CLA-2 RR:CTF:TCM H170637 EGJ
Port Director
U.S. Customs and Border Protection
301 E. Ocean Blvd., Suite 1400 Long Beach, CA 90802
Attn: Minerva Barragan, Import Specialist
Re: Application for Further Review of Protest No. 2704-11-100728: Tariff Classification of a Child Bicycle Seat
Dear Port Director:
This is in response to the Application for Further Review (AFR) of Protest No. 2704-11-100728, dated April 15, 2011, filed by counsel on behalf of Kent International, Inc. (Kent), in response to your classification of a child bicycle seat under the Harmonized Tariff Schedule of the United States (HTSUS). This letter also addresses Kent’s first AFR supplement dated February 17, 2014, and Kent’s second AFR supplement dated April 28, 2014.
FACTS:
The subject merchandise is the Wee Ride child safety seat. It enables a young child to ride in front of an adult on a bicycle. It includes a fabric padded, plastic seat with safety straps, hand and foot rests, and an adjustable metal bar that is used to fasten it to an adult bicycle frame. A picture of the child seat is provided below:
To date, Kent and CBP have had several interactions related to the tariff classification of child bike seats. On August 9, 2005, U.S. Customs and Border Protection (CBP) issued New York Ruling Letter (NY) L86862, classifying the instant child bike seat as a bicycle accessory under subheading 8714.99.80, HTSUS, with an applicable rate of duty of ten percent ad valorem. However, on September 21, 2007, CBP issued NY N016953 to a different importer. In NY N016953, CBP classified a substantially similar child bike seat as a seat under subheading 9401.80.40, HTSUS, with a free rate of duty.
Citing to NY N016953, Kent filed a protest and AFR at the Port of Newark. On August 22, 2008, Kent’s protest was approved and Kent’s child bike seats were reliquidated under heading 9401, HTSUS, free of duty. On November 13, 2008, counsel for Kent met with Import Specialists at the Port of Newark. The Import Specialists agreed to send Kent’s next protest and AFR to CBP Headquarters so that one of the conflicting rulings could be revoked.
On January 28, 2009, the Port of Newark forwarded a Kent protest and AFR to CBP Headquarters. However, in a letter to the Port dated August 31, 2010, CBP Headquarters stated that no ruling could be issued in response to Kent’s protest and AFR. The Port of Newark had liquidated Kent’s entry under heading 9401, HTSUS. Since the Port liquidated the entry under heading 9401, HTSUS, as Kent had requested, the tariff classification of the merchandise was not protestable as a matter of law. 19 U.S.C. §1514(a)(2). Subsequently, CBP issued two more rulings classifying substantially similar child bike seats under heading 9401, HTSUS: NY N066722, dated July 16, 2009, and NY N166197, dated June 6, 2011.
Between March 1 and April 19, 2010, Kent made three entries at the Port of Long Beach. Pursuant to NY L86862, the Port of Long Beach liquidated the merchandise under heading 8714, HTSUS. On April 11, 2011, Kent timely submitted the instant protest and AFR, asserting that the subject merchandise should be classified under heading 9401, HTSUS. The matter is protestable as a decision on classification. 19 U.S.C. §1514(a)(2). Kent’s AFR satisfies application criteria because Kent alleges that the Port’s liquidation under heading 8714, HTSUS, is inconsistent with CBP rulings on substantially similar merchandise. 19 C.F.R. § 174.24(a). Kent further alleges that classification of the child bike seat involves questions of law or fact which have not previously been ruled upon by CBP. 19 C.F.R. § 174.24(b). In a supplemental submission dated February 17, 2014, Kent makes a claim for treatment with respect to the classification of the subject merchandise for entries made prior to the effective date of the revocation or modification of NY rulings NY N016953, NY N066722, and NY N166197, and that CBP has an established and uniform practice with respect to the classification of the subject merchandise.
ISSUES:
1. Is the child bike seat classified under heading 8714, HTSUS, as an accessory to a bicycle, or under heading 9401, HTSUS, as a seat?
2. Does Kent have a claim for treatment of child bike seats being classified under heading 9401, HTSUS, requiring that the subject entries of child bike seats be liquidated under heading 9401, HTSUS?
