OT:RR:CTF:FTM H312768 PJG
Mr. Michael E. Murphy
Baker & McKenzie LLP
815 Connecticut Avenue, NW
Washington, D.C. 20006
RE: Modification of NY N010048; tariff classification of controllable shading system
Dear Mr. Murphy:
This is in reference to New York Ruling Letter (“NY”) N010048 that U.S. Customs and Border Protection (“CBP”) issued to you on May 3, 2007, pursuant to your request for a binding ruling on behalf of Lutron Electronics Co., Inc. The ruling pertains to the tariff classification under the Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”) of a controllable shading system and a controllable drapery track system used for commercial and residential applications that were both classified in heading 8479, HTSUS. We have reviewed NY N010048 and determined it to be in error only with respect to the classification of the controllable shading system. The controllable drapery track system did not include the drapes at the time of importation and remains classified under heading 8479, HTSUS. Accordingly, NY N010048 is modified.
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 (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed action was published on September 30, 2020, in Volume 54, Number 38, of the Customs Bulletin. CBP received one comment on October 30, 2020, in opposition to the proposed action.
FACTS:
In NY N010048, CBP described the controllable shading system as follows:
The controllable shading …system[] [is] used for commercial and residential applications. The system[] aid[s] in reducing glare, protecting furnishings from U/V damage and maximizing HVAC efficiency. The settings …are electronically programmable so that window treatments can be programmed to stop at present positions. The system[] can also be equipped to receive infrared control signals and may be controlled by hand-held remotes in addition to the keypad controls….The complete controllable shading systems consist of fabric shades, hem bars, one (or more) quiet electronic drive units (“QEDs”), roller tubes, roller bulk idlers, brackets and associated hardware.
CBP classified the merchandise under heading 8479, HTSUS, and specifically in subheading 8479.89.9897, HTSUSA, which in May 2007 provided for “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: Other: Other: Other.”
ISSUE:
What is the proper tariff classification under the HTSUS for the controllable shading system?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) is made in accordance with the General Rules of Interpretation (“GRI”). 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 HTSUS provisions under consideration are as follows:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
6303 Curtains (including drapes) and interior blinds; curtain or bed valances:
GRI 3(a) and (b) provide as follows:
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 each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
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.
The Harmonized Commodity Description and Coding System Explanatory Notes
(“ENs”) constitute the “official interpretation of the Harmonized System” at the international level. See 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). While neither legally binding nor 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 id.
The EN to GRI 3(b) states, in pertinent part:
(VI) This second method relates only to :
(i) Mixtures.
(ii) Composite goods consisting of different materials.
(iii) Composite goods consisting of different components.
(iv) Goods put up in sets for retail sales.
It applies only if Rule 3 (a) fails.
(VII) In all these cases the goods are to be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
(VIII) The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
(IX) For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.
Examples of the latter category of goods are :
(1) Ashtrays consisting of a stand incorporating a removable ash bowl.
(2) Household spice racks consisting of a specially designed frame (usually of wood) and an appropriate number of empty spice jars of suitable shape and size.
As a general rule, the components of these composite goods are put up in a common packing.
* * *
The subject merchandise is made up of different components, i.e., fabric shades, hem bars, one (or more) QEDs, roller tubes, roller bulk idlers, brackets and associated hardware. When by application of GRI 2, HTSUS, goods are prima facie classifiable under two or more headings, GRI 3, HTSUS, is applicable. According to EN IX for GRI 3(b), a “composite good” is a good that is “made up of different components,” which may be “adapted one to the other and [be] mutually complementary and . . . together . . . form a whole which would not normally be offered for sale in separate parts.” The subject merchandise is a composite good; therefore, GRI 3(b) requires that classification be based on the product that provides the composite good with its essential character.
The EN to GRI 3(b) (VIII) lists factors to help determine the essential character of such goods: “the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.” The U.S. Court of International Trade (“CIT”) has indicated that the factors listed in the EN to GRI 3(b) (VIII) are “instructive” but “not exhaustive” and has indicated that the goods must be “reviewed as a whole.” Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1293 (Ct. Intl’l Trade 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007) (citing A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378, 383 (1971) (citation omitted)). With regard to the good which imparts the essential character, the CIT has stated that it is “that which is indispensable to the structure, core or condition of the article, i.e., what it is.” Id. at 1293 (citing A.N. Deringer, Inc., 66 Cust. Ct. at 383).
