Application for Further Review of Protest 2095-19-104227; Eligibility of tantalum pin components as parts of articles for the use or benefit of the handicapped under subheading 9817.00.96, HTSUS

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H313200 November 9, 2020 OT:RR:CTF:VS H313200 CMR CATEGORY: Classification U.S. Customs and Border Protection Pharmaceuticals, Health & Chemicals Center Of Excellence and Expertise 3600 E. Paisano Dr., Bldg. D El Paso, TX 79905 Attn: SIS Jessica Sutton RE: Application for Further Review of Protest 2095-19-104227; Eligibility of tantalum pin components as parts of articles for the use or benefit of the handicapped under subheading 9817.00.96, HTSUS Dear Director: This is in response to your referral of the Application for Further Review (AFR) of Protest 2095-19-104227, timely filed by the importer, Medtronic, Inc., against your decision to deny duty-free treatment to certain tantalum pin components. Medtronic contends that the tantalum pin components are imported to be used as parts of articles which have been previously found by Customs and Border Protection (CBP) to be eligible for duty-free treatment under subheading 9817.00.96, Harmonized Tariff Schedule of the United States (HTSUS). We note the AFR was properly approved. FACTS: Medtronic states that the imported merchandise consists of radiopaque tantalum marker pin components to be used in the production, after importation, of implantable polymer devices designed to help provide stability for spinal fusion caused by degenerative cervical disc diseases. Tantalum pins are integrated into polymer plastic devices in order to display orientation in radiography, providing surgeons the ability to verify placement of various medical grade polyetheretherketone (PEEK) implantables. Finished tantalum pin components, of various sizes, are manufactured in Germany and shipped to the Medtronic manufacturing site in Puerto Rico for insertion into machined PEEK implantables. The tantalum marker pins are made from straightened, high tolerance, unannealed tantalum wire and are specifically cut to length prior to importation. The imported pins are used in the construction of PEEK spinal cages utilized in Medtronic’s branded ‘Capstone Peek Spinal System.’ Medtronics submits that the imported pins maintain the adequate mechanical properties to withstand the impact of insertion into the spinal cage implants. At the time of import, the tantalum pins have undergone many significant manufacturing steps to bring them into very exact specifications prior to manufacture into a finished polymer device. According to the protest submission, “[p]rior to import, the tantalum pin goes through at least four core processing steps, including raw material collection; precision cutting, shaping, deburring; quality inspection and packaging.” The steps are set forth in the submission as follows: Raw tantalum alloy wire is inspected for material quality and measurement approval. The precision cutting, shaping and deburring process utilizes a rotary milling machine to cut excess material off the raw metal wire and shape to specified dimensions, which will allow for pin insertion and assembly into the completed PEEK cage. The machined part will be sanded and smoothed to be free of burrs and sharp edges. The finished pin will be inspected to comply with cut depths, dimensions and coating thickness requirements. The pin will be packaged in a non-leaching material, which prevents damage to parts upon shipping. According to Medtronics, the above operations render the tantalum pin suitable only for implantable cage production, as it is stated it has no other apparent use. ISSUE: Whether the imported radiopaque tantalum marker pins are eligible for duty free treatment under subheading 9817.00.96, HTSUS, as parts of articles specially designed or adapted for the use or benefit of the handicapped. LAW AND ANALYSIS: Subheading 9817.00.96, HTSUS, provides for: articles specially designed or adapted for the use or benefit of the blind or other physically or mentally handicapped persons; parts and accessories (except parts and accessories of braces and artificial limb prosthetics) that are specially designed or adapted for use in the foregoing articles . . . Other. Subheading 9817.00.96 excludes “(i) articles for acute or transient disability; (ii) spectacles, dentures, and cosmetic articles for individuals not substantially disabled; (iii) therapeutic and diagnostic articles; or, (iv) medicine or drugs.” U.S. Note 4(b), Subchapter XVII, Chapter 98, HTSUS. Accordingly, eligibility within subheading 9817.00.96, HTSUS, depends on whether the article in question is “specially designed or adapted for the use or benefit of the blind or physically and mentally handicapped persons,” and whether it falls within any of the enumerated exclusions. See subheading 9817.00.96, HTSUS; U.S. Note 4(b), Subchapter XVII, Chapter 98, HTSUS. Note 4(a) to Chapter 98, HTSUS, provides: (a) For purposes of subheadings 9817.00.92, 9817.00.94 and 9817.00.96, the term “blind or other physically or mentally handicapped persons” includes any person suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities, such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working. U.S. Note 4(a), Subchapter XVII, Chapter 98, HTSUS. This list of exemplar activities indicates that the term “handicapped persons” is to be liberally construed so as to encompass a wide range of conditions, provided the condition substantially interferes with a person’s ability to perform an essential daily task. While the HTSUS and subchapter notes do not provide a proper definition of “substantial” limitation, the inclusion of the word “substantially” denotes that the limitation must be “considerable in amount” or “to a large degree.” CBP has recognized several factors to be utilized and weighed against each other on a case-by-case basis when determining whether a particular product is “specially designed or adapted” for the benefit or use of handicapped persons. See U.S. Customs Serv. Implementation of the Duty-Free