3. Does CBP have an established and uniform practice of classifying child bike seats under heading 9401, HTSUS, requiring that the subject entries of child bike seats be liquidated under heading 9401, HTSUS?
LAW AND ANALYSIS:
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. 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 and, unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The relevant HTSUS provisions are:
8712 Bicycles and other cycles (including delivery tricycles), not motorized …
* * *
8714 Parts and accessories of vehicles of headings 8711 to 8713 …
* * *
9401 Seats (other than those of heading 9402), whether or not convertible into beds, and parts
thereof …
* * *
Note 1(h) to Chapter 94 states that:
1. This chapter does not cover:
(h) Articles of heading 8714 …
* * *
In HQ H180103, dated June 26, 2014, CBP revoked the three rulings which classified child bike seats as seats under heading 9401, HTSUS: NY N016953, NY N066722, and NY N166197. In HQ H180103, CBP classified all of the child bike seats under heading 8714, HTSUS, as accessories to bicycles. HQ H180103 was published in the Customs Bulletin, Volume 48, Number 29, dated July 23, 2014, which is enclosed with this letter. The analysis and holding contained in HQ H180103 and NY L86862 are incorporated herein by reference. Kent’s child bike seats are properly classified under heading 8714, HTSUS, as accessories to bicycles.
Kent makes several legal arguments which urge CBP to apply its decisions in NY N016953, NY N066722, and NY N166197, all now revoked, to Kent’s entries of child bike seats. Kent requests a remedy in equity, stating that CBP has allowed Kent’s competitors to enter their child bike seats under a duty free provision while requiring Kent to enter its substantially similar merchandise under a dutiable provision.
First, we note that CBP is required to follow U.S. statutes and regulations. Pursuant to 19 C.F.R. § 177.9(a), a ruling letter “represents the official position of [CBP] with respect to the particular transaction or issue described therein and is binding on all [CBP] personnel.” On August 9, 2005, CBP issued NY L86862 to Kent, classifying Kent’s child bike seats under heading 8714, HTSUS. NY L86862 sets forth CBP’s official position on the tariff classification of Kent’s child bike seats. Since August 9, 2005, CBP’s position has been and continues to be that Kent’s child bike seats are properly classified under heading 8714, HTSUS.
Kent’s first legal argument pertains to modification of treatment under 19 U.S.C. § 1625(c)(2), which provides as follows:
(c). A proposed interpretive ruling or decision which would -
(1) modify (other than to correct a clerical error) or revoke a prior interpretative ruling or decision which has been in effect for at least 60 days; or
(2) have the effect of modifying the treatment previously accorded by the Customs Service to substantially identical transactions;
shall be published in the Customs Bulletin. The Secretary shall give interested parties an opportunity to submit, during not less than the 30-day period after the date of such publication, comments on the correctness of the proposed ruling or decision. After consideration of any comments received, the Secretary shall publish a final ruling or decision in the Customs Bulletin within 30 days after the closing of the comment period. The final ruling or decision shall become effective 60 days after the date of its publication.
Kent notes that pursuant to NY N016953, NY N066722, and NY N166197, ports liquidated many entries of child bike seats under heading 9401, HTSUS. Some of Kent’s entries of child bike seats were also liquidated under heading 9401, HTSUS. Pointing to these rulings and liquidations, Kent alleges that CBP established a treatment of classifying child bike seats under heading 9401, HTSUS. As such, Kent asserts that CBP must grant this treatment to Kent’s entries up until September 22, 2014, which is the effective date of CBP’s revocation of the three child bike seat rulings issued to Kent’s competitors.
In Precision Specialty Metals, Inc. v. United States, 24 C.I.T. 1016, 1043 – 1044 (2000), the U.S. Court of International Trade (CIT) stated that “the term ‘treatment’ looks to the actions of Customs, rather than its ‘position’ or ‘policy.’” The CIT further stated that the term treatment “is also distinct from the terms ‘ruling’ and ‘decision.’” Id. The CIT stated that their interpretation of the term recognized that “importers may order their actions based not only on Customs' formal ‘policy,’ ‘position,’ ‘ruling’ or ‘decision,’ but on its prior actions.” Id.
