Application for Further Review of Protest 3901-06-100754

HQ H013755 April 18, 2008 CLA-2: RR:CTF:TCM H013755 KSH CATEGORY: Classification TARIFF NO.: 8714.19.0060 Port Director U.S. Customs and Border Protection 10 Causeway Street Boston, MA 02222 RE: Application for Further Review of Protest 3901-06-100754 Dear Port Director: This is in reply to your correspondence forwarding Application for Further Review of Protest (AFR) 0401-07-100121, filed by counsel on behalf of his client, Segway LLC. The protest is against Customs and Border Protection’s (CBP) classification and liquidation of six entries of bumper/battery assemblies under heading 8507 of the Harmonized Tariff Schedule of the United States (HTSUS). Between January 22, 2006 and June 17, 2006, protestant entered the merchandise subject to this protest in heading 8507, HTSUS, which provides for: “Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof.” The merchandise was liquidated as entered between December 18, 2006 and May 4, 2007. On June 7, 2007, protestant filed a protest and application for further review against the classification and liquidation of the merchandise in heading 8507, HTSUS. Protestant’s AFR request was approved. The protest was timely filed. See 19 U.S.C. 1514(c)(3). Protestant now claims that the merchandise is classified in heading 8714, HTSUS, which provides for: “Parts and accessories of vehicles of headings 8711 to 8713.” In support of protestant’s application for further review, protestant alleges that the protest is inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise. Specifically, protestant cites to Headquarters Ruling Letter (HQ) 957575, dated July 10, 2005. Protestant also alleges that the protest involves questions of law and fact that have not been ruled upon by the Commissioner or Customs or by the Customs courts. Further review is warranted pursuant to 19 CFR §§174.24(b) and 174.25.  FACTS: The merchandise at issue is a bumper/battery assembly that is imported for assembly on the Segaway® Personal Transporter (PT). It consists of a plastic mechanical bumper skid plate, battery monitoring module and battery. The bumper/battery assembly is designed to protect the PT chassis, computers, gyroscopes and rider from damage. Each model of the PT contains two bumper/battery assemblies. It is manufactured using Valox® plastic and is designed to absorb impacts from rocks, curbs and other obstacles. The bumper/battery assembly contains honeycomb sections that function as a “crush zone” on impact as well as other predetermined mechanical stress points to absorb and deflect the force of impact away from the chassis and computers and ultimately the rider. The bumper/battery assembly is attached to a cast metal chassis which supports the rider. Two computers, a module containing gyroscopes and two accelerometers are located on top of the chassis. The bumper/battery assembly also contains the battery monitoring module and battery subassemblies. It has been engineered as part of the PT’s fire enclosure with plastic materials. The battery monitoring module is a printed circuit board that sits on top of the lithium-ion battery. It indicates what type of battery is being used, the condition/charge level of the battery and communicates any malfunction or abnormal conditions to the computers. The battery is composed of connected lithium-ion cells. It powers the computers and powers the motors. ISSUE: Whether the bumper/battery assembly is classified in heading 8507, HTSUS, as “other storage batteries” or in heading 8714, HTSUS, as “a part and accessory of a motorcycle.” LAW AND ANALYSIS: Classification under the HTSUSA is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides, in part, that classification decisions are to be "determined according to the terms of the headings and any relative section or chapter notes." In the event that goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied, in order. The Harmonized Commodity Description and Coding System Explanatory Notes (EN) 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 HTSUSA by offering guidance in understanding the scope of the headings and GRI. While neither legally binding nor dispositive of classification issues, the EN provide commentary on the scope of each heading of the HTSUSA and are generally indicative of the proper interpretation of the headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989). Initially, the applicable section and chapter notes must be examined for any instruction they provide. In this regard, Additional U.S. Rule of Interpretation 1(c) provides as follows: 1. In the absence of special language or context which otherwise requires: (c) 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; Insofar as protestant claims that the merchandise at issue is classifiable as a part or accessory of a motorcycle, Note 2 to Section XVI, HTSUS, is applicable. Note 2 to Section XVI, HTSUS, provides in pertinent part as follows: 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 headings of chapters 84 and 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8485, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; (b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431,8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate ... (c) All other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate, or failing that, in heading 8485 or 8548. Section XVI, Note 1(l), HTSUS, excludes articles of Section XVII. Section XVII, Note 2(f), HTSUS, excludes from the expressions "parts" and "parts and accessories" electrical machinery or equipment (chapter 85). Thus, if the bumper/battery assembly is found to be a good classifiable in heading 8507 or elsewhere in chapter 85, it cannot be classified in heading 8714. EN 87.14, pg. 1437, states that heading 8714, HTSUS, "covers parts and accessories of a kind used with motorcycles (including mopeds), cycles fitted with an auxiliary motor, side-cars, non- motorized cycles, or invalid carriages, provided the parts and accessories fulfill both the following conditions:"(i) They must be identifiable as being suitable for use solely or principally with the above mentioned vehicles; (ii) They must not be excluded by the provisions of the Notes to Section XVII. The bumper/battery assembly is a composite good consisting of the battery and a bumper. No one heading completely describes the bumper/battery assembly. The bumper/battery assembly is prima facie classifiable in heading 8714, HTSUS, as a part or accessory of a motorcycle and heading 8507 as a storage battery. For this reason, it is necessary to apply an essential character analysis as required by GRI 3(b). GRI 3(b) states, in pertinent part: (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. EN (VIII) to GRI 3(b) provides:The factor which determines the essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods. Recent court decisions on the essential character for GRI 3(b) purposes have looked primarily to the role of the constituent material in relation to the use of the goods. See, e.g., Better Home Plastics Corp. v. U.S., 916 F. Supp. 1265 (CIT 1996), aff’d 119 F. 3d 969 (Fed. Cir. 1997); Mita Copystar America, Inc. v. U.S., 966 F.Supp. 1245 (CIT 1997), rehear’g denied, 994 F. Supp. 393 (1998). The bumper protects the PT chassis, computers, gyroscopes and rider from expected mechanical impact energy endured during normal or abusive riding or maneuvering and acts as a fire enclosure. The bumper achieves this by spreading out the impact energy through the use of dual wall structure which absorbs bottom impact forces, spreads the force to the case cover and into the chassis. Similar force spreading means would have to be introduced independent of the placement of the battery cells within the battery assembly to maintain the protection afforded by the bumper to the chassis and the rider. The battery assembly indicates what type of battery is being used, the condition/charge level of the battery and communicates any malfunction or abnormal conditions to the computers and provides the necessary charge for operation. The battery assembly is indispensable to the function of the PT as it provides the power necessary for operation and communicates the overall condition of the battery. However, the bumper is equally important as it protects the chassis, computers, gyroscopes and rider from mechanical damage and the battery from fire damage. Since both the bumper and the battery are essential to the PT, a determination cannot be made in accordance with GRI 3(b). Thus, resort must be made to GRI 3(c). GRI 3(c) provides:       (c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.The heading that occurs last in numerical order is heading 8714, HTSUS. Therefore, the bumper/battery subassembly is classified in this heading. HOLDING: Protest number 0401-07-100121 is granted in full. By application of GRI 3(c), the bumper/battery assembly is classified in heading 8714, HTSUS. It is provided for in subheading 8714.19.0060, HTSUS, which provides for: “Parts and accessories of vehicles of headings 8711 to 8713: Of motorcycles (including mopeds): Other, Other.” The column one, general rate of duty is free. 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 in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision 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 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