Provisions of the Nairobi Protocol, Annex E, to the Florence Agreement, T.D. 92-77, 26 Cust. B. & Dec. 240, 241 (1992) (“Implementation of the Nairobi Protocol”) at 243-244. These factors include: (1) the physical properties of the article itself (i.e., whether the article is easily distinguishable by properties of the design, form, and the corresponding use specific to this unique design, from articles useful to non-handicapped persons); (2) whether any characteristics are present that create a substantial probability of use by the chronically handicapped so that the article is easily distinguishable from articles useful to the general public and any use thereof by the general public is so improbable that it would be fugitive; (3) whether articles are imported by manufacturers or distributors recognized or proven to be involved in this class or kind of articles for the handicapped; (4) whether the articles are sold in specialty stores which serve handicapped individuals; and, (5) whether the condition of the articles at the time of importation indicates that these articles are for the handicapped. See also Danze, Inc. v. United States, Slip Op. 18-69 (Ct. Int’l Trade 2018); Sigvaris, Inc. v. United States, 227 F.Supp.3d 1327 (Ct. Int’l Trade, 2017), aff’d, 899 F.3d 1308 (Fed. Cir. 2018). The court in Sigvaris, 899 F.3d. 1308 (Fed. Cir. 2018), found that “[t]hese factors aid in assessing whether the subject merchandise is intended for the use or benefit of a specific class of persons to a greater extent than for the use or benefit of others.” The court adopted these factors into its analysis. In support of its protest, Medtronics relies upon New York Ruling Letter (NY) N201418, dated February 17, 2012, wherein CBP agreed with a secondary classification of Medtronic’s Capstone Peek Spinal Fusion System, along with other items, as an article specially designed or adapted for the use or benefit of the handicapped in subheading 9817.00.96, HTSUS. In addition, Medtronics relies upon Headquarters Ruling Letter (HQ) 562870, dated December 19, 2003, wherein CBP held that a motor assembly designed and manufactured for use exclusively with an insulin pump was eligible for duty-free treatment under subheading 9817.00.96, HTSUS, as a part of an article specially designed or adapted for the use or benefit of the handicapped. As pointed out by Medtronics, NY N201418 found the article, i.e., the Capstone Peek Spinal Fusion System, in which the imported tantalum pins were to be incorporated during production, to be classifiable as an article specially designed or adapted for the use or benefit of the handicapped. We have no reason to question the decision in that ruling. As such, the question is whether the tantalum pins, as imported, are parts susceptible to use in various articles or are so manufactured that they are dedicated for use as parts of the Capstone Peek Spinal Fusion System and have no other use. As stated in HQ 562870, which is relied upon by Medtronics: The traditional rule in this regard is "that a 'part' of an article is something necessary to the completion of that article. It is an integral, constituent, or component part, without which the article to which it is joined could not function as such article." See, United States v. Willoughby Camera Stores, Inc., 21 CCPA 332, T.D. 46851 (1933), cert. denied, 292 U.S. 640, 54 S.Ct. 773, 78 L.Ed. 1492 (1933), which held that a tripod is not “part” of a camera. Moreover, because a determination regarding whether an item constitutes a "part" is highly fact specific, the courts and Customs have applied other criteria to make this determination. The courts have held that "the mere fact that two articles are designed to be used together is not alone sufficient to establish that either is a part of the other, or of their combined entity." Westfield Manufacturing Company v. United States, 191 F. Supp. 578 (1961). In Schick X-Ray Co. v. United States, 271 F. Supp. 305 (1967), the court stated that, “[m]any …objects, despite the fact that their usefulness is only in conjunction with other articles, retain a separateness of identity and a functional self-sufficiency which preclude their classification as parts.” See also, HQ H301481, dated June 14, 2019; and, HQ H311614, dated September 11, 2020. In this case, the tantalum pins are inserted into the polymer plastic devices to allow surgeons to see the orientation of the devices in radiography and verify the placement of the devices, e.g., the polymer plastic devices of the Capstone Peek Spinal Fusion System. Without the presence of the pins in the devices, surgeons would not be able to confirm the proper placement and orientation of the devices. We agree with Medtronics that the tantalum pins are integral to the polymer plastic devices in which they are inserted during production of the devices. As such, the tantalum pins are considered to be parts of such devices. See Starkey Lab. v. United States, 22 CIT 360, 6 F.Supp. 2nd 910 (CIT April 10, 1998), motion to vacate judgment denied, 110 F. Supp. 2d 945 (CIT June 19, 2000), wherein the court found hearing aid parts to be classifiable as articles for the handicapped classifiable under item 870.67 of the Tariff Schedules of the United States or subheading 9817.00.9600, HTSUS. HOLDING: As the tantalum pins at issue are specifically designed and manufactured to specifications which limit their use to parts of the Medtronics’ Capstone Peek Spinal Fusion System, which has been previously determined to be eligible for duty-free treatment under subheading 9817.00.96, HTSUS, as an article specially designed or adapted for the use or benefit of the handicapped, the tantalum pins are eligible for duty free treatment under subheading 9817.00.96, HTSUS, as parts of an article specially designed or adapted for the use or benefit of the handicapped. The protest should be allowed. 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 Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution. Sincerely, For Craig T. Clark, Director Commercial and Trade Facilitation Division