Kent’s treatment argument is not persuasive because the issuance of a ruling to Kent precludes a finding of treatment. The CIT addressed this in Motorola Inc. v. United States, 30 C.I.T. 1766 (2006) (“Motorola”). In Motorola, the importer asserted that two CBP preclassification rulings, previously determined to be prior interpretive rulings, constituted treatment. CBP countered that this argument was illogical under a plain reading of 19 U.S.C. § 1625(c). The CIT outlined CBP’s rebuttal, which was that a "more logical reading of [the statute] is that Congress intended subsections (c)(1) and (c)(2) to have the same impact, but under different situations, the former when a prior interpretative ruling . . . has been issued, and the latter when no previous interpretative ruling or decision has been issued." Id. The CIT agreed with CBP, and stated that reading subsection (c)(2) as including interpretative rulings would render subsection (c)(1) redundant. Id. Since an interpretive ruling which provides CBP’s official position on the tariff classification of Kent’s merchandise has been issued to Kent, Kent is precluded from making a claim for treatment.
In a similar vein, Kent alleges that CBP violated 19 U.S.C. § 1625(c) by issuing NY N016953, NY N066722, and NY N166197 to Kent’s competitors, and by liquidating Kent’s entries under heading 9401, HTSUS. Kent alleges that these rulings and liquidations revoked NY L86862 without the publication, notice and comment period required by 19 U.S.C. § 1625(c). Kent alleges that CBP’s violation of 19 U.S.C. § 1625(c) entitles Kent’s entries to the same duty free treatment granted to its competitors’ entries. In support of this argument, Kent cites to International Custom Products, Inc. v. United States, 748 F.3d 1182 (Fed. Cir. 2014) (“International Custom Products II”).
In International Custom Products II, the Court of Appeals for the Federal Circuit (CAFC) affirmed the CIT’s decision to void a CBP Notice of Action for failing to comply with the requirements of 19 U.S.C. § 1625(c). 748 F.3d 1182 aff’g International Custom Products v. United States, 878 F. Supp. 2d 1329 (CIT 2012) (“International Custom Products I”). On January 20, 1999, CBP issued NY D86228 to the importer, which classified the importer’s white sauce as a sauce under heading 2103, HTSUS, with a duty rate of 6.6% ad valorem. International Custom Products II, 748 F.3d at 1182-1184. In April 2005, CBP issued a Notice of Action which stated that all of the importer’s current and future entries of white sauce would be classified as dairy spreads under heading 0405, HTSUS. Id. The applicable rate of duty and the safeguard duty rate resulted in an increase in duty of approximately 2400%. Id.
As the Notice of Action stated that it applied to all current and future entries of white sauce, it effectively revoked NY D86228. International Custom Products II, 748 F.3d at 1186-1187. However, the CAFC held that since the Notice of Action failed to comply with the publication, notice and comment requirements of 19 U.S.C. § 1625(c), the Notice of Action was null and void. Kent states that CBP’s three rulings and liquidations under heading 9401, HTSUS, effectively revoked NY L86862. As such, Kent urges CBP to grant duty free treatment to all of its entries of child bike seats.
We disagree with Kent’s 19 C.F.R. § 1625(c) argument. Pursuant to 19 C.F.R. § 177.19(a), a ruling is in effect until it is revoked. Under 19 C.F.R. § 177.9(b)(2), a ruling letter “setting forth the proper classification of an article under the provisions of the [HTSUS] will be applied only with respect to transactions involving articles identical to the sample submitted with the ruling request or to articles whose description set forth in the ruling letter.” In International Customs Products II, the Notice of Action specifically applied to the importer’s entries of white sauce, which were identical to the white sauce which was the subject of the ruling letter. 748 F.3d at 1182-1184. Conversely, the three ruling letters issued to Kent’s competitors did not describe Kent’s child bike seat. Even if they did apply to Kent’s child bike seat, these ruling letters would be null and void with regard to Kent’s merchandise as Kent’s ruling was never revoked pursuant to the requirements set forth in 19 C.F.R. § 1625(c).
