CLA-2 OT:RR:CTF:TCM H179956 LWF
Port Director
U.S. Customs & Border Protection
Port of Minneapolis
330 2nd Ave. South, Suite 560
Minneapolis, MN 55401
Re: Internal Advice Request (No. 11/025); Classification of incomplete power paint spray gun kits from China
Dear Port Director:
This letter is in response to your memorandum dated July 19, 2011, forwarding a Request for Internal Advice (No. 11/025) initiated by Barnes, Richardson & Colburn, on behalf of its client, Graco Minnesota, Inc. (“Graco”), by letter dated April 27, 2011. At issue is the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of incomplete power paint spray kits from China. We have also considered arguments presented by Graco in a telephone conference with members of our staff on December 14, 2012.
FACTS:
The merchandise at issue consists of incomplete cordless and corded paint spray gun kits imported in several configurations. Prior to this Request for Internal Advice, Graco entered the kits under subheading 8424.90.90, HTSUS, which provides for “Mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines; parts thereof: Parts: Other.” The kits were entered on January 5, 2011, and U.S. Customs and Border Protection (CBP) issued a Form 28 Request for Information, dated February 9, 2011, for individual part descriptions of the various kit components. Graco responded to the CBP Form 28 by providing information identifying the components contained in the kits, as well as submitting a Prior Disclosure. On April 27, 2011, Graco submitted its Request for Internal Advice.
Each kit contains multiple components, including a plastic clamshell housing that is shaped like the final spray gun. The components are imported in a plastic carrying case that is designed to transport and protect the final, assembled spray gun. The kits are imported in four different configurations, described as follows:
Configuration 1: The imported merchandise is a cordless spray gun kit that consists of a plastic clamshell housing shaped like the final spray gun and equipped with a trigger, an electric motor with a printed circuit board and attached trigger mechanism, a plastic reservoir for paint, rechargeable lithium-ion batteries, and a battery charger. The components are imported together in a plastic carrying case designed to hold the complete spray gun.
Configuration 2: The imported merchandise is a cordless spray gun kit that consists of a plastic clamshell housing shaped like the final spray gun and equipped with a trigger, a plastic reservoir for paint, rechargeable lithium-ion batteries, and a battery charger. The components are imported together in a plastic carrying case designed to hold the complete spray gun. The Configuration 2 kit does not contain a motor.
Configuration 3: The imported merchandise is a corded spray gun kit that consists of a plastic clamshell housing, a plastic reservoir for paint, and a control board. The components are imported together in a plastic carrying case designed to hold the complete spray gun. The Configuration 3 kit does not contain a motor.
Configuration 4: The imported merchandise is a corded spray gun kit that consists of a plastic clamshell housing and a plastic reservoir for paint. The components are imported together in a plastic carrying case designed to hold the complete spray gun. The Configuration 4 kit does not contain a motor or control board.
For kits imported without motors under Configuration 2, Configuration 3, and Configuration 4, Graco incorporates separately supplied motor and/or control boards during the domestic assembly operations. Furthermore, none of the imported kits contain nozzles, pumps, gearing systems, or spraying systems. After importation, a nozzle, pump, gearing system, and spray system fastened of domestic or separate foreign origin are attached to the motor and the circuit board with several bolts and then inserted into the clamshell housing. The clamshell housing is then fastened together with several screws to form a complete spray gun.
ISSUE:
Are the power paint spray gun kits properly classified as incomplete machines of heading 8424, HTSUS, or should the kit components be individually classified in their respective headings?
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative section of chapter Notes. In the event that goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS subheadings under consideration are as follows:
8424 Mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines; parts thereof:
8424.20 Spray guns and similar appliances:
8424.20.90 Other…
8424.90 Parts:
8424.90.90 Other…
* * * * *
8501 Electric motors and generators (excluding generating sets):
8501.10 Motors of an output not exceeding 37.5 W:
Of under 18.65 W:
8501.10.40 Other…
* * * * *
8504 Electrical transformers, static converters (for example rectifiers) and inductors; parts thereof:
8504.40 Static converters:
8504.40.95 Other…
* * * * *
8507 Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof:
8507.80 Other storage batteries:
8507.80.80 Other…
* * * * *
8537 Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517:
8537.10 For a voltage not exceeding 1,000 V:
8537.10.90 Other…
* * * * *
Note 2(a) to section XVI, HTSUS, states:
Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:
Parts which are goods included in any of the headings of chapter 84 or 85 (other than heading 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings.
* * * * *
Additional U.S. Rule of Interpretation 1(c), HTSUS, provides that:
In the absence of special language or context which otherwise requires[,] a provision for parts of an article covers products solely or principally used as a part of such articles but a provision for “parts” or “parts and accessories” shall not prevail over a specific provision for such part or accessory.”
