HQ H301769 is correct for the reasons set forth herein.
The product at issue is described as a “170 Piece Mechanic’s Tool Set (Model No. CTK170MPN).” According to the information provided in HQ H301769, the tool set contains the following components:
Quantity
Component
Classification
2018 Column 1 Duty Rate
3
Ratchets
8466.10.0175
3.9%
4
Extensions
8466.10.0175
3.9%
1
Adapter
8466.10.0175
3.9%
1
Universal Joint
8466.10.0175
3.9%
72
Sockets
8204.20.0000
9%
3
Screwdrivers
8205.40.0000
6.2%
12
Combination Wrenches
8204.11.0030
9%
1
Bit Driver
8466.10.0175
3.9%
45
Bits
8207.90.6000
3.7%
24
Hex Keys
8204.11.0060
9%
1
Needle Nose Pliers
8203.20.6030
$0.12/doz + 5.5%
1
Adjustable Wrench
8204.12.0000
9%
1
Slip-Joint Pliers
8203.20.4000
12%
HQ H301769 noted that the tool set is classified, pursuant to General Rule of Interpretation (“GRI”) 1, in subheading 8206.00.00, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “Tools of two or more headings of 8202-8205, put up in sets for retail sale.” The issue presented in HQ H301769, which you are asking this office to reconsider, was the rate of duty applicable to the 170-piece mechanic’s tool set from China.
The Column 1 duty rate for tool sets classified in subheading 8206.00.00, HTSUS is the “rate of duty applicable to that article in the set subject to the highest rate of duty.” The tool set at issue contains five items classified in subheading 8466.10.0175, HTSUS: three ratchets, four extensions, one adapter, one universal joint, and one bit driver. As noted in HQ301769, the United States Trade Representative (“USTR”) imposed an additional ad valorem duty of 25% on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). “Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (June 20, 2018, 83 F.R. 28710). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(b), HTSUS (“List 1”). Among the subheadings listed in List 1 is 8466.10.0175, HTSUS. Thus, although the tool set itself is not included in List 1, the tool set contains items that are. In any event, the rate of duty for the tool set is based on the article subject to the highest rate of duty. As outlined in HQ H301769, for purposes of determining which article in the set is subject to the highest rate of duty, any applicable Section 301 measures must be taken into account. See HQ H299857, dated September 6, 2018. In Stanley’s original submission, Stanley noted that, following the logic of these rulings, the rate of duty would be 28.9%, which represents 3.9% for tools classified in heading 8466, HTSUS plus the additional 25% required by the Section 301 measures for goods coming from China under heading 8466, HTSUS.
However, on September 24, 2018, USTR implemented further Section 301 measures on additional products of China listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS (“List 3”). “Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (September 21, 2018, 83 Fed. Reg. 47974). Products of China on List 3 were subject to an additional 10% ad valorem rate of duty, which was increased to 25% on May 9, 2019. “Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (84 Fed. Reg. 20459, May 9, 2019). Since the tool set at issue, as an item classified in subheading 8206.00.00, HTSUS, is included on List 3, Stanley asked this office to consider whether additional duties should be applied as the tool set is now also subject to Section 301 measures. In HQ H301769, this office found that, based on a reading of the HTSUS, the applicable rate of duty is 38.9%, which represents the Column 1 duty rate (based on the highest rate of duty of the tools per subheading 8466.10.01, HTSUS) plus the Section 301 measures for tools of heading 8466, HTSUS, and the 10% additional duty for tool sets classified in 8206.00.00, HTSUS under Section 301.
Your request for reconsideration argues that HQ H301769 improperly applied two additional tariff rates under the Section 301 measures. Your submission argues that USTR did not intend to assess both additional rates of duty on items classified in subheading 8206.00.00, HTSUS under Section 301. You base this argument on the fact that prior to the assessment of the 10% additional duty (now 25%) under List 3, there was neither a separate general (or Column 1) duty rate, nor a separate additional Section 301 duty rate assessed on tool sets classified in subheading 8206.00.00, HTSUS. However we find this argument unpersuasive.
The premise that subheading 8206.00.00, HTSUS has no Column 1 duty rate is false. The Column 1 duty rate is the “rate of duty applicable to that article in the set subject to the highest rate of duty.” The fact that the Column 1 duty rate may vary based on the items included in the tool set does not mean that the Column 1 duty rate does not exist.
Further, the fact that there was no separate additional Section 301 duty rate assessed on tool sets classified in subheading 8206.00.00, HTSUS prior to its inclusion in Section 301 List 3, also does not suggest that USTR did not intend for the Section 301 measures to apply twice. USTR’s silence on this issue could be interpreted either way. It could easily be argued that USTR knowingly included tool sets in List 3 and did not specify that these would be in lieu of the Column 1 duty rate.
However, there is no need to attempt to deduce USTR’s intention with a plain reading of the HTSUS. Nothing in the language of the Column 1 rate for 8206.00.00, HTSUS limits the duty rate to the article subject to the highest general duty rate. The Column 1 rate for the tool sets at issue is the same as the article subject to the highest rate of duty without regard to whether that rate is derived from trade remedies.
Further, U.S. Note (e) of Chapter 99, HTSUS, which was published with List 3 by USTR (see 83 Fed. Reg. 47974), outlines how the Section 301 measures should be applied to the items in List 3:
For the purposes of heading 9903.88.03, products of China, as provided for in this note, shall be subject to an additional 25 percent ad valorem rate of duty. . . . All products of China that are classified in the subheadings enumerated in U.S. note 20(f) to subchapter III are subject to the additional 25 percent ad valorem rate of duty imposed by heading 9903.88.03.
Notwithstanding U.S. note 1 to this subchapter, all products of China that are subject to the additional 25 percent ad valorem rate of duty imposed by heading 9903.88.03 shall also be subject to the general rates of duty imposed on products of China classified in the subheadings enumerated in U.S. note 20(f) to subchapter III.
. . .
Products of China that are provided for in heading 9903.88.03 and classified in one of the subheadings enumerated in U.S. note 20(f) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees, exactions and charges that apply to such products, as well as to the additional 25 percent ad valorem rate of duty imposed by heading 9903.88.03.
Emphasis added. US Note (e) repeatedly notes that Section 301 measures are in addition to the Column 1 duty rate. US Note (e) further notes that items in List 3 should continue to be subject to all other “antidumping, countervailing, or other duties . . .” Here, other duties would refer to the duties under List 1. Therefore, the Section 301 measures on 8206, HTSUS, currently at 25%, should be in addition to the Column 1 duty rate of 28.9%.
For all of the aforementioned reasons, we find that the calculated duty rate for the mechanic’s tool set was correct. We therefore affirm HQ H301769.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division