• HQ H209836
• Apr 23, 2015

• Type : Classification • HTSUS :
•  Related:   818084; I85202; 960049; 965168; I83961; N022275; N075377; N017484   

CLA–2 OT:RR:CTF:TCM H209836 JPJ

Port Director
U.S. Customs and Border Protection
5600 Pearl Street
Rosemont, IL 60018

RE: Application for Further Review of Protest No. 3901-12-100069; Classification of inner/outer races and hub rings for automotive wheel hub units

Dear Port Director:

The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 3901-12-100069, timely filed on January 25, 2012, on behalf of American NTN Bearing Manufacturing Corporation (“ANBM”) or (“Protestant”). The AFR concerns the classification of inner and outer races and rings for use in automotive wheel hub assemblies under the Harmonized Tariff Schedule of the United States (“HTSUS”). Our decision takes into consideration a supplement to ANBM’s AFR dated May 24, 2012. A meeting with members of my staff was held at CBP Headquarters on July 30, 2014. CBP also requested that ANBM supplement its treatment claim. ANBM’s supplemental submission on the treatment claim dated January 9, 2015, has also been taken into consideration in our decision.

FACTS:

ANBM, a subsidiary of NTN Corporation, manufactures and assembles automotive wheel hub units incorporating ball and tapered roller bearings at its plant in Elgin, Illinois. ANBM imports various components for wheel hub units from its parent company in Japan.

The merchandise is described as “unfinished and not heat treated” inner and outer races and hub rings for automotive wheel hub units. They are entered separately and apart from the wheel hub units. The races and rings at issue have the following part numbers: B3#HUB034T-2*2U0A; B3#HUB092T-29*4U0A; B3#HUB213T-4*2U0A; B0#HUB162T-1*2U0A; B0#HUB175T-1*2U0A; B0#HUB176T-1*2U0A; B0#HUR093-7*2U0A; and C0#HUB092T-17*4U0A.

The unfinished components are further processed by ANBM in the U.S. before being assembled by ANBM into completed wheel hub units. The finishing processes performed by ANBM differ depending on the component. For example, after importation, a forged (unfinished) inner ring is turned, heat treated, ground and the spacing between the balls is measured. An imported forged outer ring is turned, heat treated via induction, ground, the spacing between the balls is measured, the ball cassette is assembled and checked and the component is then washed.

The merchandise was entered on one entry at the port of Chicago on December 14, 2010, under subheading 8708.99, HTSUS, as parts of motor vehicles. CBP reclassified the merchandise under subheading 8482.99, HTSUS, as parts of ball or roller bearings. The entry was liquidated on September 30, 2011. Protestant argues that the merchandise was properly classified as entered.

ISSUE:

Are the races and rings for automotive wheel hub units properly classified as parts of bearings under heading 8482, HTSUS, or as parts of motor vehicles under heading 8708, HTSUS?

LAW AND ANALYSIS:

Initially, we note that this matter is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification. The protest was timely filed, within 180 days of liquidation. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).

Further Review of Protest No. 3901-12-100069 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because the protested decision is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee.

Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.

GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and, mutatis mutandis, to GRIs 1 through 5. The 2012 HTSUS headings under consideration are the following:

8482 Ball or roller bearings, and parts thereof:

8708 Parts and accessories of the motor vehicles of headings 8701 to 8705:

Note 1(l) to Section XVI (which includes Chapter 84), HTSUS, states, in pertinent part, as follows:

This section does not cover:

(l) Articles of section XVII;

Note 2(e) to Section XVII (which includes Chapter 87), HTSUS, states, in pertinent part, as follows:

2. The expressions “parts” and “parts and accessories” do not apply to the following articles, whether or not they are identifiable as for the goods of this section:

(e) Machines or apparatus of headings 84.01 to 84.79, or parts thereof; articles of heading 84.81 or 84.82 or, provided they constitute integral parts of engines or motors, articles of heading 84.83;

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTS and are thus useful in ascertaining the proper classification of the merchandise. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The ENs 8482, provide, in relevant part, as follows:

This heading covers all ball, roller or needle roller type bearings. They are used in place of smooth metal bearings and enable friction to be considerably reduced. They are generally fitted between the bearing housing and the shaft or axle, and may be designed to give radial support (radial bearings) or to resist thrust (thrust bearings). Certain bearings may be designed for both radial and thrust support.

