CLA-2 CO:R:C:G 088051 KWM
Mr. James L. Gregory
C.F. Liebert, Inc.
P.O. Box L
Blaine, Washington 98230
RE: Wall panel system
Dear Mr. Gregory:
This will acknowledge receipt of your letter dated June 18, 1990, requesting tariff
classification of a "wall panel system" manufactured in Canada. Your letter has been
forwarded to this office for a ruling.
FACTS:
Your letter refers to the merchandise at issue as a "wall panel system." It is a
modular wall system described as:
. . . panels made of expanded polystyrene connected through the use of specially
designed wooden members and splines, also made of polystyrene. Once the panels
are installed, they may be sheathed with conventional siding or sheetrock.
The system is essentially an alternative to conventional wood framing construction
techniques. The panels are prefabricated and installed at the building site. They are not
sheathed at the time of entry. Illustrative literature which accompanied your request
describes the wall system as "a highly efficient exterior wall system" which is used to
create "a structurally sound, easily assembled load-bearing wall." The literature highlights
the energy efficient contributions of the polystyrene panels. However, the literature also
recognizes the role of the wood studs in providing load-bearing capabilities, faster single
operation erection of the walls, and ease of installation. The cost breakdown provided
indicates that the cost of the wood exceeds that of the plastics. In addition, we believe
that the panel is in chief weight of wood, but that the bulk of the product is
polystyrene.
ISSUE:
How are these goods classified under the Harmonized Tariff Schedule of the United
States Annotated?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States Annotated
(HTSUSA) is made in accordance with the General Rules of Interpretation (GRI's). The
systematic detail of the harmonized system is such that virtually all goods are classified
by application of GRI 1, that is, according to the terms of the headings of the tariff
schedule and any relevant 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 GRI's may be applied, taken in order.
Subheading 4418.90.4050, HTSUSA, provides for:
4418 Builders' joinery and carpentry of wood, including
cellular wood panels and assembled parquet panels;
shingles and shakes:
4418.90 Other:
4418.90.40 Other:
4418.90.4050 Prefabricated partitions and panels for
buildings......................
(Emphasis added). This heading would appear to include the instant goods, if we
consider them to be "of wood." The Explanatory Notes to Chapter 44, HTSUSA, give
some guidelines to use in determining the classification of building panels:
As a general rule, building panels composed of layers of wood and
plastics are classified in this Chapter. Classification of these panels depends
on their external surface or surfaces which normally give them their essential
character in terms of their intended uses. Thus, for example, a building
panel, used as a structural element in roofing, wall or floor applications and
consisting of an external layer of particle board and a layer of insulating
material of plastics, is classified in heading 44.10, whatever the thickness
of the layer of plastics, since it is the rigid, strong, wood portion which
allows the panel to be used as a structural element, the plastics having a
subsidiary insulation function. On the other hand, a panel in which a wood
backing serves merely as a support for an exterior surface of plastics is,
in most cases, classified in Chapter 39.
(Emphasis in the original). The gist of the explanatory note is that building panels are
classified by the material which provides "their essential character in terms of their
intended uses." In most cases, the panels at issue are used on or for the surface
treatment of a building wall, and the material is that which comprises the external surface
of the panels. In this case, the wall panels are the interior of the walls, and provide
the load bearing structure and insulation components. However, the rationale for inclusion
in the heading still applies. In terms of use, we find that the wood component provides
the essential character of the panels.
Though insulation is an important function of the panel, it is by no means the
only function. The primary use of the panels will be in the construction of walls. The
wood studs incorporated into the panels provide the structural integrity without which the
polystyrene would be merely another form of bulk insulation. Based on our evaluation
of the facts, cost and weight breakdowns, and recognition that the structural or load-
bearing nature of the panels is provided by the wood component, we find that the
essential character of the panels is that of the wood. Therefore, these are more properly
described by the terms "builders' joinery or carpentry of wood . . . prefabricated
partitions or panels for buildings" of subheading 4418.90.4050, HTSUSA.
HOLDING:
The building panels at issue here, comprised of expanded polystyrene bonded to
wooden studs, and used to form the structural or load bearing portion of walls for homes
and other buildings, are classified in subheading 4418.90.4050, HTSUSA, as described
above. The applicable rate of duty for these goods will be 5.1 percent ad valorem.
Articles that meet the definition of "goods originating in the territory of Canada"
(see General Note 3(c)(vii)(B), HTSUSA) are subject to reduced rates of duty under the
United States-Canada Free Trade Agreement Implementation Act of 1988. If the
merchandise constitutes "goods originating in the territory of Canada," the applicable rate
of duty would be 4 percent ad valorem. Further, goods meeting the description of
subheading 9905.44.10, HTSUSA, may be eligible for entry free of duty.
Sincerely,
John A. Durant
Director
Commercial Rulings Division