OT:RR:CTF:VS H312963 EE
Mark S. Stepien
Assistant Center Director, Automotive and
Aerospace Center of Excellence and Expertise
477 Michigan Avenue, Room 200
Detroit, MI 48226
RE: Application for Further Review of Protest No. 3501-20-101587; Lawn Mower Engines; 9817.00.60, HTSUS
Dear Mr. Stepien:
This is in reference to the Application for Further Review (“AFR”) of Protest No. 3501-20-101587, timely filed on June 17, 2020, on behalf of Loncin Motor Co., Ltd. (hereinafter, the “protestant”), concerning the eligibility of certain lawn mower engines for duty-free treatment under subheading 9817.00.60, HTSUS.
FACTS:
The merchandise subject to the protest at issue consists of lawn mower engine model nos. 136-7812, 139-0602, 133-9970, and 136-7817, imported by the protestant under subheading 8407.90.90, Harmonized Tariff Schedule of the United States (“HTSUS”). The protestant claims it produced these models and sold them to Toro Company for installation on Toro lawn mowers, classified under heading 8433, HTSUS. CBP liquidated the entries on December 20, 2019, under subheading 8407.90.90, HTSUS, which provides for: “Spark-ignition reciprocating or rotary internal combustion piston engines: Other engines: Other.” CBP also assessed Section 301 duties of 25 percent ad valorem on the merchandise. Counsel for the protestant timely filed a protest on June 17, 2020, claiming that the lawn mower engines are properly classifiable under subheading 9817.00.60, HTSUS, or that they are alternatively classified under subheading 8407.90.10, HTSUS, which provides for: “Spark-ignition reciprocating or rotary internal combustion piston engines: Other engines: To be installed in agricultural or horticultural machinery or equipment.”
The protestant provided the following documents for the three entries at issue in support of their claim: commercial invoices from the protestant to the protestant C/O Superior 3rd Party Logistics in St. Paul, MN; invoice reports from the Superior Group of Companies in St. Paul, MN to the protestant; packing lists from the protestant to the protestant C/O Superior 3rd Party Logistics in St. Paul, MN; sea waybills listing the shipper as the protestant and the consignee as the protestant C/O Superior 3rd Party Logistics in St. Paul, MN; sea freight invoices from the Superior Group of Companies in St. Paul, MN to the protestant; and EPA engine declaration forms. The protestant also provided a purchase agreement between Toro Purchasing Co. and the protestant dated November 6, 2012 and January 2, 2013; and a certification of proof of use 9817.00.60, HTSUS, dated September 18, 2019 from the Toro Company located in Bloomington, MN, addressed to the protestant.
ISSUE:
Whether the lawn mower engines are eligible for duty-free treatment under subheading 9817.00.60, HTSUS.
LAW AND ANALYSIS:
Subheading 9817.00.60, Harmonized Tariff Schedule of the United States (“HTSUS”), applies to parts to be used in articles provided for in headings 8432, 8433, 8434 and 8436, whether or not such parts are principally used as parts of such articles and whether or not covered by a specific provision within the meaning of additional U.S. rule of interpretation 1(c). Based on the statutory and regulatory requirements, Headquarters Ruling Letter (“HQ”) 087849 of May 22, 1991, summarized eligibility of an article for duty-free treatment as parts of machines used in agricultural pursuits under subheading 9817.00.60, HTSUS, as a three part test that must be satisfied: (1) the articles must not be among the list of exclusions to heading 9817.00.60, HTSUS, under Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2, HTSUS; (2) the terms of heading 9817.00.60, HTSUS, must be met in accordance with GRI 1; and (3) the merchandise must meet the actual use regulations under 19 C.F.R. § 10.131 through 10.139. If a good fails any part of the test, then it is treated according to its primary classification.