* * * * *
The Explanatory Notes to the Harmonized Commodity Description and Coding System (ENs) represent the official interpretation of the Harmonized System at the international level. 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 T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN to heading 8424, HTSUS (EN 84.24), states, in pertinent part, that the heading includes:
(B) Spray Guns and Similar Appliances
Spray guns and similar hand controlled appliances are usually designed for attaching to compressed air or steam lines, and are also connected, either directly or through a conduit, with a reservoir of the material to be projected. They are fitted with triggers or other valves for controlling the flow through the nozzle, which is usually adjustable to give a jet or more or less divergent spray. They are used for spraying paint or distemper, varnishes, oils, plastics, cement, metallic powders, textile dust, etc…
Hand controlled spray guns with self-contained electric motor, incorporating a pump and a container for the material to be sprayed (pint, varnish, etc.), are also covered by the heading.
…
Parts
Subject to the general provisions regarding the classification of parts (see the General Explanatory Norte to Section XVI), the heading includes parts for the appliances and machines of this heading. Parts falling in this heading thus include, inter alia, reservoirs for sprayers, spray nozzles, lances and turbulent sprayer heads not of a kind described in heading 84.81.
* * * * *
Heading 8424, HTSUS, provides for “Mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines; parts thereof.” The instant merchandise consists of incomplete power paint spray gun kits, which are presented unassembled and subject to post-import assembly operations in the United States. Concerning the classification of incomplete or unfinished merchandise, GRI 2(a) states as follows:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or failing to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
Accordingly, the principal issue in this case is whether the imported kits possess the essential character of spraying machines of heading 8424, HTSUS.
CBP has consistently classified incomplete or unfinished articles that possess the essential character of the complete or finished good in the same HTSUS heading as the complete or finished good. For example, used motor vehicles from which the engine and transmission have been removed are classifiable as motor vehicles of heading 8703, HTSUS, incomplete or unfinished. See HQ 967894, dated October 26, 2005. In HQ 956226, dated September 13, 1994, CBP classified microwave oven modules for combination microwave/convection ovens, imported without the operating controls, plug, and cord, as electrothermic household appliances of heading 8516, incomplete or unfinished. Similarly, CBP classified incomplete three-wheeled, battery-operated, motorized golf carts, which consisted of the frame, carry platform, motor and controls, but without the rear wheels and or a battery, as motor vehicles for the transport of goods, in heading 8704, incomplete or unfinished. See HQ 962985, dated December 13, 1999. In each of the above cases, the merchandise consisted of incomplete and non-functional goods; however, the imported components were found to possess the essential character of the complete article and therefore, were classifiable pursuant to GRI 2(a).
Although classification pursuant to GRI 2(a) does not require that an incomplete or unfinished article possess the functionality of a complete good of the same heading, the imported merchandise must share the same essential character as the finished good. GRI 2(a) states that “any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the completed or finished article.” The longstanding position of CBP is that the term “essential character” for purposes of GRI 2(a) means the attribute which strongly marks or serves to distinguish what an article is, that which is indispensable to the structure, core or condition of the article. See HQ H013671, dated January 16, 2009 (citing HQ 956538, dated November 29, 1994). The essential character for purposes of GRI 2(a) is determined on a case-by-case basis based on the nature of a given article.
Graco cites HQ 955806, dated February 9, 1994, in which CBP considered the classification of four sets of unassembled bicycle components, to which parts were added after importation to produce complete bicycles. There, CBP used the visual appearance and the value of the components as entered to determine the essential character of the merchandise pursuant to GRI 2(a). However, while CBP classified two unassembled bicycle sets that included a frame, fork, kick stand, brakes, brake/shifter levers, reflector, derailleur, handlebar, grips, and stem as unassembled bicycles of heading 8712, HTSUS, CBP also concluded that the two remaining unassembled sets did not have the essential character of complete bicycles. Those sets contained fewer individual parts (no levers, handlebar, grips, or stem) and together, the sets were valued at less than 50% of the total value of the complete bicycles. Consequently, CBP classified the sets that did not contain levers, a handlebar, grips, or a stem under heading 8714, HTSUS, which provides for other parts and accessories of vehicles of headings 8711 to 8713, HTSUS.
Here, we find that the instant kits are more akin to the unassembled sets classified in HQ 955806 under heading 8714, HTSUS, because they do not possess the essential character of a complete or finished article of that heading. EN 84.24 states that hand controlled spray guns possess a “self-contained electric motor, incorporating a pump and a container for the material to be sprayed (paint, varnish, etc.).” As such, a mechanical appliance classified as a spray gun in heading 8424, HTSUS, would have an electric motor, pump, and reservoir, so that the device is capable of dispensing a liquid. The instant kits do not possess nozzles, pumps, gearing systems, or spray systems, and therefore, they are wholly incapable of projecting, dispersing, or spraying liquids. To the contrary, the kits are subject to further working operations and must be combined with several additional components after importation to achieve basic spraying functionality. Consequently, we cannot reasonably conclude that the kits possess the essential character of finished machines of 8424, HTSUS, pursuant to GRI 2(a).
