Protest and Application for Further Review No 1601-2018-100201; Classification of Lubricant Canisters

HQ H301950 August 31, 2021 CLA-2 OT:RR:CTF:EMAIN H301950 PF CATEGORY: Classification TARIFF NO.: 8479.90.94 Port Director Port of Charleston U.S. Customs and Border Protection200 East Bay Street Charleston, SC 29401 Attn: T.J. Trimeloni, Import Specialist Re: Protest and Application for Further Review No: 1601-2018-100201; Classification of Lubricant Canisters Dear Port Director: The following is our decision as to Protest and Application for Further Review No. 1601-2018-100201, which was filed on July 16, 2018 on behalf of H-T-L Perma USA LP (“protestant” or “Perma”). The protest pertains to the classification of lubricant canisters under the Harmonized Tariff Schedule of the United States (“HTSUS”). The subject merchandise was entered by protestant on December 28, 2017. On February 9, 2018, CBP at the Port of Charleston liquidated the entries under subheading 8479.89.94, HTSUS, which provides for “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: Other: Other.” On July 16, 2018, protestant filed a protest and AFR regarding the tariff classification of the subject merchandise and claiming that the correct classification of the subject merchandise should be in subheading 8479.90.94, HTSUS, which provides for “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Parts: Other.” FACTS: The merchandise at issue in this protest is a lubricant canister. According to the protestant, the lubricant canisters act as holding compartments within the Perma STAR VARIO electromechanical single point lubrication systems (“STAR VARIO system”). These systems are electromechanical devices that use an electromechanical drive unit and battery pack to automatically deliver controlled amounts of lubricant, stored in the lubricant canister, to specific points of systems or components using precise lubricant metering. Such systems are used to mechanically and automatically apply lubricant in small, measured amounts over certain specified time intervals without the need for an operator. The STAR VARIO system operates fully automatically and specifically is used for automatic single-point lubrication of roller and sliding bearings, sliding guides, open gars, gear racks, spindles, shaft seals, and chains. The system runs off a reusable drive unit with a 4.5V battery back. It also has an LCD display that shows operating status with push button controls that can set the discharge period to a time between one and twelve months and these settings can be changed at any time. The STAR VARIO system also incorporates LED lights to signal functions and errors. ISSUE: Whether the lubricant canisters are classified as an other machine and mechanical appliance in subheading 8479.89.94, HTSUS, or as a part of a machine in subheading 8479.90.94, HTSUS. LAW AND ANALYSIS: Initially, we note that the matters protested are protestable under 19 U.S.C. §1514(a) (2) as decisions on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)). Further Review of Protest No. 1601-2018-100201 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because the decision against which the protest was filed is alleged to be 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. Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (“GRIs”) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes. GRI 1 requires that classification be determined first 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 heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. GRI 2(a) provides, in relevant part, 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 articles has the essential character of the complete or finished article.” GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, and any related subheading notes, and mutatis mutandis to the GRIs 1 through 5. The 2017 HTSUS headings under consideration are as follows: 8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: 8479.89 Other: 8479.89.94 Other… 8479.90 Parts: 8479.90.94 Other… Note 2 to Section XVI (Chapters 84-85) states, in pertinent part, that: Subject to note 1 to this section, note 1 to chapter 84 and 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: Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; 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. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517 … The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. See T.D. 89-90, 54 Fed. Reg. 35127 (August 23, 1989). The ENs to GRI 2(a) provide, in relevant part, that: (V)    The second part of Rule 2 (a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport. (VI)   This Rule also applies to incomplete or unfinished articles presented unassembled or disassembled provided that they are to be treated as complete or finished articles by virtue of the first part of this Rule. (VII)  For the purposes of this Rule, “articles presented unassembled or disassembled” means articles the components of which are to be assembled either by means of fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only assembly operations are involved. No account is to be taken in that regard of the complexity of the assembly method. However, the components shall not be subjected to any further working operation for completion into the finished state. Unassembled components of an article which are in excess of the number required for that article when complete are to be classified separately. The ENs to Section XVI, Note 2, HTSUS provide that: The above rules do not apply to parts which in themselves constitute an article covered by a heading of this Section (other than headings 84.87 and 85.48); these are in all cases classified in their own appropriate heading even if specially designed to work as part of a specific machine. . .  