Application for Further Review of Protest No. 3501-10-100014 Katadyn Pocket Filter Replacement Kit

HQ H114756 December 3, 2010 CLA-2 OT:RR:CTF:TCM H114756 EG CATEGORY: Classification Tariff No.: 6909.19.50 Port Director U.S. Customs and Border Protection 330 2nd Avenue South, Suite 560 Minneapolis, MN 55401 Attn: Kristi Viets, Import Specialist Re: Application for Further Review of Protest No. 3501-10-100014: Katadyn Pocket Filter Replacement Kit Dear Port Director: This is in response to your correspondence dated June 24, 2010, forwarding Protest and Application for Further Review (AFR) No. 3501-10-100014, dated April 20, 2010, filed on behalf of Katadyn Products Inc. (Katadyn), concerning the classification of the Katadyn Pocket Filter Replacement Kit, under the Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The subject merchandise consists of a “Pocket Microfilter Element Replacement” kit, item #8013619 (the kit). The kit is a group of replacement parts and cleaning supplies for the Katadyn Pocket Microfilter, which is a travel-size filter used to remove waterborne contaminants from outdoor water sources such as lakes and rivers. The kit consists of: 1) a silver impregnated ceramic filter element; 2) a red gauge; 3) a cleaning pad; 4) an o-ring; 5) lubricant; 6) a plastic bag; 7) an outlet hose; 8) a silicon tube; 9) a pocket clip and 10) sales box packaging. The kit is not repackaged in the United States. A completely assembled Pocket Microfilter consists of a round pump handle which leads into the body of the pump. A tube extends out from the bottom of the Pocket Microfilter. The consumer places the tube in a stream, creek or other body of fresh water and uses the hand pump to pump the water through the tube and up into the Pocket Microfilter’s body. The unfiltered water is channeled into the space outside the ceramic element and inside the filter’s outer casing. Pressure forces the unfiltered water through the ceramic element into the ceramic element’s hollow center. The small pore size of the ceramic element prevents most bacteria and dirt from passing through the ceramic. The filtered water travels up the channel inside the ceramic element’s center and out the spout of the top aluminum fitting. The consumer can safely drink water filtered by the Pocket Microfilter. Once the ceramic element’s filtering life span expires, the consumer can order the replacement kit which is the subject of this Protest. The ceramic filter element is the largest and most expensive item in the kit. The ceramic element is a long tube of ceramic impregnated with 0.155 gram of silver. The silver works as a disinfecting agent and impedes the growth of bacteria on the ceramic element. At the top and bottom of the tube are aluminum fittings which work to fasten the ceramic element into the assembled Pocket Microfilter. The top aluminum fitting includes the small exit spout for the filtered water. In the center of the ceramic element is a stainless steel tube to accommodate the piston for the pump subassembly. According to the importer, the value of the aluminum fittings and stainless steel tube is greater than the value of the ceramic portion of the ceramic element. Between January 12, 2009 and April 24, 2009, Katadyn entered the kits under heading 8421, HTSUS, which provides for filtering apparatus for liquids. On October 21, 2009, CBP issued a CF 28, Request for Additional Information to Katadyn regarding the kit. Katadyn responded to the request for information on October 29, 2009. On February 8, 2010, CBP issued a second CF 28 to Katadyn. Katadyn responded with the requested information on March 3, 2010. On March 8, 2010, CBP issued a CF29, Notice of Action, which advanced the rate and reclassified the merchandise from heading 8421, HTSUS, to heading 6909, HTSUS, which provides for ceramic wares for technical uses. On March 26, 2010, CBP liquidated the entries under heading 6909, HTSUS. On April 20, 2010, Katadyn timely submitted the subject Protest and Application for Further Review (AFR). ISSUE: Is the kit classified under heading 6909, HTSUS as ceramic ware for technical uses, or under heading 8421, HTSUS, as parts of filtering apparatus? LAW AND ANALYSIS: We note that the matter is protestable under 19 U.S.C. 1514(a)(2) as a decision on classification. Katadyn’s AFR satisfies application criteria because CBP has not previously ruled upon whether a ceramic water filter replacement kit suitable for camping and hiking is classifiable as filtering apparatus or as ceramic ware for technical uses. 19 C.F.R. § 174.24(b). Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. The following 2009 HTSUS provisions are at issue: 6909 Ceramic wares for laboratory, chemical or other technical uses; ceramic troughs, tubs and similar receptacles of a kind used in agriculture; ceramic pots, jars and similar articles of a kind used for the conveyance or packing of goods … * * * 8421 Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases; parts thereof … * * * The subject kit consists of components which are prima facie classifiable in different headings. Therefore, we must apply GRI 3(b), which states that: When, by application of Rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification shall be affected as follows: … Mixtures, composite goods consisting or 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. GRI 3(b) states, in relevant part, that goods put up in sets for retail sale shall be classified as if consisting of the material or component which gives them their essential character, insofar as this criterion is applicable. Explanatory Note (EN) (X) to GRI 3(b) states that for purposes of Rule 3(b) the term "goods put up in sets for retail sale” means goods which: (a) consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and, (c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards). The subject replacement kit satisfies the aforementioned criteria for a retail set. The kit consists of several components which are prima facie classifiable under different HTSUS headings, such as the ceramic element, the cleaning pad and the lubricant. Moreover, all of the articles serve to meet the particular need of replacing and maintaining a new ceramic filter element in the Pocket Microfilter. The kits are imported in outer packaging which is prepared for sale directly to ultimate consumers without repackaging. Under GRI 3(b), the kit is a retail set and shall be classified according to the component which gives the kit its essential character. EN (VIII) to GRI 3(b) states that “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.” There have been several court decisions on "essential character" for purposes of classification under GRI 3(b). See, Conair Corp. v. United States, 29 C.I.T. 888 (2005); Structural Industries v. United States, 360 F. Supp. 2d 1330, 1337-1338 (Ct. Int’l Trade 2005); and Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1295-1356 (Ct. Int’l Trade 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007). "[E]ssential character is that which is indispensable to the structure, core or condition of the article, i.e., what it is." Home Depot USA, Inc. v. United States, 427 F. Supp. 2d at 1293 quoting A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378, 383 (1971). In particular in Home Depot USA, Inc. v. United States, the court stated "[a]n essential character inquiry requires a fact intensive analysis." 