CLA-2 OT:RR:CTF:EMAIN H328536 TPB
David M. Schwartz
Thompson Hine, LLP
1919 M. St. NW, Suite 700
Washington, DC 20036-3537
[email protected]
Re: Request to reconsider NYRL N327185; Classification of a personal hydrofoil
Dear Mr. Schwartz:
The following is our decision regarding your request for reconsideration of New York Ruling Letter (NYRL) N327185, dated August 10, 2022, on behalf of your client, Manta5 LP (Manta5; Importer) regarding the tariff classification of Manta5’s Hydrofoiler SL3 e-Bike (Hydrofoiler) from China, under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
In NYRL N327185, the subject Hydrofoil is described as follows:
The subject merchandise is a Manta5 Hydrofoiler SL3 e-Bike, which has all water terrain capabilities and made with the intention of building a new sport. It is equipped with the following top features: an easy electric only launch, 10 levels of motor assistance, throttle override, up to 4 hours of ride time, a composite monocoque chassis with new floatation and mount ergonomics, carbon fiber or composite foils, 19.4 kilometers per hour or 12.05 miles per hour top speed, disassembly into 4 pieces for easy transport, 36 kilograms total assembled weight, Bluetooth connectivity, a dedicated App [application], and a dual waterproof lithium-ion 58-volt Hydro pack battery.
The variable electric assist 2.5-kilowatt motor is controlled by a remote, or pedal assist, which allows the user to effectively cycle between 10 levels of motor assistance. The motor assistance provides versatility, for a wide range of body types, fitness levels, and the ability to allow an individual to choose the intensity of their ride. It also includes a manual mode, to allow the rider to pedal without motor assist, or ride and coast, with no pedaling required. The Hydrofoiler SL3 incorporates an integrated LCD display, which displays live battery level, assist level, throttle position, system warnings, rider power display, and rider cadence display. The Hydrofoiler SL3 also has added safety features, such as a propeller shroud, independent manual and electric drives, and tilt sensors that cut power to the propeller when you fall.
In Manta5’s request for reconsideration, the importer provided additional information and arguments, including schematics and videos, which have been taken into consideration. Namely, the importer describes the product at issue as the world’s first hydrofoil bike. The importer’s website claims that the Manta5’s sole purpose has been to replicate an intuitive cycling experience on water. Although the website also claims that the product is suitable for a wide range of sizes and abilities (“If you can ride a bike and swim, you can ride the Hydrofoiler SL3”), importer notes in its submission that operating the Hydrofoiler requires training and a measurable degree of athletic ability and skill. Balancing is critical, and even though there is a battery-powered motor to assist with commencement of the ride and continued forward movement, a rider needs to maintain a speed of six mph to prevent the bike from submerging. (The Hydrofoiler does not have enough independent buoyancy to support the rider’s body weight while not propelling forward, and the bike will be submerged while stationary, but will not sink.).
ISSUE:
Is the product under consideration, the Hydrofoiler SL3, properly classified under subheading 9506.29, HTSUS, as an article/equipment for general exercise or other sport; or subheading 8903.99, HTSUS, which provides for other vessels for pleasure or sports?
LAW AND ANALYSIS:
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.
The HTSUS provisions under consideration are as follows:
8903 Yachts and other vessels for pleasure or sports; row boats and
canoes:
8903.99 Other:
8903.99.91 Other
* * *
9506 Articles and equipment for general physical exercise, gymnastics, athletics, other sports (including table-tennis) or outdoor games, not specified or included elsewhere in this chapter; swimming pools and wading pools; parts and accessories thereof:
9506.29.00 Other
9506.29.00 Other
Note 1(q) to Chapter 95, HTSUS, excludes, in pertinent part, “[s]ports craft such as canoes and skiffs (chapter 89)….” As such, if the subject Hydrofoiler is a sports craft like canoes and skiffs of heading 89.03, it is excluded from classification under heading 95.06.
In the Importer’s view, the Hydrofoiler cannot be classified under heading 89.03 because it does not have enough floatation to support the rider’s body weight while not propelling forward, and will be submerged while stationary, but will not sink. Importer argues that watercraft of heading 89.03 do not submerge while stationary, noting in particular that the Hydrofoiler has no physical or water-worthy characteristics that are similar to a skiff or a canoe. Skiffs, canoes and similar watercraft have bottoms and sides to keep water out and to keep them afloat. Moreover, the Importer is of the view that classifying the Hydrofoiler under a provision that identifies yachts, rowboats, canoes, sailboats and motorboats does not make sense, as the Hydrofoiler has none of the characteristics of the articles identified under heading 89.03.