Graco asserts that HQ 955018, dated January 25, 1994, supports its position that the absence of nozzles, pumps, and spray systems from the instant merchandise does not preclude a finding that the kits possess the essential character of machines of heading 8424, HTSUS. In HQ 955018, CBP considered the classification of assembled laser printers from Japan that were imported without electronic controller boards. CBP determined that a computer laser printer, imported without an electronic controller board, retained the essential character of a complete printer and classified the merchandise as an incomplete, unassembled good pursuant to GRI 2(a). Based on this ruling, Graco maintains that spray gun kits imported without an electronic motor or pump maintain the essential character of a complete spray gun.
However, although the electronic controller boards were incorporated into the printer after importation, the ruling indicates that the installation of the electronic controller boards was the only assembly operation performed in the United States. Unlike the laser printers at issue in HQ 955018, the instant spray gun kits are disassembled at the time of importation and are subject to a substantially more complex assembly process in the United States. A nozzle and pump must first be connected and bolted to an electric motor, and the kit components must then be inserted into the clamshell housing, which is fastened together with several screws. As such, the assembly operations that Graco describes substantially differ from the incorporation of an electronic controller board into laser printers in HQ 955018 and distinguish the case from the instant facts. See also HQ 967894 (applying GRI 2(a) when classifying a fully assembled automobile imported without a motor or transmission). Consequently, we do not agree that HQ 955018 supports the application of GRI 2(a) when classifying the unassembled spray gun kits.
Finally, Graco distinguishes the instant facts from HQ 953860, dated June 23, 1993, in which CBP considered the classification of lawn mower parts imported in bulk. In that ruling, lawn mower parts were imported in bulk, disassociated from any specific finished mower, and treated as parts inventory prior to assembly operations. By contrast, the instant spray gun kits feature components that are not imported in bulk. Furthermore, unlike the component articles at issue in HQ 953860, the instant merchandise is packaged in a plastic case for use in the assembly of one spray gun. However, for the reasons discussed above, we find that the nature of the assembly operations required after importation shows that the imported kits do not possess the essential character of completed spray guns upon their entry into the United States. Drawing analogy to HQ 953860, the absence of nozzles and pumps from the imported kits is akin to the domestic origin of the blades and blade housing of the lawnmowers in the prior CBP ruling. Insomuch as blades and blade housings were deemed essential to the operation of complete lawnmowers, nozzles and pumps are necessary for the dispersal of pressurized water from complete spray guns. Consequently, we must conclude that the absence of those components precludes a finding that the kits possess the essential character of complete spray guns.
With respect to Graco’s alternative argument that the kits should be classified pursuant to GRI 3(b) as “goods put up in sets for retail sale,” we note that the term “set” as used in GRI 3(b) carries specific meaning and is defined in detail by EN (X) to GRI 3(b), which states, in pertinent part:
(X) For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to mean good which:
consist of at least two different articles which are, prima facie, classifiable in different headings. Therefore for example, six fondue forks cannot be regarded as a set within the meaning of this Rule;
consist of products or articles put up together to meet a particular need or carry out a specific activity;
(c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).
In the instant case, there is no dispute that the kit components are classifiable in different headings. The lithium-ion batteries are classifiable under heading 8507, HTSUS, specifically subheading 8507.80.80, HTSUS, which provides for “Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof: Other storage batteries: Other;” and the electric motors are classifiable under heading 8501, HTSUS, specifically subheading 8501.10.40, HTSUS, which provides for “Electric motors and generators (excluding generating sets): Motors of an output not exceeding 37.5 W: Of under 18.65 W: Other.” Similarly, it is apparent upon first impression that the kits consist of articles that are put up together to carry out the specific activity of assembling a spray gun. However, we find that the kits fail to meet the third criterion because after importation, they must be combined with nozzles and pumps before they can be sold to retail purchasers. Compare HQ 958914, dated April 23, 1996 (finding that a consumer mini compact disc stereo system was not a set because after importation, it was repackaged with speakers and into a master carton before being put up for sale to the public), with HQ 083968, dated July 6, 1989 (finding that fuel line repair kits, put up for sale in their condition as imported without domestic packaging or finishing operations, were suitable for sale directly to purchasers). Consequently, the kits are not suitable for sale directly to users without repackaging and, therefore, cannot be classified as sets, pursuant to GRI 3(b).
As the kits cannot be classified pursuant to GRI 2(a) or GRI 3(b), the individual components of each kit must be classified separately, and we must determine whether the individual components can be classified as parts of a spray gun in heading 8424, HTSUS. Note 2 (a) to section XVI precludes classification of parts or accessories which are goods included in Chapter 85, HTSUS. Note 2(a) to section XVI, HTSUS, states, in pertinent part, that:
Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules: (a) Parts which are goods included in any of the heading of chapter 84 or 85 (other than heading 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings.
