CLA-2 CO:R:C:M 088891 MBR
Mr. Gordon W. Larson
4950 Gateway East
P.O. Box 144
El Paso, Texas 79942
RE: Home Alarm Systems; Components Shipped in Bulk Form; GRI
2(a); Incomplete or Unfinished Articles; Articles Presented
Unassembled or Disassembled; Upgrade Kit; GRI 3(b); Set
Dear Mr. Larson:
This is in reply to your letter of March 6, 1991, requesting
classification of bulk shipments of home alarm system components
from Mexico, on behalf of Honeywell Protective Services Division,
under the Harmonized Tariff Schedule of the United States
Annotated (HTSUSA).
FACTS:
Presently, you import the following merchandise from Mexico
in bulk form:
-Control panel boards for systems 1500, 1500e MOD II, 2000e,
and 6000 (future system).
-Alphanumeric home security panel and security panels for
system 1500, 1500e MOD II, 2000, and 6000.
-300 mhz Receiver.
-300 mhz Transmitters, models TH8802, and T8803.
-System 1500 dialer board.
-Hardwire expander boards, hardwire module boards, multiple
receiver adapter boards, receiver interface boards, remote
receiver adapter boards, PLC boards, alphanumeric HSP
adapter boards, and end of line module boards.
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ISSUE:
Can a shipment of the above components be considered an
unassembled, incomplete alarm system having the essential
character of a complete or finished alarm system, under the
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA)?
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) to the HTSUSA
govern the classification of goods in the tariff schedule. GRI 1
states, in pertinent part:
...classification shall be determined according to
the terms of the headings and any relative section
or chapter notes...."
You state:
The reason for requesting this ruling is that,
prospectively, Honeywell, desires to enter
shipments of these components as unassembled,
essentially complete alarm systems under HTSUS
8531.10.00456 and are asking you to rule that this
is the proper classification if the shipment
consists of the correct components and quantities
to qualify for that classification.
General Rule of Interpretation (GRI) 2(a), HTSUSA, states in
part that a heading which provides for a particular article will
cover that article incomplete or unfinished provided that, as
imported, the unfinished article has the essential character of
the complete or finished article. The rule also applies to
incomplete or unfinished articles imported unassembled or
disassembled provided that they are to be treated as complete or
finished articles by virtue of the first part of GRI 2(a). The
articles in this case are both incomplete and unassembled.
The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs) although not dispositive, should be
looked to for the proper interpretation of the HTSUSA. See 54
Fed. Reg. 35128 (August 23, 1989). The relevant ENs, page 2,
provide some guidance on the application of GRI 2(a) to
unassembled goods by stating that "when goods are so presented it
is usually for reasons such as requirements or convenience of
packing, handling or transport." The ENs provide further that
for purposes of Rule 2(a) the expression "articles presented
unassembled or disassembled" means articles the components of
which are to be assembled either by means of simple fixing
devices (screws, nuts, bolts, etc.) or by riveting or welding,
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for example, provided only simple assembly operations are
involved.
You have made no statements or offered any evidence that
these proposed shipments would be anything more than bulk
shipments of equal numbers of components. This is not the type
of "convenience of packing, handling or transport" that the ENs
contemplate. We have previously addressed this issue in HQ
087888, dated December 3, 1990, and held that these types of
shipments are "nothing more than disparate components in bulk
form."
However, see also HQ 088760, dated March 18, 1991, which
held that when merchandise is shipped in "blister packs" and
referred to as "kits" which require only a "nut-and-bolt
assembly operation," they possess the essential character of a
complete article.
You also inquire about the HTSUSA classification of "upgrade
kits" which consist of up to 8 Alphanumeric HSPs and Alphanumeric
Adapter Boards (designed to adapt the HSPs to the system to be
upgraded). GRI 3(b) provides direction for the classification of
goods put up in sets for retail sale. The rule states, in
pertinent part:
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...
The ENs for GRI 3(b), page 4, state:
(X) For the purposes of this Rule, the term "goods put up
in sets for retail sale" shall be taken to mean goods
which:
(a) consist of at least two different articles which
are, prima facie, classifiable in different
headings...;
(b) consist of products or articles put up together to
meet a particular need or carry out a specific
activity; and
(c) are put up in a manner suitable for sale directly
to users without repacking (e.g., in boxes or cases or
on boards).
The "upgrade kit" meets the first three criteria of the EN
definition of "goods put up in sets for retail sale" because it:
(1) consists of at least two different articles; (2) which are
classifiable in different headings; (3) consists of articles put
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up together to carry out a specific activity. However, it is
not apparent whether or not the articles are put up in a manner
suitable for sale directly to users without repacking. If they
are so packaged, then we would conclude that the "upgrade kits"
are goods put up in sets for retail sale.
Since the Alphanumeric Adapter Boards function merely to
adapt the Alphanumeric HSPs to the system to be upgraded, we find
that the Alphanumeric HSPs impart the essential character of the
set.
Currently, you import the instant merchandise under a number
of headings. These classifications are presently under review,
and will be decided by HQ 088595.
HOLDING:
The proposed shipments, as described, would not be
considered to have the essential character of a complete home
alarm system, because they are apparently nothing more than
disparate components shipped in bulk form.
If the "upgrade kits" (consisting of up to 8 Alphanumeric
HSPs and Alphanumeric Adapter Boards) are goods put up in sets
for retail sale, they are determined to have the essential
character of the Alphanumeric HSPs.
Sincerely,
John Durant, Director
Commercial Rulings Division