While heading 89.03 does provide for yachts, rowboats, and canoes, it also provides for other vessels for pleasure or sports. When tariff terms are not defined in the tariff or the EN they will be construed in accordance with their common and commercial meaning. See Nippon Kogaku (USA), Inc. v. United States, 69 CCPA 89, 673 F.2d 380 (1982). The common and commercial meaning of tariff terms, such as “vessels,” may be determined by consulting reliable resources, such as dictionaries, lexicons, scientific authorities, encyclopedias, etc. See C.J. Tower & Sons v. United States, 69 CCPA 128, 673 F.2d 1268 (1982).
Oxford English Dictionary (“OED” – online):
4.
a. Any structure designed to float upon and traverse the water for the carriage of persons or goods; a craft or ship of any kind, now usually one larger than a rowing boat and often restricted to seagoing craft or those plying upon the larger rivers or lakes.
Frequently with distinctive premodifiers, as bomb-, fishing, gun-, machine-, sailing-, steam-, trading-, transport-, war-vessel, etc.
In this case, the appropriate premodifier would be water-, as in water vessel, and we therefore must determine if that describes the product at issue for classification purposes. While the definition used in the OED states that a vessel is “now usually” larger than a rowing boat and often restricted to seagoing craft or those plying upon larger rivers or lakes, this definition, by context, is not intended to be restrictive, nor could it anticipate all possible forms of vessels. The Hydrofoiler SL3 is an article that is designed to float upon, and allow a person to traverse water, whether for pleasure or sport. As such, it meets the terms of heading 89.03.
Further, we may also consult the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) which constitute the official interpretation of the Harmonized System (HS) at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). The ENs for heading 89.03 provide a list of products classifiable under that heading, including “…yachts, marine jets and other sailboats and motorboats, dinghies, kayaks, sculls, skiffs, pedalos (a type of pedal-operated float), sports fishing vessels, inflatable craft and boats which can be folded or disassembled.” (Emphasis added). Notably, CBP has previously classified jet skis in heading 89.03. See NY Ruling 806763, dated February 15, 1995. A mentioned above, the Hydrofoiler SL3 is a pedal-operated transport used on water. While many of these exemplars do not perfectly align with the OED definition cited above, they are nonetheless intended to fall within the scope of heading 89.03 per the ENs to that heading. As such, we conclude that that the product at issue is properly classified under heading 89.03 as other vessels for pleasure or sport, per GIR 1. Being that it is a sports craft of heading 89.03, the Hydrofoil is excluded from classification under heading 95.06 per Note 1(q) to Chapter 95.
Assuming arguendo that the subject merchandise is not excluded from Chapter 95 per Note 1(q), supra, we nevertheless find that the Hydrofoil is not classifiable under heading 95.06, which provides for, in pertinent part, articles and equipment for general physical exercise, gymnastics, athletics, other sports (including table-tennis) or outdoor games, not specified or included elsewhere in this chapter.
As is mentioned by Manta5, usage of the Hydrofoiler requires some degree of skill and training. On this point we can agree. However, this fact alone does not itself qualify the product to be classified under heading 95.06, which provides for articles and equipment for general physical exercise, gymnastics, athletics, other sports (including table-tennis) or outdoor games, not specified or included elsewhere in this chapter; swimming pools and wading pools; parts and accessories thereof.
In addition to being excluded from Chapter 95 by Note 1(q), we also observe that Note 1(n) to Chapter 95 states that the chapter does not cover “Sports vehicles (other than bobsleighs, toboggans and the like) of Section XVII.” There are no similar exemplars in the ENs for heading 95.06 that would indicate that the Hydrofoiler is properly classified within this provision. The relevant ENs, for heading 95.06, read as follows:
Articles and equipment for general physical exercise, gymnastics or athletics, e.g.,
Trapeze bars and rings; horizontal and parallel bars; balance beams, vaulting horses; pommel horses; spring boards; climbing ropes and ladders; wall bars; Indian clubs; dumb bells and bar bells; medicine balls; rowing, cycling and other exercising apparatus; chest expanders; hand grips; starting blocks; hurdles; jumping stands and standards; vaulting poles; landing pit pads; javelins, discuses, throwing hammers and putting shots; punch balls (speed bags) and punch bags (punching bags); boxing or wrestling rings; assault course climbing walls.
