Ms. Maria Pinilla
1205 E. South Temple
South Lake City, UT 84103
RE: The tariff classification of prefabricated residential “microhome” buildings from China
Dear Ms. Pinilla:
In your letter, dated September 1, 2020, you requested a binding tariff classification ruling. The ruling was requested for prefabricated “microhome” buildings. Product documentation was submitted for our review. Please note that, as explained below, we suggest that you file additional binding ruling requests for multiple items contained within the microhome units.
The merchandise under consideration is prefabricated residential home buildings identified as “microhomes”. The body of each unit is constructed from 40-foot, high-cube, steel shipping containers. The Model 640, for which design plans were provided, is constructed of two container components combined to form a single residential building unit. The units are to be installed onto a fixed foundation. They are complete with finished walls and ceilings, windows, flooring, and doors. The units are also fully outfitted with electrical (and solar), plumbing, tankless water heater, HVAC, and exhaust systems.
At the time of importation, the buildings will be outfitted with appliances and fixtures. You state that the appliances will include a refrigerator, stove cooktop, oven, microwave oven, and dishwasher. The design plans also identify a combination washer/dryer unit. The fixtures include sinks, toilets, cabinets, and the like. The building will also be imported with solar panels, an inverter panel, a battery, and a change controller that will be stored inside the unit to prevent damage during shipping. The solar panels and components will be installed after importation. All furniture will be purchased and installed in the US after importation.
Note 4 to Chapter 94, Harmonized Tariff Schedule of the United States (HTSUS), states that “For the purposes of heading 9406, the expression "prefabricated buildings" means buildings which are finished in the factory or put up as elements, entered together, to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages or similar buildings.” The microhomes meet this definition. Each is pre-engingeered and manufactured in the factory, and is imported complete to be assembled on site. They are resistant to weather conditions, are permanent, and function primarily as housing units. Therefore, we find that the microhomes constitute prefabricated buildings.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level (for the 4 digit headings and the 6 digit subheadings) and facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and the General Rules of Interpretation (GRIs). While neither legally binding nor dispositive of classification issues, the ENs provide commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989). The ENs to heading 9406, HTSUS, state that
(t)he buildings of this heading may or may not be equipped. However, only builtin equipment normally supplied is to be classified with the buildings. This includes electrical fittings (wiring, sockets, switches, circuitbreakers, bells, etc.), heating and air conditioning equipment (boilers, radiators, air conditioners, etc.), sanitary equipment (baths, showers, water heaters, etc.), kitchen equipment (sinks, hoods, cookers, etc.) and items of furniture which are built in or designed to be built in (cupboards, etc.).
The appliances, with the exception of the cooktop, are not “equipment normally supplied” with buildings. As such, the refrigerator, oven, microwave oven, dishwasher, and washer/dryer must be identified and classified separately from the microhome. We recommend that you submit additional binding classification ruling requests for these appliances. Any furniture (such as chairs, desks, and beds), electronics, and any other non-standard equipment not identified in this request must also be classified separately.
In your letter, you suggest that the microhomes are classifiable under 9406.10.0000, HTSUS, which provides for prefabricated buildings of wood. While we agree that the units are prefabricated buildings, they are not constructed of wood. The body of each unit is a steel shipping container.
The applicable subheading for the microhomes will be 9406.90.0030, HTSUS, which provides for Prefabricated buildings: Other: Of metal: Other. The rate of duty will be 2.9 percent ad valorem.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 9406.90.0030, HTSUS, unless specifically excluded, are subject to an additional 25% percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, 9903.88.03, in addition to subheading 9406.90.0030, HTSUS, listed above.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at https://hts.usitc.gov/current.
There are additional considerations with respect to the solar panels included with the microhome units. We again recommend you obtain an additional binding ruling regarding the solar panel components in order to determine any applicable import requirements. On January 23, 2018, Presidential Proclamation 9693 imposed safeguard measures on imports of crystalline silicon photovoltaic (CSPV) cells and certain products incorporating CSPV cells in the form of additional tariffs or tariff rate quotas for a period of three years. Photovoltaic generators classified under heading 8501, HTSUS, unless specifically excluded, are subject to the additional duties. See Note 20 to Chapter 99 and subheading 9903.45.25, HTSUS.
The solar panels may also be subject to antidumping duties and countervailing duties (AD/CVD) for crystalline silicon photovoltaic cells from China. Written decisions regarding the scope of AD/CVD orders are issued by the Enforcement and Compliance office in the International Trade Administration of the Department of Commerce and are separate from tariff classification and origin rulings issued by Customs and Border Protection (CBP). You can contact them at http://trade.gov/enforcement/ (click on “Contact Us”). For your information, you can view a list of current AD/CVD cases at the United States International Trade Commission website at http://www.usitc.gov (click on “Antidumping and Countervailing Duty” under “Popular Topics” at the top of the screen), and you can search AD/CVD deposit and liquidation messages using CBP’s AD/CVD Search tool at http://addcvd.cbp.gov/.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Laurel Duvall at [email protected]
Steven A. Mack
National Commodity Specialist Division