The EN for General Note 2 for section XVI states that:
The above rules do not apply to parts which in themselves constitute an article covered by a heading of this Section (other than headings 84.85 and 85.48; these are in all cases classified in their own appropriate heading even if specially designed to work as part of a specific machine. This applies in particular to:
…
(9) Electrical transformers and other machines and apparatus of heading 85.04.
(10) Electric accumulators assembled into battery packs (heading 85.07).
…
(14) Boards, panels, consoles, desks, cabinets and other apparatus for electric control or the distribution of electricity (heading 85.37).
* * * * *
Thus, even though the lithium-ion batteries and battery charger described in Configuration 1 and Configuration 2 and the control board described in Configuration 3 are intended to be primarily used with the spray gun, they are precluded from classification in heading 8424, HTSUS, by Note 2(a) to section XVI, because they are provided for eo nomine in heading 8507, HTSUS. See e.g., HQ H155376, dated June 22, 2011, (classifying rechargeable lithium-ion cells in heading 8507, HTSUS). Similarly, battery chargers and control boards are provided for eo nomine within headings of chapter 85, HTSUS. See e.g., New York Ruling Letter (“NY”) N156075, dated April 18, 2011, (classifying a charger for a rechargeable lithium polymer battery pack in heading 8504, HTSUS); and NY H83182, dated July 31, 2001, (classifying a control board for a washing machine motor in heading 8537, HTSUS). Consequently, we find that the subject lithium-ion batteries, battery charger, and control board are described by the terms of headings 8507, 8504, and 8537, HTSUS, respectively. As goods of Chapter 85, they are precluded from classification as “parts” in heading 8424, HTSUS, by application of Note 2(a) to section XVI, HTSUS.
With respect to the plastic clamshell housings and plastic reservoirs, heading 8424, HTSUS, provides for parts of spray guns. The EN 84.24 description of parts of heading 8424, HTSUS, includes “reservoirs for sprayers.” As discussed above, the plastic clamshell housings and reservoirs present the form, shape and overall visual appearance of the completed spray gun. They are specifically designed for and exclusively used with finished machines of heading 8424, HTSUS. As such, they are properly classified as parts under subheading 8424.90, HTSUS.
Finally, the plastic carrying cases are classifiable in accordance with GRI 5(a). Insomuch as the carrying cases are imported with the unassembled spray gun components and are specifically designed to hold and secure one plastic clamshell housing and a reservoir, we find that the carrying cases are properly classified pursuant to GRI 5(a) with parts of heading 8424, HTSUS, specifically in subheading 8424.90, HTSUS.
HOLDING:
By application of GRI 1, the items contained in the power paint spray gun kits are classified separately under their applicable tariff provisions.
By application of GRI 1, the plastic clamshell housings and plastic reservoirs are properly classified under heading 8424, HTSUS, specifically subheading 8424.90.90, HTSUS, which provides for “Mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines; parts thereof: Parts: Other.” The column one, general rate of duty under this provision is free.
By application of GRI 1, the lithium-ion batteries are classified under heading 8507, HTSUS, specifically subheading 8507.80.80, HTSUS, which provides for “Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof: Other storage batteries: Other.” The column one, general rate of duty under this provision is 3.4 percent ad valorem.
By application of GRI 1, the battery chargers are classified under heading 8504, HTSUS, specifically subheading 8504.40.95, HTSUS, which provides for “Electrical transformers, static converters (for example rectifiers) and inductors; parts thereof: Static converters: Other.” The column one, general rate of duty under this provision is 1.5 percent ad valorem.
By application of GRI 1, the electric motors are classified under heading 8501, HTSUS, specifically subheading 8501.10.40, HTSUS, which provides for “Electric motors and generators (excluding generating sets): Motors of an output not exceeding 37.5 W: Of under 18.65 W: Other.” The column one, general rate of duty under this provision is 4.4 percent ad valorem.
By application of GRI 1, the control boards are classified under heading 8537, HTSUS, specifically 8537.10.90, HTSUS, which provides for “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517: For a voltage not exceeding 1,000 V: Other.” The column one, general rate of duty under this provision is 2.7 percent ad valorem.
By application of GRI 1 and GRI 5(a), the spray gun cases are properly classified under heading 8424, HTSUS, specifically subheading 8424.90.90, HTSUS, which provides for “Mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines; parts thereof: Parts: Other.” The column one, general rate of duty under this provision is free.
You are to mail this decision to counsel for the internal advice requester no later than sixty days from the date of this decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public, on the CBP Home Page at http://www.cbp.gov, by means of the Freedom of Information Act, and other methods of publication.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division