Normally, bearings consist of two concentric rings (races) enclosing the balls or rollers, and a cage which keeps them in place and ensures that their spacing remains constant.

PARTS

The heading also covers parts of ball, roller or needle roller bearings, e.g.:

Polished steel balls Bearing balls Needles or rollers for bearings, of any shape Rings, cages, fixing sleeves, etc.

The ENs to Section XVII (which includes Chapter 87), provide, in relevant part, as follows:

(III) Parts and Accessories

Parts and accessories excluded by Note 2 to Section XVII

This Note excludes the following parts and accessories, whether or not they are identifiable as for the articles of this Section:

(6) Certain other goods of Chapter 84, e.g.: (b) Ball or roller bearings (heading 84.82)

The ENs 8708, provide, in relevant part, as follows:

This heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfill both the following conditions:

They must be identifiable as being suitable for use solely or principally with the above-mentioned vehicles; and They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note).

Protestant argues that the inner and outer races and hub rings are parts and accessories of motor vehicles, provided for in heading 8708, HTSUS. In support of heading 8708, HTSUS, Protestant argues: (1) the inner and outer races and hub rings are components of wheel hub units used in motor vehicles; (2) wheel hub units are parts of motor vehicles provided for in heading 8708, HTSUS; (3) components of wheel hub units are parts of motor vehicles provided for in heading 8708, HTSUS; (4) Generation 2 and Generation 3 wheel hub units are parts solely or principally used with motor vehicles; and (5) Section XVII, Note 3, HTSUS, requires that parts and accessories which are suitable for use solely or principally with goods of chapters 86 through 88 be classified in heading 8708, HTSUS. Finally, Protestant argues that CBP has struggled with the classification of wheel hub units, and that this has allegedly resulted in inconsistent rulings on wheel hub units. We disagree.

Regarding the classification of wheel hub units, CBP has stated that “a design feature or features which imparts a significant additional non-friction reducing capability to a ball or roller bearing will remove that bearing from the scope of heading 8482.” See Headquarters Ruling Letter (HQ) 960049, dated August 26, 1997. For example, in NY 818084, dated February 7, 1996, CBP classified a splined hub unit for a driving wheel as a part of a motor vehicle in heading 8708, HTSUS, because its inner ring had a splined inner surface which enabled it to transmit the power of the driving axle to the wheel. CBP found that the transmission of power of the driving axle to the wheel was a function unrelated to friction reduction. See also NY N022275, dated February 6, 2008; NY R023329, dated August 3, 2005; and NY I85202, dated August 20, 2002 (hub units with splined inner surfaces that transmit power from the drive axle to the wheel classified under heading 8708, HTSUS). The addition of other features such as sensors for ABS braking systems or a tone-ring which is part of an anti-lock brake system will also place a wheel hub outside the scope of heading 8482, HTSUS. For example, in NY N075377, dated October 6, 2009, CBP classified an angular contact bearing with a double flanged wheel mounting hub and axle mounting flange in heading 8708, HTSUS, because it included a toothed sensor ring, known as a “tone ring,” which is a part of an anti-lock brake system.

However, certain features are related to the friction reducing capability of a bearing, and do not remove these products from the scope of heading 8482, HTSUS. A Generation 2 hub unit for a non-driving wheel consisting of a double row angular contact ball bearing with a flanged outer ring and spigot was classified in heading 8482, HTSUS. In HQ 960049, CBP considered a Generation 2 hub unit for a non-driving wheel which had an inner ring fitted over an axle shaft and a flanged outer ring and spigot for attachment to the wheel hub. CBP stated: “that for ball or roller bearings to function as friction-reducing elements they must necessarily have design features which permit them to attach to a shaft or machinery part with which they will be used.” See HQ 960049. There, CBP concluded that the flanged outer ring and spigot – which were designed to facilitate centering and mounting of the brake and wheel – were common design features of ball or roller bearings of this type and did not impart a non-friction reducing capability.

