Modification of NY H80677, dated March 15, 2001; Classification of certain tool kits

HQ W968258 July 15, 2010 CLA-2 OT:RR:CTF:TCM 968258 JPJ CATEGORY: Classification TARIFF NO.: 8207.90.60 Ms. Nancy Jin Peace International Corporation 831 Foster Avenue Bensenville, Illinois 60106 RE: Modification of NY H80677, dated March 15, 2001; Classification of certain tool kits Dear Ms. Jin: This letter concerns New York Ruling letter (“NY”) H80677, dated May 15, 2001, issued to you by the National Commodity Specialist Division (“NCSD”), U.S. Customs and Border Protection (“CBP”). At issue in that ruling, in relevant part, was the classification of a tool kit consisting of 4 screwdriver bits, a screwdriver handle and an extension adapter in a textile roll, under the Harmonized Tariff Schedule of the United States (HTSUS). We have reviewed NY H80677 and have found that it is incorrect with respect to the tool kit. For the reasons set forth in this ruling, we are modifying NY H80677. Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI, a notice of proposed action was published on June 9, 2010, in the Customs Bulletin, Vol. 44, No. 24. No comments were received. FACTS: In NY H80677, the tool kit was described as follows: The first sample includes 4 screwdriver bits, a screwdriver handle and an extension adapter. The tool roll has pockets for the screwdriver handle and the adapter and a hard plastic strip riveted at each end to the inside of the roll. Four hard plastic sliders with posts are attached to this strip. The bits, which are mounted in a socket type holder, fit snugly over the posts for storage. ISSUE: Whether the tool kit is classified in heading 8205, HTSUS, as handtools. . . not elsewhere specified or included, or in heading 8207, HTSUS, as interchangeable tools for handtools. LAW AND ANALYSIS: Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI’s). GRI 1 provides that the classification of goods shall be determined 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 may then be applied. The HTSUS provisions under consideration are as follows: 8205 Handtools (including glass cutters) not elsewhere specified or included; blow torches and similar self-contained torches; vises, clamps and the like, other than accessories for and parts of machine tools; anvils; portable forges; hand-or pedal-operated grinding wheels with frameworks; base metal parts thereof (con.): 8207 Interchangeable tools for handtools, whether or not power-operated, or for machine-tools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screwdriving), including dies for drawing or extruding metal, and rock drilling or earth boring tools; base metal parts thereof: 8466 Parts and accessories suitable for use solely or principally with the machines of headings 8456 to 8465, including work or tool holders, self-opening dieheads, dividing heads and other special attachments for machine tools; tool holders for any type of tool for working in the hand: The Harmonized Commodity Description and Coding System Explanatory Notes ("ENs") constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s 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. 35127-28 (Aug. 23, 1989). The instant tool kit consists of at least two different articles that are, prima facie classifiable in more than one heading, i.e., the screwdriver handle and extension adapter are classifiable in heading 8466, HTSUS, and the screwdriver bits are classifiable in heading 8207, HTSUS. As such, classification cannot be resolved under GRI 1. GRI 2(b) directs that the "classification of goods consisting of more than one material or substance shall be according to the principles of rule 3." GRI 3 provides 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 effected as follows: The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings refer to only part of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to the goods, even if one of them gives a more complete or precise description of the good. 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. 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 headings at issue only refer to part of the items in the set put up for retail sale. As such, they are regarded as equally specific and resort must be made to GRI 3(b). EN X to GRI 3(b) provides guidance for determining whether the instant tool kit constitutes “goods put up in sets for retail sale”: For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to mean 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 screwdriver handle, extension adapter, and screwdriver bits are prima facie classifiable under different headings of the HTSUS. These are put together to meet a particular need or carry out a specific activity, that is, tightening or loosening fasteners and is imported in a manner suitable for sale to users without repacking. Because the three criteria under EN X to GRI 3(b) are satisfied, pursuant to GRI 3(b), the item constitutes “goods put up in sets for retail sale” and will be “classified as if it consisted of the material or component which gives it its essential character, insofar as this criterion is applicable.” Explanatory Note VIII to GRI 3(b) explains: "[t]he factor which determines 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 the constituent material in relation to the use of the goods." As noted above, EN (VIII) to GRI 3(b) provides that when performing an essential character analysis the factors that should be considered are the bulk, quantity, weight or value, or 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). Therefore, a case-by-case determination on essential character is warranted in this situation. Applying the essential character analysis to the merchandise at issue, we look particularly to the role of the constituent material in relation to the use of the goods. As noted above, this set is intended to be used for tightening or loosening fasteners. The central component is the screwdriver bits because they enable the tool to function as intended. Thus, the bits are what play the most important role in the use of the instant tool kit, and provide the essential character of the set. Accord NY J82517, April 17, 2003 (which determined, in relevant part, that the essential character of a 24 Piece Ratchet & Bit Set was imparted by the screwdriver bits); NY K83351, March 10, 2004 (which determined, in relevant part, that the essential character of three tool sets was imparted by the screwdriver bits). As such, the screwdriver bits are provided for in heading 8207, HTSUS. HOLDING: In accordance with GRI 3(b), the instant tool kit, which includes 4 screwdriver bits, a screwdriver handle and an extension adapter, is classified in heading 8207, HTSUS, and specifically in subheading 8207.90.60, HTSUS, as: “Interchangeable tools for handtools, whether or not power-operated, or for machine-tools (for example, for pressing, stamping, punching, tapping, threading, drilling, boring, broaching, milling, turning or screwdriving), including dies for drawing or extruding metal, and rock drilling or earth boring tools; base metal parts thereof: Other interchangeable tools, and parts thereof: Other: Other: Not suitable for cutting metal, and parts thereof: For handtools, and parts thereof”. The 2010 column one rate of duty is 4.3%. EFFECT ON OTHER RULINGS: NY H80677, dated May 15, 2001, is hereby modified. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division