Protest 1703-97-100078; Telephone Directory Printing PressComponents

HQ 960560 September 18, 1998 CLA-2 RR:CR:GC 960560 DWS CATEGORY: Classification TARIFF NO.: 7308.90.95; 8443.11.50; 8443.60.00 Port Director of Customs 1 East Bay Street Savannah, GA 31401 RE: Protest 1703-97-100078; Telephone Directory Printing Press Components Dear Port Director: The following is our decision regarding Protest 1703-97-100078 concerning your action in classifying and assessing duty on telephone directory printing press components under the Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The merchandise consists of telephone directory printing press components contained within four entries. It is claimed that together, the four entries contain a disassembled reel-fed offset printing press for the production of telephone directory pages. The primary components of the press are two mechanized reel stands, two printing towers, and a double-width folder. Each reel stand feeds a continuous paper web through one of the printing towers, where four separate units use an offset printing process to print both sides of the paper web using four different colors. After emerging from the printing towers, the two printed paper webs enter the double-width folder, which folds the paper webs into two 64 page signatures (groups of pages) to be bound into telephone directories. Each printing tower consists of four separate printing units, supported and positioned one above the other and integrated into a single structure by iron and steel structural components. The entire printing press measures 76 feet in length, 29 feet in height, 14 feet in width, and weighs approximately 850,000 pounds. Because of the size of the printing press, it was disassembled and packed in four separate shipments shipped on four different vessels from Germany to Savannah, Georgia. Entry 500-0611664-9 consists mainly of four of the eight printing units and miscellaneous components. Entry 500-0611830-6 consists mainly of the other four printing units and the control desks. Entry 500-0611454-5 consists mainly of the two paper reel stands and miscellaneous components. Entry 500-0611459-4 consists mainly of the double-width folder and the structural components of the printing press. The merchandise was entered under subheading 8443.11.50, HTSUS, as other reel-fed, offset printing machinery. The entries were liquidated on December 27, 1996, in the HTSUS provisions describing the goods contained within the entries. Specifically, for the classification portion of this protest, it is our understanding that your office classified components in entries 500-0611454-5, 500-0611664-9, 5000611459-4, and 500-0611830-6, including the girders, frames, and other structural components of the printing press structure, under subheading 7308.90.95, HTSUS, as other structures. Drive motors and motors for circumferential register and chain drives contained in entry 500-0611830-6 were liquidated under subheading 8501.40.60, HTSUS, as other AC motors, single-phase. For entry 500-0611454-5, in a Customs Form 29 (Notice of Action) dated December 10, 1996, claimed that the components contained therein are commingled, stating that sufficient information on the components was not furnished by the protestant, Stevens Graphics, Inc. (Stevens). The protest was timely filed on March 26, 1997. In the amended protest, Stevens states that it imported an offset printing press from Koenig & Bauer-Albert, A.G./Motter ("KBA") in Germany, and that most of it was imported in four shipments. It is claimed that per KBA's arrangements, other third party suppliers delivered portions of the printing press to Stevens in Atlanta, Georgia, and were not included as part of the four shipments at issue. Stevens claims that the articles in KBA invoice 96/037 were not actually contained in the entries, at issue, but that Stevens erroneously included the value of the goods in the entry summaries. The articles claimed to be not dutiable because they were not imported or because they were imported duty paid are as follows: Certain Allen-Bradley electrical control cabinets in the amount of $1,020,000, manufactured by Allen-Bradley in Wisconsin and shipped directly from Wisconsin to Atlanta; 16 Ryco water control cubicles manufactured by Ryco in Illinois and shipped directly from Illinois to Atlanta; Cut-off controls, web-break detectors, web guide systems, and color-to-color register devices manufactured by Web Printing Controls, in Illinois, also shipped directly from Illinois to Atlanta; Ink levelers and ink agitators manufactured by Master Flo Technology ("Master Flo") in Canada, shipped directly from Canada to Atlanta and duty paid by Master Flo; and Roll handling system from MEG, S.A. a French company, which MEG purchased from HOVAIR Systems, in Seattle, Washington, who manufactured the roll handling system and shipped it directly from Seattle to Atlanta Stevens also claims that 16 Allen-Bradley electrical control cabinets were exported from Wisconsin to KBA in Germany, where KBA assembled them into the printing units for the printing press, and should be eligible for duty-free treatment under subheading 9802.00.80, HTSUS. Stevens states that it originally believed that 16 "control cubicles" in KBA invoices 96/032 and 96/036 were 16 Ryco water control cubicles. Steven now amends its protests since the Ryco water control cubicles were actually in KBA invoice 96/037, and the 16 "control cubicles" in KBA invoices 96/032 and 96/036 were actually the electrical control cabinets manufactured by Allen-Bradley in Wisconsin. Stevens states that the Allen-Bradley electrical control cabinets were first sold to an Allen-Bradley affiliate in Germany for $245,000, who sold them to KBA for $245,000, and that the value of the electrical controls upon importation