CBP also noted that the fact that the product at issue in HQ 960049 was designed for a specific vehicle was “not legally relevant because many ball or roller bearing types are manufactured to specific engineering and design criteria and are purchased with a particular application in mind.” See HQ 960049. See also HQ 965168, dated July 25, 2002 (double-flange "non-driven hub assembly" consisting of a mounting flange, wheel flange and a bearing, classified under heading 8482, HTSUS).

The merchandise at issue is not a complete wheel hub unit, but individual components, described as “unfinished and not heat treated” inner and outer races and hub rings, imported separately and apart from the wheel hub unit.

Heading 8708, HTSUS, is a parts provision within Section XVII, HTSUS. As such, Note 2(e) to Section XVII provides that the term “parts” within the context of Section XVII does not apply to articles of heading 8482, HTSUS, whether or not such articles are identifiable as parts for the goods of Section XVII. So, if the inner and outer races and hub rings are described by heading 8482, HTSUS, then they are not provided for in heading 8708, HTSUS, whether or not they are identifiable as parts of motor vehicles. Therefore, the merchandise, in general, must first be ruled out of heading 8482, HTSUS, before heading 8708, HTSUS, can be considered. Heading 8482, HTSUS, provides for “Ball or roller bearings, and parts thereof”. The terms “bearing” and “ball bearing” are not defined in the HTSUS. When a tariff term is not defined by the HTSUS or its legislative history, “the term’s correct meaning is its common meaning.” Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994). The common meaning of a term used in commerce is presumed to be the same as its commercial meaning. Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir. 1989). To ascertain the common meaning of a term, CBP may consult “dictionaries, scientific authorities, and other reliable information sources” and “lexicographic and other materials.” C.J. Tower & Sons v. United States, 673 F.2d 1268, 1271 (C.C.P.A. 1982); Simod, 872 F.2d at 1576.

The term “bearing” is defined as “[a]n object, surface, or point that supports: supporting power: point of support: … a machine part in which a journal, gudgeon, pivot, pin or other part revolves, oscillates, or slides – see ball bearing, needle bearing, roller bearing, thrust bearing.” Merriam Webster’s Third New International Dictionary, p. 192 (2003).

In THK America Inc. v. United States, 837 F.Supp. 427 (Ct. Int’l. Trade 1993), the Court of International Trade defined “ball bearings” as “a rolling bearing with balls as rolling elements.” THK America, 837 F.Supp. at 432 (citing The Antifriction Bearing Manufacturers Association Standard Terminology for Antifriction Ball and Roller Bearings and Parts, p. 2, (1984)). The Court further defined a “rolling bearing” as:

A bearing operating with rolling rather than sliding between the parts supporting load and moving in relation to each other. It comprises raceway members and rolling elements with or without means for their spacing and/or guiding. It may be de-signed to support radial, axial or combined radial and axial load.

THK America, 837 F.Supp. at 432 (citing The ABFMA Standard Terminology for Antifriction Ball and Roller Bearings and Parts, p. 12).

Protestant argues that the unfinished components are identifiable as parts of a wheel hub unit and have no use other than as components of wheel hub units. Therefore, it believes the components are properly classified in heading 8708, HTSUS. Protestant cites NY I83961, dated August 6, 2002, which classified a flanged wheel hub forging in heading 8708, HTSUS for support. A flanged wheel hub forging is a component in and of itself that is different from bearing races or rings. NY I83961, also undercuts Protestant’s arguments. In that ruling, the classification of unfinished inner and outer rings for ball bearings that would ultimately be incorporated into a complete wheel hub unit were also addressed. The bearing races were found to be classified in subheading 8482.99.0500, HTSUSA, which provides for inner or outer rings or races for ball bearings. In addition, it was determined in NY N017484, dated October 17, 2007, that unfinished forgings, that upon completion would become the inner rings for bearings used in wheel HUB 3 units, were classified as inner or outer races for ball bearings in subheading 8482.99.0500, HTSUSA.

We agree that the unfinished races and rings are, prima facie, parts of the vehicles in which they will be used. However, at the time of importation, the unfinished rings/races are entered separately and apart from the wheel hub units. As such, they provide no additional functionality other than to hold the balls or rollers in place and to serve as the rolling track for the balls or rollers within the bearing assembly. Ultimate end use with a motor vehicle does not dictate classification in heading 8708, HTSUS.