The lawn mower engines at issue are classified under heading 8407, HTSUS, which is not among the list of exclusions in Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2, HTSUS. Accordingly, they satisfy the first part of the test. Under the second requirement, the lawn mower engines must be used in articles provided for in headings 8432, 8433, 8434 and 8436, whether or not such parts are principally used as parts of such articles and whether or not covered by a specific provision within the meaning of additional U.S. rule of interpretation 1(c). Since the lawn mower engines are parts to be installed in lawn mowers, classified under heading 8433, HTSUS, they satisfy the second requirement of the three-part test. Finally, the third part of the test requires the merchandise to meet the actual-use provisions in 19 C.F.R. §§ 10.131-10.139. 19 C.F.R. § 10.133 provides:
When the tariff classification of any article is controlled by its actual use in the United States, three conditions must be met in order to qualify for free entry or a lower rate of duty unless the language of the particular subheading of the Harmonized Tariff Schedule of the United States applicable to the merchandise specifies other conditions. The conditions are that:
(a) Such use is intended at the time of importation.
(b) The article is so used.
(c) Proof of use is furnished within 3 years after the date the article
is entered or withdrawn from warehouse for consumption.
19 C.F.R. § 10.134 provides:
A showing of intent by the importer as to the actual use of imported merchandise shall be made by filing with the entry for consumption or for warehouse a declaration as to the intended use of the merchandise, or by entering the proper subheading of an actual use provision of the Harmonized Tariff Schedule of the United States (HTSUS) and the reduced or free rate of duty on the entry form. Entry made under an actual use provision of the HTSUS may be construed as a declaration that the merchandise is entered to be used for the purpose stated in the HTSUS, provided the Center director is satisfied the merchandise will be so used. However, the Center director shall require a written declaration to be filed if he is not satisfied that merchandise entered under an actual use provision will be used for the purposes stated in the HTSUS.
19 C.F.R. § 10.138 provides:
Within 3 years from the date of entry or withdrawal from warehouse for consumption, the importer shall submit in duplicate in support of his claim for free entry or for a reduced rate of duty a certificate executed by (1) the superintendent or manager of the manufacturing plant, or (2) the individual end-user or other person having knowledge of the actual use of the imported article. The certificate shall include a description of the processing in sufficient detail to show that the use contemplated by the law has actually taken place. A blanket certificate covering all purchases of a given type of merchandise from a particular importer during a given period, or all such purchases with specified exceptions, may be accepted for this purpose, provided the importer shall furnish a statement showing in detail, in such manner as to be readily identified with each entry, the merchandise which he sold to such manufacturer or end-user during such period.
In the instant case, the lawn mower engines were entered by the protestant under subheading 8407.90.90, HTSUS, rather than subheading 9817.00.60, HTSUS. Further, the protestant did not file a written declaration of intent at time of entry. Accordingly, the protestant does not meet the requirements of 19 C.F.R. § 10.133(a) and 19 C.F.R. § 10.134. The protestant submitted a certificate signed by an employee Toro company stating that the parts are at issue are to be utilized in the manufacture of lawn mowers classified under heading 8433, HTSUS. However, this certificate is dated September 18, 2019 and was submitted after the date of entry. As such, it does not satisfy the requirements of 19 C.F.R. § 10.133(a) and 19 C.F.R. § 10.134. In HQ 965354, dated February 14, 2002, CBP revoked an earlier ruling, HQ 961431, dated December 1, 1998, where the declaration of intended use for certain internal combustion engines was filed twenty-one days after the date of the entry summary. In HQ 965354, CBP held that failure to file the required intent declaration with entry indicates noncompliance with 19 C.F.R. § 10.133. Moreover, CBP stated that such noncompliance is “not curable under section 10.112 as this provision relates merely to the late filing of documents.” See also HQ H240589, dated July 18, 2014. In accordance with HQ 965354, your arguments related to 19 C.F.R. § 10.112 are not relevant. Since the protestant has not provided evidence that the merchandise satisfies the actual use criteria required in accordance with 19 C.F.R. §§ 10.131-10.139, the lawn mower engines are not eligible for duty-free treatment under subheading 9817.00.60, HTSUS. We agree with the protestant that the lawn mower engines should be classified under subheading 8407.90.10, HTSUS, which provides for: “Spark-ignition reciprocating or rotary internal combustion piston engines: Other engines: To be installed in agricultural or horticultural machinery or equipment.”
HOLDING:
The protest should be DENIED in part and ALLOWED in part. The lawn mower engines are not eligible for duty-free treatment under subheading 9817.00.60, HTSUS. The lawn mower engines should be classified under subheading 8407.90.10, HTSUS. 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. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the
Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division