CLA-2 RR:CTF:TCM 968226 HkP
Mr. Stephen J. Leahy
Leahy & Ward
63 Commercial Wharf
Boston, MA 02110
RE: Revocation of HQ 955105; rechargeable storage battery and battery charger
Dear Mr. Leahy:
This is in reference to Headquarters Ruling Letter (“HQ”) 955105, issued to you on December 10, 1993, in which a storage battery and battery charger were classified under the Harmonized Tariff of the United States (“HTSUS”) in three different scenarios presented for our consideration. We have reconsidered HQ 955105 and determined that the tariff classification of the storage battery and battery charger is incorrect. This letter sets forth the correct classification.
Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. §1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation was published on June 28, 2006, in the Customs Bulletin, Volume 40, No. 27. No comments were received in response to this notice.
FACTS:
HQ 955105 described the merchandise as consisting of a nickel cadmium storage battery and a battery charger, both designed to power a footwarmer, and not attached to one another. We were asked to determine the tariff classification of the storage battery and battery charger in the following scenarios: (1) the items are imported as a set and suitable for sale and distribution to consumers as imported, (2) the items are imported suitable for packing with other components in a complete footwarmer set, and (3) the items are imported in a footwarmer box with no other components included in the box. We considered scenarios 2 and 3 to be identical for classification purposes.
With regard to scenario 1, in HQ 955105, U.S. Customs and Border Protection (“CBP”) found the battery and battery charger to be a set for classification purposes. However, the ruling also found that:
With regard to the subject set, its primary purpose is to power a footwarmer through the use of the included battery pack. Without the battery, it is our understanding that the footwarmer cannot operate. The battery charger is included in the footwarmer set to recharge the battery whenever it is low on power. Consequently, it is our position that the storage battery imparts the essential character of the subject set. See HQ 954061, dated May 13, 1993, wherein we held that a rechargeable lead acid battery pack set, which could be used for a variety of applications, was classifiable under subheading 8507.20.00, HTSUS. Therefore, the set containing the storage battery and the battery charger is classifiable under subheading 8507.30.00, HTSUS.
It is now CBP’s position that this essential character analysis is incorrect because it is based on HQ 954061, a ruling that classified merchandise not similar to the merchandise under consideration in HQ 955105. The particular scenario in HQ 955105 concerned a battery charger set, whereas HQ 954061 concerned the classification of a rechargeable battery power source.
With regard to scenarios 2 and 3, HQ 955105 found the items to be a composite good, with its essential character being imparted by the storage battery based on the reasoning quoted above. Similarly, we now find this essential character analysis to be incorrect.
ISSUE:
What is the essential character of the storage battery and battery charger when imported as a set or a composite good?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). 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 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
8504 Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof:
8504.40 Static converters:
8504.40.95 Other:
Rectifiers and rectifying apparatus:
8504.40.9550 Other
8507 Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof:
8507.80 Other storage batteries:
8507.80.8000 Other
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, the ENs 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.
Heading 8504, HTSUS, provides for, inter alia, static converters. EN 85.04(II) explains that “[t]he apparatus of this group are used to convert electrical energy in order to adapt it for further use.” Accordingly, we find that the battery chargers are provided for in heading 8504, HTSUS.
Heading 8507, HTSUS, provides for electric storage batteries. EN 85.07 explains that “[e]lectric accumulators (storage batteries or secondary batteries) are characterized by the fact that the electrochemical action is reversible so that the accumulator may be recharged.” As a result, we find that rechargeable batteries are provided for in heading 8507, HTSUS.
Based on the foregoing we find that the battery chargers packaged together with batteries are, prima facie, classifiable under headings 8504 and 8507, HTSUS. Therefore they cannot be classified solely on the basis of GRI 1.
GRI 3 provides, in pertinent part, 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 on 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.
Explanatory Note X to GRI 3(b) provides that:
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).
With regard to scenario 1, we find the subject storage battery and battery charger to be a set for classification purposes. They fully satisfy all three requirements of EN 3(b)(X), in that, the batteries and the chargers are classifiable in different headings, are “put up together” to provide a rechargeable power source, and are offered for sale directly to users without repacking. Consequently, the batteries and chargers may not be classified separately under their respective classifications.
With regard to scenarios 2 and 3, we consider them to be the same. It is a
well-established classification principle that goods are classified in their imported condition. XTC Products, Inc. v. United States, 771 F. Supp. 401, 405 (1991). See also United States v. Citroen, 223 U.S. 407 (1911). Accordingly, from this point forward, we will refer to scenarios 2 and 3 as “scenario 2”.
With regard to scenario 2, we note that after the storage battery and battery charger are imported other components must be added to the footwarmer box. We find the addition of these other components to be repacking. Accordingly, we find that the subject storage battery and battery charger are not a set for classification purposes because they do not fulfill the requirements of EN 3(b)(X).
Explanatory Note (IX) to GRI 3(b) provides, in pertinent part:
For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.
Based on the foregoing, we find that the storage battery and the battery charger in scenario 2, as imported, constitute a composite good. Although the two items are “separable components”, they are adapted one to the other, are mutually complementary, and, as indicated by the merchandise itself, form a whole which would not normally be offered for sale in separate parts.
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.” Court decisions on essential character for GRI 3(b) purposes have looked primarily to the role of the constituent material in relation to the use of the good. See Better Home Plastics Corp. v. U.S., 915 F. Supp. 1265 (CIT 1996), aff’d 119 F. 3d 969 (Fed. Cir. 1997) (“Better Home Plastics”); Mita Copystar America, Inc. v. U.S., 966 F. Supp. 1245 (CIT 1997), rehear’g denied, 994 F. Supp. 393 (1998); Vista Int’l Packing Co. v. U.S., 890 F. Supp. 1095 (CIT 1995). See also Pillowtex Corp. v. U.S., 893 F. Supp. 188 (CIT 1997), aff’d 171 F. 3d 1370 (CAFC 1999); Avenues in Leather, Inc. v. U.S., 2004 Ct. Int’l Trade LEXIS 39, aff’d 423 F.3d 1326 (Fed. Cir. 2005).
We note that, prior to initial use, the storage battery must be fully charged in order to be useful. Further, every time the battery need charging, the charger must be used. We find, therefore, that the battery charger is essential to the effectiveness of the storage battery. We also note that the storage battery has a limited shelf life. Once it can no longer hold a charge, it is discarded, and a new battery must be purchased. In this sense, the battery become “disposable” while the charger remains functional.
CBP has previously held, in relation to similar merchandise, that the battery-charging component imparts the set’s essential character because the purpose of the set is to charge batteries. The main reason for purchasing the set is not to obtain batteries, but rather to obtain a device which decreases the need to periodically purchase new batteries. See HQ 083672, dated May 16, 1989, NY E80178, dated April 29, 1999. So too, in the instant case, we find that the purpose of the subject battery charger in scenarios 1 and 2 is to charge batteries, and that such sets and composite goods are provided for under subheading 8504.40.9550, HTSUS, as “other” rectifiers and rectifying apparatus.
HOLDING:
By application of GRI 3(b), we find that the subject battery charger set and the composite good made up of the storage battery and battery charger are provided for in heading 8504, specifically in subheading 8504.40.9550, HTSUS, which provides for: “Electrical transformers, static converters (for example, rectifiers) and inductors; … : Static converters: Other: Rectifiers and rectifying apparatus: Other.”
The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
EFFECT ON OTHER RULINGS:
HQ 955105, dated December 10, 1993, is hereby revoked. 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