was the same as their value when originally exported to Germany. Stevens states that KBA assembled the electrical control cabinets onto the printing units by mechanically attaching them to the printings units using nuts, bolts, and hinges, and by electrically wiring the electrical control cabinets into the printing units. It is stated that the KBA assembly process amounted to nothing more than attaching the Allen-Bradley electrical control cabinets to the sides of the printing units and connecting the required wiring. Stevens states that it has been unable to obtain the exact date or port from Allen-Bradley when the electrical control cabinets were exported from the U.S., but it is believed to be sometime between December 8, 1995, and March 21, 1996. Stevens states that it then imported the electrical control cabinet/printing unit assemblies in entries 500-0611664-9 and 500-0611830-6. A declaration from Heinz Schmid on behalf of the assembler, KBA, and an endorsement from Stevens, the importer, are included. ISSUE: Whether the components contained in the four separate entries together constitute an incomplete and unassembled reel-fed, offset printing press, imparting the essential character of a complete printing press. Whether the paper reel stands and double-width folding machine are classifiable under subheading 7308.90.95, HTSUS, as other structures of iron or steel, or under subheading 8443.60.00, HTSUS, as machines for uses ancillary to printing. Whether certain components contained in entries 500-0611664-9 and 500-0611830-6 impart the essential character of complete reel-fed, offset printing presses classifiable under subheading 8443.11.50, HTSUS, as other reel-fed, offset printing machinery. Whether the remaining components contained in the four entries are classifiable under subheading 7308.90.95, as other structures of iron or steel, or under subheading 8443.90.50, HTSUS, as parts of printing machinery. Whether the electrical control cabinets qualify for the partial duty exemption under HTSUS subheading 9802.00.80, when imported into the U.S. Whether enough evidence is submitted to substantiate that the articles on KBA invoice 96/037 are not subject to duty. LAW AND ANALYSIS: CLASSIFICATION Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's). GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes. The 1996 HTSUS provisions under consideration are as follows: 7308 Structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge sections, lock gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel: 7308.90 Other: Other: 7308.90.95 Other. * * * * * * * * * 8443 Printing machinery, including ink-jet printing machines, other than those of heading 8471; machines for uses ancillary to printing; parts thereof: Offset printing machinery: 8443.11 Reel-fed: 8443.11.50 Other. 8443.60.00 Machines for uses ancillary to printing. 8443.90 Parts: 8443.90.50 Other. * * * * * * * * * We will first consider whether, in accordance with GRI 2(a), the components contained in the four separate entries together constitute an incomplete and unassembled reel-fed, offset printing press, imparting the essential character of a complete printing press (we use the term incomplete as counsel states that some components of the printing press are sourced in the U.S.). GRI 2(a) states that: [a]ny 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 falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled. In HQ 954820, dated December 13, 1993, which dealt with whether two separate shipments of printing press components together constitute a complete and unassembled printing press, we stated that: [i]t is well settled that articles which are not imported together are precluded from being an entirety. U.S. v. Baldt Anchor, Chain & Forge Division of Boston Metals Co., 59 CCPA 122, C.A.D. 1051, 429 F.2d 1403 (1972). The term "entirety", which was used in the Tariff Schedules of the United States (TSUS), is embodied in GRI 2(a) of the HTSUS. ***** The shipment of the various parts and the shipment of the main printing head do not together constitute a complete and unassembled flexographic printing press. The two shipments arrived at the port of Savannah on two different dates, and, under Baldt Anchor, they cannot together constitute a complete printing press as if the shipments were entered at the same time. The fact that the main printing head was intended to be included in the subject shipment is irrelevant as to the classification of the subject parts. See HQ 081999, dated December 10, 1990. With regard to the subject components, they were packed in four separate shipments, shipped on four different vessels, and entered on four different days. Therefore, in keeping with the reasoning in HQ 954820, it is our position that the subject components together do not constitute an incomplete and unassembled printing press imparting the essential character of a complete reel-fed, offset printing press classifiable under subheading 8443.11.50, HTSUS. As stated above, for entry 500-0611664-9, your office, in a Customs Form 29 Notice of Action dated December 10, 1996, claimed that the components contained therein are commingled, stating that sufficient information on the components was not furnished by the protestant, Stevens Graphics, Inc. (Stevens). However, based upon a review of the documentation provided by your office, it is inconclusive whether the components contained in the entry constitute a commingling of goods. See General Note 17, HTSUS. Counsel for Stevens states that all the goods contained in entry 500-0611454-5 are parts of the subject printing press and therefore should be classifiable under subheading 8443.90.50, HTSUS. However, apart from reiterating that the components are integral to the operation of the press and specially designed for use with the