With regard to the liquidation of Kent’s entries under heading 9401, HTSUS, we agree with Kent that such liquidation did not follow the classification set forth in Kent’s ruling letter. However, these liquidations are not at issue in the instant protest and AFR and so we are unable to direct the Port to reliquidate those entries at the higher rate of duty. For all of these reasons, we disagree that a failure to comply with 19 U.S.C. § 1625(c) would require CBP to reliquidate all of Kent’s entries under heading 9401, HTSUS. To the contrary, International Customs Products II would direct us to reliquidate all of Kent’s entries under heading 8714, HTSUS, as NY L86862 has never been revoked. 748 F.3d at 1186-1187.
Finally, Kent asserts that CBP had a de facto established and uniform practice of classifying child bike seats in heading 9401, HTSUS. Kent asserts that this established and uniform practice requires CBP to liquidate all of its protested entries under the duty free provision. According to 19 U.S.C. § 1315(d), an established and uniform practice is set forth in a finding by the Secretary of the Treasury. The Court of Appeals for the Federal Circuit (CAFC) explained de facto established and uniform practice (EUP) in Jewelpak Corp. v. United States, 297 F.3d 1326, 13 (Fed. Cir. 2002), as follows:
It is of note that with respect to an "established and uniform practice," [19 U.S.C.] section 1315(d) speaks only in terms of findings made by the Secretary of the Treasury. Our court has also noted the existence of a judicial gloss on the statute that allows a finding of a de facto EUP, but the requirements for establishing a de facto EUP are stringent and the requirements for extinguishing one are not. See Heraeus-Amersil, Inc. v. United States, 795 F.2d 1575 (Fed. Cir. 1986).
In Heraeus-Amersil, Inc. v. United States, the CAFC reviewed its prior decisions to determine whether a de facto EUP existed for Heraeus’ entries. 795 F.2d at 1581. The CAFC stated that “[i]n these previous cases, the judicial search for a uniform practice concentrated largely on evidence of uniform classification and liquidation of merchandise at various ports over an extended period of time.” Id. The CAFC noted its decision in Siemens America, Inc. v. United States, 692 F.2d 1382, 1383-84 (Fed. Cir. 1982), where it determined that the liquidation of approximately 100 entries under one tariff heading over a two-year period at one port did not create a de facto EUP. The CAFC also noted the decision of its predecessor, the U.S. Court of Customs and Patent Appeals (CCPA), in Washington Handle Co. v. United States, 34 C.C.P.A. 80 (1946). In that decision, the CCCPA determined that merchandise entered and liquidated under the same tariff item for a two-year period solely at two subports did not create a de facto EUP. Id.
However, the CAFC determined that over a ten-year period, at the only two ports at which Heraeus’ merchandise was imported, more than 300 entries were classified under item 540.11 or 540.41 (depending upon shape). Heraeus-Amersil, 795 F.2d at 1581 – 1582. On this evidence, the CAFC found that Heraeus successfully proved the existence of a de facto EUP for the classification of Heraeus’ merchandise. Id.
Turning to the instant protest and AFR, Kent asserts that CBP had a de facto EUP of classifying child bike seats as seats under heading 9401, HTSUS. Kent points out that the Port of Newark liquidated several of Kent’s entries under heading 9401, HTSUS. Kent also states that CBP issued three ruling letters which classified substantially similar child bike seats under heading 9401, HTSUS. As a result, Kent asserts that since 2007, the ports have liquidated child bike seats under heading 9401, HTSUS.
Kent’s argument for a de facto EUP fails for several reasons. First, CBP issued NY L86862 to Kent, which classified Kent’s child bike seats under heading 8714, HTSUS. In addition, the Port of Long Beach liquidated all of Kent’s entries of child bike seats under heading 8714, HTSUS. For these reasons, we do not find that a de facto EUP existed for the tariff classification of child bike seats under heading 9401, HTSUS.
HOLDING:
By application of GRI 1 (Note 1(h) to Chapter 94), the child bicycle seat is classified in heading 8714, HTSUS. It is specifically classified under subheading 8714.99.80, HTSUS, which provides for “Parts and accessories of vehicles of headings 8711 to 8713: Other: Other: Other…” The 2010 column one, general rate of duty is ten percent ad valorem.
Since classification of the merchandise as indicated above is the same as the liquidated rate, you are instructed to DENY the protest in full.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
You are to mail this letter together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of this letter, the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B Harmon, Director
Commercial Rulings Division