OT:RR:CTF:ER
H244253 MES
Mr. Steven B. Zisser
Zisser Customs Law Group
9355 Airway Road
Suite 1
San Diego, CA 92154
Re: Ruling request regarding subheading 9817.00.96, HTSUS, and the applicability of antidumping and countervailing duties
Dear Mr. Zisser:
This is in response to your ruling request dated March 1, 2013, on behalf of Sunrise Medical LLC, (“Sunrise”), which we received on July 22, 2013. You request a ruling regarding whether various wheelchair parts from China are eligible for duty-free treatment under subheading 9817.00.96, HTSUS. Additionally, you request a ruling regarding whether merchandise classified under subheading 9817.00.96, HTSUS, is exempt from paying antidumping and countervailing duties.
FACTS:
Sunrise is a large manufacturer of power and manual wheelchairs and wheelchair accessories. Various Chinese-origin aluminum parts of specialized wheelchairs will be imported into the United States such as: frames, forks, armrest and footrest assemblies, and wheel assemblies. The frames consist of various tubes of different colors and sizes attached to each other by hinges, brackets, pins and other fastening hardware. Forks are used to attach the wheels to the frame of the wheelchair. The armrest and footrest assemblies come in various shapes and sizes. The wheel subassemblies include hand rails, wheel locks, wheels and various other parts. In all cases, these parts are used in the assembly of specialized wheelchairs in the United States that are adapted to the patient’s specific handicap condition, body size, weight and age or for the repair of such wheelchairs. Subheading 9817.00.96 covers articles, such as qualifying
wheelchairs and wheelchair accessories, that are specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons and parts and accessories (except parts and accessories of braces and artificial limb prosthetics) that are specially designed or adapted for use in articles.
In your letter, you state that, for purposes of this ruling, we should assume that some of the parts, components, and subassemblies at issue include aluminum extrusions and are within the scope of the orders on aluminum extrusions covered by Antidumping Duty Order A-570-967 and Countervailing Duty Order C-570-968. From this, assuming that the wheelchair parts at issue are eligible for duty-free treatment under subheading 9817.00.96, HTSUS, you argue that antidumping and countervailing duties are prohibited because “antidumping duties and countervailing duties are all considered “duties” for the purposes of applying the Nairobi Protocol language.” As support, you state the “[w]ith the implementation of the Nairobi Protocol in 1982, 1988 and 1995 we believe it is clear that both the U.S. Congress and the President fully expected that those handicap eligible items would be granted duty-free treatment and not subject to any additional duty assessments or fees. The Senate stated in its Report that one of the goals of this law was to benefit the handicapped and show U.S. support for the rights of the handicapped. We reasonably believe that this would include anti-dumping and countervailing duty assessments.”
ISSUES:
Whether the imported parts are eligible for preferential tariff treatment under subheading 9817.00.96, HTSUS.
Whether goods that are classified under subheading 9817.00.96, HTSUS, which fall within the scope of antidumping and countervailing duty orders, are subject to antidumping and countervailing duties.
LAW & ANALYSIS:
The Agreement on the Importation of Educational, Scientific and Cultural Materials, known as the Florence Agreement, provides for duty-free treatment and the reduction of trade obstacles for imports of educational, scientific and cultural materials. The Nairobi Protocol to the Florence Agreement on the Importation of Educational, Scientific, and Cultural Materials Act of 1982 expanded the duty-free treatment for certain articles for the use or benefit of the handicapped. Section 1121 of the Omnibus Trade and Competitiveness Act of 1988 and Presidential Proclamation 5978 provided for the implementation of the Nairobi Protocol by inserting permanent provisions, subheadings 9817.00.92, 9817.00.94, and 9817.00.96 into the HTSUS. These tariff provisions specifically state that “articles specifically designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons” are eligible for duty-free treatment.
U.S. Note 4(a), Chapter 98, HTSUS (“U.S. Note 4(a)”), states that the term “blind or other physically or mentally handicapped persons” includes any person suffering from a
permanent or chronic physical or mental impairment that substantially limits one or more major life activities, such as caring for one’s self, performing manual tasks, walking, seeing, hearing,
speaking, breathing, learning, or working. U.S. Note 4(b), Chapter 98, HTSUS (“U.S. Note 4(b)”), states that subheadings 9817.00.92, 9817.00.94 and 9817.00.96 do not cover: (i) articles for acute or transient disability; (ii) spectacles, dentures, and cosmetic articles for individuals not substantially disabled; (iii) therapeutic and diagnostic articles; or (iv) medicine or drugs. Persons who cannot walk suffer from a permanent or chronic physical impairment which substantially limits a major life activity and therefore, are considered physically handicapped persons under U.S. Note 4(a). The wheelchair parts must be “specially designed or adapted” for the use or benefit of handicapped persons, as required by the superior text in subheading 9817.00.96, HTSUS, to qualify for duty-free treatment under subheading 9817.00.96.
In Starkey Laboratories, Inc. v. United States, 22 CIT 360 (April 10, 1998), the court found certain parts of hearing aids to be specially designed or adapted for the use of deaf persons. The court held that the parts (potentiometers, trimmers, variable resistors, coils, microphones, receivers, hearing aid body parts and hearing aid subassemblies including microphones or receivers) were specially designed or adapted in that the parts had to adhere to certain design limitations, i.e., the merchandise had to be resistant to humidity and moisture; they had to be manufactured to fine tolerances; and for those components that used power, their power consumption had to be designed to be low to prolong battery life in hearing aids.