GRI 2(a) extends the scope of tariff headings to include unfinished parts, provided the unfinished parts have the essential character of the finished parts. Examination of the submitted photographs and diagrams reveals that the merchandise are net shape blanks that closely approximate the outline of the finished articles they will form. Although the merchandise may not be to final tolerances and lack the finished surfaces of finished parts, upon importation they are readily recognizable as the finished products they will become. Further, there is no evidence to suggest that the merchandise, in its condition as imported, has any practical use other than for completion into finished bearing parts. We find that the unfinished races and rings, in their condition as imported, have the essential character of bearing parts provided for in heading 8482, HTSUS.

Therefore, the unfinished inner and outer races and hub rings are parts of bearings, articles of heading 8482, HTSUS. We note that Note 2(e) to Section XVII, HTSUS, precludes the instant products from classification as parts of motor vehicles under heading 8708, HTSUS, by virtue of their classification under heading 8482, HTSUS. Bearing rings/races are specifically provided for in subheading 8482.99, HTSUS. Accordingly, the rings designed for use with ball bearings fall to be classified in subheading 8482.99.0500, HTSUSA, and the rings designed for use with tapered roller bearings fall to be classified in subheading 8482.99.1580, HTSUSA.

TREATMENT CLAIM Protestant’s alternative claim is that under 19 U.S.C. 1625(c) a "treatment" has been established under subheading 8708.99, HTSUS.

Under section 625 of the Tariff Act of 1930, as amended, 19 U.S.C. §1625 (1994), a proposed interpretive ruling or decision which would modify (other than to correct a clerical error) or revoke a prior interpretive ruling or decision which has been in effect for at least 60 days, or have the effect of modifying the treatment previously accorded by the Customs Service to substantially identical transactions, must be published in the Customs Bulletin and will become effective 60 days after the date of its publication. If Protestant were able to substantiate its claim of treatment under 19 U.S.C. §1625(c)(2), it would be entitled to liquidation of the entries under heading 8708, HTSUS, for the 60-day period set forth in the Customs Bulletin. Thereafter, the merchandise would be classifiable in accordance with Customs and Border Protection’s notice, under heading 8482, HTSUS. Section 177.12(c)(1) of the Customs Regulations (19 CFR 177.12(c)(1)) provides that the following rules will apply for purposes of determining whether a treatment was previously accorded by CBP to substantially identical transactions of a person: (i) There must be evidence to establish that: (A) There was an actual determination by a Customs officer regarding the facts and issues involved in the claimed treatment; (B) The Customs officer making the actual determination was responsible for the subject matter on which the determination was made; and

(C) Over a 2-year period immediately preceding the claim of treatment, Customs consistently applied that determination on a national basis as reflected in liquidations of entries or reconciliations or other Customs actions with respect to all or substantially all of that person's Customs transactions involving materially identical facts and issues.

Section 177(c)(1)(ii) provides that the determination of whether the requisite treatment occurred will be made on a case-by-case basis and will involve an assessment of all relevant factors. In particular, CBP will focus on past transactions to determine whether there was an examination of the merchandise by CBP or the extent to which those transactions were reviewed by CBP. Diminished weight will be given to transactions involving small quantities or values, and no weight to informal entries or transactions processed without examination or CBP officer review.

Section 177.12(c)(1)(iv) of the Customs Regulations, 19 CFR 177.12(c)(iv)), provides that "(t)he evidentiary burden as regards the existence of the previous treatment is on the person claiming the treatment." Section 177.12(c)(1)(iv), further states the following:  The evidence of previous treatment by Customs must include a list of all materially identical transactions by entry number (or other Customs assigned number), the quantity and value of merchandise covered by each transaction (where applicable), the ports of entry, the dates of final action by Customs, and, if known, the name and location of the Customs officer who made the determination on which the claimed treatment is based. In addition, in cases in which an entry is liquidated without any Customs review (for example, the entry is liquidated automatically as entered), the person claiming a previous treatment must be prepared to submit to Customs written or other appropriate evidence of the earlier actual determination of a Customs officer that the person relied on in preparing the entry and that is consistent with the liquidation of the entry.