427 F. Supp. 2d 1278, 1284 (Ct. Int’l Trade 2006). The ceramic filter element is the largest and most expensive component in the kit. The ceramic filter element also has a prominent role in the kit because it replaces the expired ceramic filter element in the Pocket Microfilter. The other components of the kit, such as the cleaning pad, the lubricant and the O-ring, all support and maintain the filtering function which is carried out by the ceramic filter element. As such, the ceramic filter element is the component which provides the kit’s essential character. The kit must be classified according to the ceramic filter element. Legal Note 1(b) to Chapter 84 states that articles of ceramic are excluded from classification in Chapter 84. Therefore, if the ceramic filter element is an article of ceramic, it cannot be classified under heading 8421, HTSUS. The General ENs to Chapter 84 shed light upon what constitutes a “ceramic article” under Legal Note 1(b) to Chapter 84. The General ENs state that a ceramic article retains its ceramic character even if it “incorporate[es] components of minor importance of other materials, such as stoppers, joints, taps, etc., clamping or tightening bands or collars or other fixing or supporting devices (stands, tripods, etc.).” However, according to the General ENs a ceramic article loses its ceramic character if it a) contains a high proportion of components of other materials (such as metals), b) is incorporated or permanently mounted in frames, cases or the like, of other materials or c) it combines static ceramic portions with mechanical portions such as pumps, motors and other moving components of a different material. The protestant sets forth three arguments for classification under heading 8421, HTSUS. First, the protestant states that the metal portions of the ceramic filter element are more expensive than the ceramic portion and that the metal portions are more important than the ceramic portion. In Headquarters Ruling Letter (HQ) 957854, dated August 11, 1995, CBP classified tubular modules used in sugar manufacturing. The tubular modules contained ceramic membrane filters, as well as gaskets, thermometers, valves and manometers. CBP determined that the tubular modules lost their ceramic character because they were incorporated with a high proportion of other materials. In New York Ruling Letter (NY) 870034, dated January 22, 1992, CBP classified an advanced ceramic tube filter and its replacement ceramic tubes used to filter hot gas. The ceramic replacement tubes were classified under heading 6909, HTSUS, because they were composed of ceramic and did not contain a high proportion of other materials. See also NY 861627, dated April 8, 1991 (classifying ceramic filters to be placed in a metal filtering vessel under heading 6909, HTSUS). The subject ceramic filter element is more similar to the ceramic replacement tubes of NY 870034 than to the tubular modules of HQ 957854. The subject ceramic filter element does not contain a high proportion of other materials. The ceramic filter element is impregnated with 0.155 gram of silver and includes aluminum fittings at the top and bottom of the element. The aluminum fittings are like the components of minor importance cited by the General ENs to Chapter 84, such as clamping or tightening bands or collars. The ceramic portion actually does the filtering. The metal components merely serve to hold the ceramic portion in place and provide channels through which the water flows. As such, the aluminum fittings and the small amount of silver do not cause the ceramic filter element to lose its character as a ceramic article. Second, the protestant argues that ceramic filter element is not a domestic-type filter and cannot be used as part of a domestic water filtration system. We find that this argument is without merit because the domestic purpose of the ceramic filter element is not at issue and is not a relevant inquiry for the headings at issue. Finally, the protestant argues that heading 6909, HTSUS, does not cover the ceramic filter element because the ceramic filter element is not “ceramic ware for laboratory, chemical or other technical use.” During a telephone conversation with an employee of Katadyn on November 18, 2010, the protestant stated that heading 6909, HTSUS, is intended for ceramic articles which are used in mechanical applications, such as in grinding operations or in ball bearings. The protestant mentioned that static ceramic materials should not be classified in heading 6909, HTSUS. We also disagree with this statement. CBP has previously classified static ceramic filter elements in heading 6909, HTUS. See NY 861627 and NY 870034. For the aforementioned reasons, the subject ceramic filter element retains its ceramic character and cannot be classified in Chapter 84. As such, the subject ceramic filter element is classified as ceramic ware for technical uses under heading 6909, HTSUS. HOLDING: By application of GRI 3(b) and Legal Note 1(b) to Chapter 84, the “Pocket Microfilter Element Replacement” kit is classified in heading 6909, HTSUS, specifically subheading 6909.19.50, HTSUS, as “[c]eramic wares for laboratory, chemical or other technical uses; …: ceramic wares for laboratory, chemical or other technical uses: other: other..,” with a column one, general duty rate of 4 percent ad valorem. The protest is denied in full. You are to mail this decision to the protestant no later than 60 days from the date of the decision. At that time, 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