In NY N010048, CBP determined that the essential character of the controllable shading system was imparted by the QEDs. However, consistent with prior rulings, we find that the function of the QEDs is/are ancillary to the function of the shade, which protects a space from sunlight and provides privacy. See New York Ruling Letter (“NY”) N293716 (Feb. 21, 2018) (stating that the shade provided the essential character to the motorized window shade because “the lifting and lowering mechanisms of the window shade are ancillary to the protection the shade provides”); see also Headquarters Ruling Letter (“HQ”) 955432 (Aug. 4, 1994) (stating that the screening material imparts the essential character to the shade and heat retention systems because it “controls the environment of the structures in which the shade and heat retention systems at issue operate”). Similarly, the function of the remaining components, specifically, the hem bars, roller tubes, roller bulk idlers, brackets and associated hardware, are also ancillary to the function of the shades. Accordingly, the shades impart the essential character to the subject merchandise. The subject merchandise, therefore, is classified under heading 6303, HTSUS, which provides for “Curtains (including drapes) and interior blinds; curtain or bed valances.” Sufficient information was not provided at the time of the ruling request to determine the proper classification of the merchandise under this heading beyond the four-digit level. Beyond the four-digit level, the classification of the merchandise will depend on the fabric composition of the model of the controllable shading system that will be imported.
As noted above, CBP received one comment opposing the proposed modification of NY N010048. The commenter states that, pursuant to GRI 1, or alternatively GRI 3(b) or GRI 3(c), the subject merchandise should remain classified in heading 8479, HTSUS, which provides in relevant part for “[m]achines and mechanical appliances having individual functions, not specified or included elsewhere in [Chapter 84].” The commenter argues that the subject merchandise should be classified pursuant to GRI 1 under heading 8479, HTSUS, because in accordance with Note 1(e) to Section XVI, HTSUS, only “articles of textile material for technical uses” that are classifiable in heading 5911, HTSUS, are excluded from classification in Section XVI. The commenter concludes that articles that incorporate textile components, other than textile material for technical uses, are still classifiable in Section XVI, HTSUS. The commenter states that the subject merchandise cannot be classified pursuant to GRI 1 under heading 6303, HTSUS, because Note 1 to Chapter 63, HTSUS, which applies to heading 6303, HTSUS, indicates that “Subchapter 1 applies only to made up articles, of any textile fabric” and the subject merchandise includes electromechanical components in addition to the textile fabrics.
Alternatively, the commenter indicates that even under GRI 3(b), the subject merchandise should be classified in heading 8479, HTSUS. Specifically, the commenter argues that the essential character of the subject merchandise is imparted by the electromechanical component, specifically, the electronic drive unit (“EDU”), which allows the machine, for example, to engage in two-way communication to control and monitor the shades, process positioning information, and maintain an internal log of the faults and activity of the shading system. The commenter states that the EDU is the component that accounts for the greatest value, bulk, weight, and role in relation to the use of the merchandise.
Finally, alternatively, the commenter states that even if CBP determines that the electromechanical component of the subject merchandise is just as important as the textile shade, then by application of GRI 3(c), the merchandise should still be classified under heading 8479, HTSUS, rather than heading 6303, HTSUS, because heading 8479, HTSUS, occurs last in numerical order.