The claim of treatment is made in conjunction with the protested entries of the following merchandise described as inner and outer races and wheel hub part numbers: B3#HUB034T-2*2U0A; B3#HUB092T-29*4U0A; B3#HUB213T-4*2U0A; B0#HUB162T-1*2U0A; B0#HUB175T-1*2U0A; B0#HUB176T-1*2U0A; B0#HUR093-7*2U0A; and C0#HUB092T-17*4U0A.

The merchandise was entered on one entry at the port of Chicago on December 14, 2010. In a Notice of Action, dated August 31, 2011, CBP, port of Chicago, instructed Protestant to change the classification of its merchandise from subheading 8708.99, HTSUS, to subheading 8542.99, HTSUS.

Protestant argues that it has imported wheel hub units and components since 1989. During the nearly 23 years since importations began, Protestant states that it had repeated contact with various CBP officials, in particular, with the import specialist at the port of Chicago responsible for importations of bearings. Protestant notes a meeting in the mid-1990’s between its customs counsel (affidavits provided), and a meeting in 2004 during a Focused Assessment. According to Protestant, CBP examined ANBM’s products in detail and never indicated its imported hub unit components were misclassified. Protestant argues that these meetings are evidence of an actual determination by a CBP officer regarding the facts and issues involved in the claimed treatment.

To further substantiate its claim of treatment, Protestant submitted three exhibits. Exhibit 1 is a three-column spreadsheet. Each column is labeled “Date of Entry”, “Liq. Date”, and “NTN_Part”. According to a separate list of part numbers, also provided, the spreadsheet appears to include as many as 60 different part numbers allegedly entered between July 19, 2006 and April 4, 2012. However, no descriptions for these part numbers was provided, and it is not clear whether the part numbers are for inner and outer races and hub rings. For some part numbers it provides liquidation dates, and for others it does not. The spreadsheet does not include entry numbers, the quantity or value of the merchandise, the ports of entry, the dates of final action by Customs, or the name and location of the Customs officer who made the determination on which the claimed treatment is based. Additionally, Protestant explains that the entries (entry numbers not provided) for the part numbers in Exhibit 1 had been liquidated via the bypass paperless method. Absent entry numbers, etc., and under Section 177.12(c)(1)(ii), CBP Regulations, Exhibit 1 is to be accorded no weight.

Exhibit 2 is a collection of copies of invoices and entry summary (CF 7501) documents for many of the 60 different part numbers listed in Exhibit 1. Protestant explains that the copies of the CF 7501 documents, which demonstrate that the different part numbers were entered as type “03”, or antidumping entries, and liquidated manually, establishes that they were reviewed by CBP. However, we have sorted through this exhibit, and have identified only eight (8) invoices and eight (8) CF 7501 documents for the merchandise at issue in this protest and AFR. No entry documentation was provided for part number C0#HUB092T-17*4UOA.

Additionally, no liquidation dates, or dates of final action of Customs were provided. The evidence of treatment must include the dates of final action of Customs. The evidence of treatment must also include a list of all materially identical transactions by entry number. In connection with the evidence of the liquidation of entries over a 2-year period immediately preceding the claim of treatment, as required by Section 177.12(c)1(i)(C), CBP Regulations, Protestant has failed to provide evidence of consistent liquidations over a 2-year period immediately preceding the claim of treatment with respect to all or substantially all of the importer’s Customs transactions. There is also no evidence that Customs consistently applied that determination on a national basis. Finally, Exhibit 3 includes copies of eleven (11) liquidation reports. However, none of these liquidation reports are for any of the entries of the merchandise at issue in this protest and AFR.

Based on the evidence submitted, Protestant has failed to substantiate its claim of treatment. Therefore, we find that no treatment was previously accorded by CBP to its entries of inner and outer races and hub rings under subheading 8708.99, HTSUS.

HOLDING:

By application of GRIs 1, 2(a) and 6, the inner races, outer races, and hub rings are classified in heading 8482, specifically, in subheading 8482.99, which provides for “Ball or roller bearings, and parts thereof: Parts: Other”. The column one, general rate of duty for inner or outer rings or races is 9.9% ad valorem if for ball bearings, and 5.8% ad valorem if for tapered roller bearings.

A treatment under 19 U.S.C. 1625(c) has not been established.

You are instructed to DENY the protest.

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 International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division