There is no dispute that the subject lubricant canisters are classified in heading 8479, HTSUS. The only issue is in this case is the classification of the lubricant canisters at the subheading level. As a result, GRI 6, supra, applies. Protestant maintains that CBP’s classification determination was incorrect because the lubricant canisters do not possess the essential character of complete machines and mechanical appliances, and are rather “parts” that are properly classified in subheading 8479.90.94, HTSUS. Protestant further states that the lubricant canister itself is an empty plastic cup incapable of performing any individual electromechanical function. In order for the canister to assist in any functions beyond storing lubricant, a piston must first be set within the canister, grease added, and the canister is attached to the STAR VARIO electromechanical drive unit, which provides the power and dispensary functionality of the product to distribute precise and metered amounts of lubricant at designated internals to specific points on articles such as bearings and gears without the need for an operator. CBP classified the lubricant canisters as complete, finished articles under subheading 8479.89.94, HTSUS, which is where the complete STAR VARIO system is classified. In the context of GRI 2(a), CBP has explained that the term “essential character” means the attribute that serves to distinguish what an article is; that which is indispensable to the structure, core or condition of the good; the aggregate of distinctive component parts that establishes the identity of an article as what it is, its very essence. See Headquarters Ruling Letter (HQ) 967975, dated March 24, 2006. In this case, although the subject lubricant canisters are specially designed to attach to the STAR VARIO system and facilitate the operation of the drive unit and pistons that ultimately dispense the lubricant, they do not feature any of the electromechanical components in their condition as imported. As such, they do not possess the essential character of an assembled and/or complete machine or mechanical appliance of subheading 8479.89, HTSUS, and therefore are not classified under that provision by operation of Note 2(a) to Section XVI. Note 2(b) to Section XVI, HTSUS, provides that parts suitable for use solely or principally with a particular kind of machine, such as the STAR VARIO system, are to be classified with the machines of that kind or in one of the headings that specifically provide for parts of machines. The courts have considered the nature of “parts” under the HTSUS and two distinct though not inconsistent tests have resulted. See Bauerhin Technologies Limited Partnership, & John V. Carr & Son, Inc. v. United States, 110 F.3d 774, 779. The first, articulated in United States v. Willoughby Camera Stores, 21 C.C.P.A. 322 (1933), requires a determination of whether the imported item is “an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article.” Bauerhin, 110 F.3d at 778 (quoting Willoughby Camera, 21 C.C.P.A. at 324). The second, set forth in United States v. Pompeo, 43 C.C.P.A. 9 (1955), states that an imported item “dedicated solely for use” with another article is a part of that article provided that, “when applied to that use,” the article will not function without it. Pompeo, 43 C.C.P.A. 9, 14. Under either line of cases, an imported item is not a part if it is “a separate and distinct commercial entity.” ABB, Inc. v. United States, 28 Ct. Int’l Trade 1444, 1452-53 (2004); Bauerhin, 100 F. 3d at 1452-32. “A subpart of a particular part of an article is more specifically provided for as a part of the part than as a part of the whole.” Mitsubishi Electronics America v. United States, 19 CIT 378, 383 n.3 (Ct. Int’l. Trade 1995). The subject lubricant canisters are designed as components of the STAR VARIO system, which is classified under subheading 8479.89.94, HTSUS. The subject lubricant canisters act as holding compartments within the STAR VARIO system and are the the storage units for the lubricant. Moreover, they facilitate the function of the electromechanical drive unit as it automatically dispenses the lubricant. Thus, the lubricant canisters are parts suitable for use solely with the STAR VARIO system, and are classifiable under heading 8479, HTSUS, specifically, under subheading 8479.90.94, HTSUS. See Note 2(b) to Section XVI, HTSUS. HOLDING: By application of GRIs 1 and 6, the lubricant canisters are classified in subheading 8479.90.94, HTSUS, which provides for “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Parts: Other.” The 2017 general column one, rate of duty is Free. 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 the internet at www.usitc.gov/tata/hts/. You are instructed to GRANT the Protest. 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 or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Craig T. Clark, Director Commercial and Trade Facilitation Division