CBP agrees that the subject merchandise is not classified by application of GRI 1 in heading 6303, HTSUS, therefore, CBP will not address, accept or refute, the specific arguments presented by the commenter in support of this position. However, CBP disagrees that the subject merchandise is classifiable under GRI 1 in heading 8479, HTSUS. The subject merchandise consists of two main components, the electromechanical component and the textile shade, and a number of ancillary components, specifically, the hem bars, roller tubes, roller bulk idlers, brackets and associated hardware. Heading 8479, HTSUS, provides, in relevant part, for “[m]achines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter.” While the electromechanical component of the merchandise may be classifiable in heading 8479, HTSUS, the textile shades are specifically provided for in heading 6303, HTSUS, which provides for “[c]urtains (including drapes) and interior blinds; curtain or bed valances.” The commenter cites to Note 1(e) to Section XVI, HTSUS, in support of its argument that the subject merchandise is classifiable by application of GRI 1 in heading 8479, HTSUS. Note 1(e) to Section XVI, HTSUS, states in relevant part that Section XVI, HTSUS, does not cover “other articles of textile material for technical uses (heading 5911).” Note 1(e) is simply excluding articles of textile material for technical uses that are classified in heading 5911, HTSUS, from classification in Section XVI, HTSUS. This specific exclusion does not mean that articles of textile material that are not for technical uses are classified in Section XVI, HTSUS. Moreover, the textile shades are not machinery and mechanical appliances or parts thereof of Chapters 84, HTSUS, therefore, they do not fall within the scope of Chapter 84, or specifically, heading 8479, HTSUS, by application of GRI 1. As such, the entire controllable shading system is not specifically provided for in any one heading.
GRI 2(b) states in relevant part that “[t]he classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.” GRI 3(a) states that, “[w]hen, 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: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.”
Pursuant to GRI 3(b) “[w]hen, 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.” As noted earlier, the subject merchandise is made up of two main components, the electromechanical component and the textile shade, and a number of ancillary components, specifically, the hem bars, roller tubes, roller bulk idlers, brackets and associated hardware. The electromechanical component and the textile shade are adapted one to the other and are mutually complementary in that the electromechanical component controls the position and use of the textile shade and the textile shade is responsive to the inputs of the electromechanical component. See EN (IX) to GRI 3(b). These two components would not normally be offered for sale in separate parts because they are sold as a controllable shading system. See id. As such, the controllable shading system is a composite good that must be classified using GRI 3(b). As previously, noted, the EN to GRI 3(b) (VIII) provides that when performing an essential character analysis, the factors that should be considered are the bulk, quantity, weight or value, or the role of a constituent material in relation to the use of the goods. There have been several court decisions on “essential character” for purposes of classification under GRI 3(b). See Conair Corp. v. United States, 29 C.I.T. 888 (2005); Structural Industries v. United States, 360 F. Supp. 2d 1330, 1337-1338 (Ct. Int’l Trade 2005); and Home Depot USA, Inc., 427 F. Supp. 2d at 1295-1356. “[E]ssential character is that which is indispensable to the structure, core or condition of the article, i.e., what it is.” Home Depot USA, Inc., 427 F. Supp. 2d at 1293 (quoting A.N. Deringer, Inc., 66 Cust. Ct. at 383). In particular, in Home Depot USA, Inc., the court stated “[a]n essential character inquiry requires a fact intensive analysis.” Id. at 1284. Therefore, a case-by-case determination on essential character is warranted in this situation.
If the information provided by the commenter concerning the bulk, weight and value is correct, the differences between the shade and the “electromechanical components” are not particularly stark, especially in absolute terms. Moreover, the good’s essential character as a whole is not impacted by the relative bulk, weight or value of its components. Rather, as evidenced by the fact that most of the discussion both in the ruling and the commenter’s submission concerns the role of the components in relation to the use of the goods, we find this factor to be most indicative of the merchandise’s essential character. In considering the role of the constituent materials in relation to the use of the controllable shading system, we find that the textile shade, which is properly classified under heading 6303, HTSUS, imparts the essential character to the merchandise because the textile shade protects a space from sunlight and provides privacy, which is the purpose of the subject merchandise. Although the other components enable the user to position, control and monitor the shades, among other functions, none of the other components directly provide the shade, protection and privacy that is accomplished by the textile shade. The textile shade makes the controllable shading system “what it is” because without the textile shade, the electromechanical components could not alone protect a space from sunlight and provide privacy. Since classification can be determined upon application of GRI 3(b), we do not apply the principles of GRI 3(c). Classification at the subheading level by GRI 6 is dependent upon the fabric composition of the textile shade that will be imported.
HOLDING:
Under the authority of GRI 3(b) the controllable shading system is classified under heading 6303, HTSUS, which provides for “Curtains (including drapes) and interior blinds; curtain or bed valances.”
The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
NY N010048, dated May 3, 2007, is MODIFIED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division