Requisites for other sports and outdoor games (other than toys presented in sets, or separately, of heading 95.03), e.g.:
* * *
(2) Water-skis, surfboards, sailboards and other water-sport equipment, such as diving stages (platforms), chutes, divers’ flippers and respiratory masks of a kind used without oxygen or compressed air in bottles, and simple underwater breathing tubes (generally known as “snorkels”) for swimmers or divers.
In this case, the Manta5 Hydrofoiler is a motorized watercraft that is designed and marketed as an electrically engineered water bike. The presence of a motor is indicative that the item is generally not intended to be foot-powered (i.e., it is an electric-assist product), thereby lessening the need for user exertion. It also lessens the athletic skill or effort required to operate the product. As a result, and in accordance with the Chapter Notes cited above, it is our view that the subject article is not classified as an article for general physical exercise or watersport equipment of heading 95.06.
Our own research did not find specific rulings issued by CBP for similar products, but can confirm that other sports craft type goods, whether or not motorized, such as pedal boats (N003201, dated Dec. 7, 2006) and jet skis (NY 806763, dated February 15, 1995) are classified outside of heading 95.06.
Importer cites New York ruling letters N320329, dated July 16, 2021, and N279693, dated November 23, 2016, in support of classification of the Hydrofoiler in heading 95.06. However, we note that the merchandise classified in N320329 consisted of a surfboard, a hydrofoil (mast and fin), a battery within the surfboard, and a motor controlled by a handheld remote. In this ruling, the product was classified as a set, in accordance with GRI 3(b). As it was determined that the surfboard imparted the essential character to the set, it was properly classified, eo nominee, in heading 95.06, HTSUS.
Regarding N279693, dated November 23, 2016, the merchandise was described as a linear wakeboard system which allows one to participate in the sport of wakeboarding in a body of water without the use of a motorboat. The product was principally designed for and overwhelmingly used in the practice of water-sport activities such as wakeboarding, water skiing, and knee boarding, which justified its classification in 95.06.
In reviewing the rulings cited by the requestor in support of their proposed classification we find the instant product is distinguishable from the goods classified in those rulings because the Manta5 Hydrofoiler SL3 E-Bike is not a surfboard, nor is it used in the manner that is consistent with the practice of water-sport activities.
Finally, Importer also cites to the U.S. Court of International Trade (CIT), Streetsurfing LLC v. United States, 11 F. Supp. 3d 1287 (Ct. Int’l. Tr. 2014), to support classification under heading 95.06. We acknowledge that the CIT in Streetsurfing defines sport as an activity that “possesses to a meaningful degree the … attributes of healthy, challenging and skillful recreation. We do not refute that the Hydrofoiler provides healthy, challenging and skillful recreation, however that fact alone does not qualify the product as water-sport equipment.
In reviewing the facts associated with the merchandise we note that the Hydrofoiler is akin to a bicycle (bicycles, notably, are classified outside of heading 95.06, in heading 87.12) and is therefore distinguishable from the watersport equipment described in heading 95.06. Furthermore, as noted above, there are no similar exemplars in the Explanatory Notes for heading 95.06 that would indicate that the Hydrofoiler, a self-propelled vehicle, falls within the scope of this provision.
Based on the foregoing, the Manta5 Hydrofoiler SL3 is properly classified under heading 89.03, HTSUS, and therefore excluded from classification under heading 95.06 by operation of Note 1(q) to Chapter 95.
HOLDING:
By application of GRIs 1 and 6 the personal hydrofoil at issue classified in heading 89.03, subheading 8903.99.91, HTSUS, which provides for which provides for “Yachts and other vessels for pleasure or sports; row boats and canoes: Other: Other: Other.” The rate of duty will be 1-percent ad valorem.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8903.99.91, HTSUS, unless specifically excluded, are subject to an additional 25-percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8903.99.91, HTSUS, listed above.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.
EFFECT ON OTHER RULINGS:
NYRL N327185, dated August 10, 2022, is hereby AFFIRMED.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division