In Headquarters Ruling Letter (“HRL”) H024976, dated March 23, 2009, CBP held that certain imported parts of a wheelchair securement system were eligible for preferential tariff treatment under subheading 9817.00.96, HTSUS. CBP held that the wheelchair securement systems at issue were specially designed for the use or benefit of handicapped persons, and then considered whether particular parts were specially designed or adapted for use in the securement systems. For instance, parts of general use such as nuts, bolts, and screws were not held to be eligible for preferential treatment under subheading 9817.00.96, HTSUS. CBP also held in HRL 557712, dated June 27, 1994, that wheelchairs with features such as a quad release and comfort, durability, low maintenance and rollability were predominately used by persons with permanent or chronic disabilities and met the specially designed or adapted standard, and were eligible for duty-free treatment under subheading 9817.00.96, HTSUS.
Consistent with HRL 557712, we find that the specialized wheelchairs are specially designed for the use or benefit of handicapped persons. Further, we find that the parts are imported finished and ready for assembly into the specialized wheelchairs and have no use for the general public. Accordingly, the wheelchair parts in question are specially designed and adapted for the use or benefit of handicapped persons. Further, none of the U.S. Note 4(b) exclusions apply. The wheelchair parts are not related to the treatment of an acute disability, related to a cosmetic item or a drug or medicine. CBP held in HRL H148717, dated March 25, 2011, that certain products designed for persons with reduced mobility such as a surf chair, were eligible for duty-free treatment under subheading 9817.00.96, HTSUS, and were not articles for a disability of an acute or transient nature because of their specialty design and high pricing. We note that these wheelchairs are specialized wheelchairs designed for the individual’s particular
condition and need and the parts are specially designed and adapted for use as parts of these wheelchairs. Therefore, these parts are not excluded from duty-free treatment under subheading 9817.00.96, HTSUS. Accordingly, we find that the wheelchair parts are eligible for duty-free treatment under subheading 9817.00.96, HTSUS.
As explained above, subheading 9817.00.96, HTSUS, was one of the permanent provisions inserted to implement the Nairobi Protocol, which provides that the “contracting States undertake to extend… the present protocol exemption from customs duties…” Thus, an importer bringing goods in under subheading 9817.00.96, HTSUS, would owe no customs duties. The HTSUS, however, does not specifically address antidumping or countervailing duties that may be owed. In your letter, you state that items eligible for duty-free treatment under subheading 9817.00.96, HTSUS, are exempt from antidumping and countervailing duties because “antidumping duties and countervailing duties are all considered customs duties for the purposes of applying the Nairobi Protocol language.” Therefore, you argue that antidumping and countervailing duties are the same as customs duties. However, you provide no legal authority for your position.
Courts have distinguished between customs duties and antidumping and countervailing duties. See, e.g., Dynacraft Indus. v. United States, 118 F. Supp. 2d 1286, 1291 (CIT 2000) (concluding that “antidumping and countervailing duties were never intended to be regular or general duties”). Customs duties were primarily designed to generate revenue. See, e.g., United States v. Laurenti, 581 F.2d 37, 41 n.12 (2d Cir. 1978) (explaining that customs duties were a principal source of early federal revenue). However, countervailing duties remedy unfair competitive advantages that foreign exporters have over domestic producers as a result of foreign countervailable subsidies and antidumping duties remedy the harm of sales by a foreign exporter in the U.S. market at less than fair value. See 19 U.S.C. § 1671 and 19 U.S.C. § 1673(1). Moreover, customs duties are assessed on all imports of particular merchandise and are permanent unless modified by Congress. See, e.g., Wheatland Tube Co. v. United States, 495 F.3d 1355, 1362 (Fed. Cir. 2007). Antidumping and countervailing duties, however, are only imposed on certain imports, are subject to annual review, and may terminate if dumping or subsidization is stopped. See 19 U.S.C. § 1675. Therefore, the purpose, application, and duration of antidumping and countervailing duties differ from customs duties. As such, antidumping and countervailing duties are not the same as customs duties. Therefore, CBP will assess antidumping and countervailing duties on merchandise subject to such orders in accordance with the Department of Commerce’s instructions, regardless of whether the merchandise qualifies for the Nairobi Protocol exemption from customs duties.
In your letter, you state that you believe it is clear that both Congress and the President fully expected that those handicap eligible items would be granted duty-free treatment and not be subject to antidumping and countervailing duties. However, you do not cite to any legislative history, statutory or regulatory provisions, court cases, or prior rulings supporting this position. Further, we are unaware of any legislative history, statutory or regulatory provisions, court cases, or prior rulings supporting your position. Moreover, U.S. courts have declined to interpret the term “duties” as broadly as you propose, instead distinguishing antidumping and countervailing duties from ordinary customs duties. See U.S. v. American Home Assurance Co., 964 F. Supp. 2d 1342, 1354 (CIT 2014) (declining to interpret the word “duties” in 19 U.S.C. § 580 as covering antidumping and countervailing duties).
HOLDING:
The imported wheelchair parts are eligible for duty-free treatment under subheading 9817.00.96, HTSUS.
Goods that are classified under subheading 9817.00.96, HTSUS, which fall within the scope of antidumping and countervailing duty orders, are subject to antidumping and countervailing duties.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division