printing press, we find that no convincing evidence has been provided demonstrating such. Based upon a review of counsel's attachments and the provided entry documents, it appears that the components are mostly general purpose in nature, capable of use with other products. For instance, counsel has attached a depiction of the completed printing press. The depiction indicates that a number of the structural elements (i.e., I-beams, railings, and walkways) are standard structural elements which do not appear to have been modified for use specifically with the subject printing press. The articles appear to be capable of use in various types of structures or as support elements for various types of machinery. Because it is our position that requisite information has not been provided concerning the proper classification of the components contained in the entry, with the exception of the paper reel stands, it is our position that the components remain classifiable in heading 7308, HTSUS, as liquidated. See section 174.13, Customs Regulations (19 CFR 174.13). Counsel, as an alternative claim, argues that the paper reel stands are classifiable under subheading 8443.60.00, HTSUS. In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive or legally binding, 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. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). In part Explanatory Note 84.43 (pp.1339 - 1341) states: ***** The heading also covers: (1) - (2) ***** (3) Ancillary machinery (whether or not presented separately) such as feeders and folding machines, provided they are specially designed as ancillary machines to printing machines. (I) ***** (II) MACHINES FOR USES ANCILLARY TO PRINTING This group covers machines (whether or not presented separately) for uses ancillary to printing exclusively designed to operate with printing machines and used during or after the printing operation for feeding, handling or further working the sheets or rolls of paper. As it is our understanding that the paper reel stands are designed for attachment to the printing press and serve to supply a continuous paper web to the printing press towers, we agree with counsel that they meet the description above for machines for uses ancillary to printing and are classifiable under subheading 8443.60.00, HTSUS. It is also our position that the double-width folding machine, contained in entry 500-0611459-4, is a machine for uses ancillary to printing classifiable under subheading 8443.60.00, HTSUS. See NY 803750, dated November 23, 1994, which held reel stands and folders to be classifiable under subheading 8443.60.00, HTSUS. We will now deal with the classification of the printing units contained in entries 500-0611830-6 and 500-0611664-9. Counsel claims that, in accordance with GRI 2(a), the printing units impart the essential character of a complete printing press. In HQ 954820, we also held that printing press components, imported together without the printing head, do not impart the essential character of a complete printing press. In the ruling, we stated that: [t]he essential character of the printing press is not imparted by the shipment of various parts, but by the main printing head. Without the main printing head, it would be impossible for the printing press to function as intended. Therefore, the main printing head plays the primary role in relation to the use of the printing press. It is our understanding that each printing unit is equivalent to the print head in HQ 954820. Therefore, we find that the printing units and the drive motors and motors for circumferential register and chain drives contained in entry 500-0611830-6, and the printing units in entry 500-0611664-9, impart the essential character of complete reel-fed offset printing presses and are classifiable under subheading 8443.11.50, HTSUS. As with the components in entry 500-0611454-5, with regard to the remaining components in entries 500-0611830-6 and 500-0611664-9, because it is our position that requisite information has not been provided concerning their proper classification, it is our position that those components remain classifiable in heading 7308, HTSUS, as liquidated. With regard to the components under protest contained in entry 500-0611459-4, it appears that, based upon a review of the relevant entry documents, they are mostly general purpose in nature. They are standard structural elements which do not appear to have been modified for use specifically with the subject printing press. The articles appear to be capable of use in various types of structures or as support elements for various types of machinery. Again, it is our position that those components remain classifiable in heading 7308, HTSUS, as liquidated. SUBHEADING 9802.00.80, HTSUS Subheading 9802.00.80, HTSUS, provides a partial duty exemption for: [a]rticles ... assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process, such as cleaning, lubricating and painting. All three requirements of subheading 9802.00.80, HTSUS, must be satisfied before a component may receive a duty allowance. An article entered under this tariff provision is subject to duty upon the full cost or value of the imported assembled article, less the cost or value of the U.S. components assembled therein, upon compliance with the documentary requirements of section 10.24, Customs Regulations (19 CFR 10.24). Section 10.14(a), Customs Regulations {19 CFR 10.14(a)}, states in part that: [t]he components must be in condition ready for assembly without further fabrication at the time of their exportation from the United States to qualify for the exemption. Components will not lose their entitlement to the exemption by being subjected to operations incidental to the assembly either before, during, or after their assembly with other components.