CLA-2 CO:R:C:F 950320 ALS
District Director of Customs
Lincoln Juarez Bridge, Bldg. #2
P. O. Box 3130
Laredo, Texas 78044-3130
RE: Request for Further Review of Protest 2304-91-000038, dated
February 13, 1991, Concerning Parts of Ball Point Pens
Imported Together
Dear Mr. Castellano:
This ruling is on a protest that was filed against your
decisions of November 16, 23 and 30, 1990, in the liquidation of
28 entries, covering the referenced items, filed between December
29, 1989, and October 11, 1990.
FACTS:
The merchandise under consideration consists of barrels, caps
and ink cartridges for ball point pens which, subsequent to
importation, are assembled with similar components from the same
shipment, other shipments or parts of domestic origin. In
addition, as part of the assembly process, a button of domestic
origin is placed on the open end of each pen's barrel in order to
seal that opening and prevent the ink from drying out. The pens
are then ready for packaging and marketing. The assembled pens
are available in five models with some models having fine writing
points and others having medium writing points. The assembled pens
are available with cartridges containing red, blue, black or green
ink except for the Accountant Fine Point Pen model which is only
available with red, blue or black ink cartridges.
ISSUE:
Is the merchandise under consideration ball point pens or
parts of ball point pens? - 2 -
LAW AND ANALYSIS:
Classification of merchandise under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA) is governed by
the General Rules of Interpretation (GRI's) taken in order.
GRI 1 provides that the classification is determined first in
accordance with the terms of the heading and any relative section
and chapter notes. If GRI 1 fails to classify the goods and if
the heading and legal notes do not otherwise require, the remaining
GRI's are applied taken in order.
The described ball point pen components are imported in
quantities varying from shipment to shipment. These components
are assembled subsequent to importation to form a complete pen.
Counsel has advised us that the components utilized to assemble a
particular model of pen may or may not be contained in one
shipment. However, some number of barrels and ink cartridges from
each shipment may be combined to form a unit that is essentially
a pen. Because of this the question arises as to whether each
shipment should be considered to be composed of a certain number
of ball point pens classifiable under subheading 9608.1000, HTSUSA,
with the remaining components considered as parts of ball point
pens classifiable under subheading 9608.9944, HTSUSA.
Alternatively, the question arises as to whether these components
are merely inventory stock and should be considered as parts of
ball point pens.
In regard to whether some quantity of the components in each
shipments should be considered as complete pens with the remaining
components in such shipment considered parts, we note that the
essential elements of some number of pens are present in each
shipment. Although it is not clear that the components in any
particular shipment will be combined, it appears to be reasonable
to conclude that some number of such components could be combined
to form items that have the essential characteristics of pens.
While it is necessary to add caps to the pens to protect their
points and facilitate the carrying of the pens and to place buttons
on the open ends of the barrels to seal those openings and prevent
the ink from prematurely drying to make the product a commercial
entity, such items are not needed for the combined barrel and ink
cartridge to be utilized as a pen. Thus it appears that some
number of the components of each shipment might be considered as
pens.
- 3 -
In this regard we note that GRI 2(a) provides that headings
in the HTSUSA cover not only items, although incomplete or
unfinished at the time of importation, have the essential character
of the completed item. Included within the scope of that rule are
such incomplete articles that are unassembled or disassembled. The
relevant Explanatory Notes (EN's) which represent the views of the
international group of tariff classification experts that drafted
the Harmonized System confirm that articles which have the
essential character of the finished article at the time of
importation, although incomplete, are to be classified the same as
the completed item. The EN's clarify that this is true although
the components might be unassembled or disassembled at the time of
importation for reasons such as requirements or convenience of
packing, handling or transport. EN 2(a)(VII) further states
that any quantity of unassembled components in excess of that
needed to form a complete article are to be considered separately.
The reason why a particular shipment might contain an excess
quantity of any component is not specified. It, however, would
appear that this provision might cover a situation where additional
parts are packed in error, where there are spare parts which might
be used to replace components damaged at the time of arrival or
during the assembly process, etc.
In considering whether the components are to be considered as
a varying quantity of pen parts or a combination of varying
quantities of pens and pen parts, we note that the components are,
subsequent to importation, shipped to two domestic plants where
they are combined with other components to form completed pens.
The components with which the components under consideration are
combined subsequent to importation may be of U.S. or Mexican
origin. Some components of Mexican origin, e.g. ink cartridges may
be combined with other components of U.S. origin, e.g. barrels, to
form a pen. Thus, the barrels and ink cartridges must coalesce at
the same location and time, in relatively equal quantities, to form
a unit, complete or incomplete. Since some of the barrels and ink
cartridges are primarily or solely of U.S. origin and in view of
the wide disparity in the quantities of each component in any
particular shipment, it is clear that the coalescence must take
place subsequent to importation rather than at the time of
importation or prior thereto. Thus, it appears that these
components are bulk shipments destined for inventory to supply the
domestic assembly line. In this regard we note that counsel states
that the components are placed in "cribs" upon arrival at the
assembly plants and are withdrawn therefrom on an as needed basis
to supply the assembly lines.
- 4 -
While considering this matter we were telephonically advised
by your staff that subsequent shipments of these components were
each composed exclusively of one component. They advised us that
it was not until the benefits of the Generalized System of
Preferences (GSP) were extended to both pen and pen parts that
shipments again included various components. While the importer's
intentions as to utilization of the components or their manner of
shipment does not dictate the appropriate classification thereof,
we believe that they confirm that the shipments in question were
composed of bulk inventory shipments of pen parts and not a
combination of pens and pen parts.
HOLDING:
Ball point pen parts imported in bulk which are to be combined
with other such parts imported in the same shipment, in other
shipments or with parts of domestic origin, in order to produce
ball point pens, are classifiable as parts of ball point pens under
subheading 9608.99.4400, HTSUSA. Such merchandise is subject to
a general rate of duty of .9 each plus 6.1 per cent ad valorem.
Parts of ball point pens, the product of Mexico, have been
eligible, since at least January 1, 1989, and are currently
eligible, for a free rate of duty under the Generalized System of
Preferences (GSP) upon compliance with the provisions of section
10.171 et seq., Customs Regulations (19 CFR 10.171 et seq.).
Since reclassification of the merchandise as indicated above
will result in the same rate of duty as claimed you are instructed
to allow the protest in full. A copy of this ruling should be
attached to the Form 19 and provided to the protestant as part of
the notice action on the protest.
Sincerely,
John Durant, Director
Commercial Rulings Division