CLA-2 OT:RR:CTF:TCM: H252026 ERB
Ms. Alice Liu
Atico International USA, Inc.
501 S. Andrews Avenue
Fort Lauderdale, FL 33301
Mr. Kim Young
BDP International Inc.
2929 Walker Road NW
2nd Floor
Grand Rapids, MI 49544
RE: Revocation of NY N230084; Revocation of NY N236254; Tariff classification of gazebos and canopy shelters
Dear Ms. Liu and Mr. Young:
This letter is to inform you that U.S. Customs and Border Protection (CBP) has reconsidered New York Ruling Letter (NY) N230084, issued to Atico International USA, Inc. (Atico) on August 29, 2012, and NY N236254 issued to BDP International (BDP) on December 14, 2012, concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of gazebos from China. We have reviewed these two rulings and found them to be incorrect. Accordingly, for the reasons set forth below, we are revoking these rulings.
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), a notice was published in the Customs Bulletin , Volume 49, Number 8, on February 25, 2015. Seven (7) sets of comments were received in response to the proposed notice.
FACTS:
CBP stated in NY N230084 the following:
The product to be imported is item number A050MA0075, gazebo. The product is comprised of steel tubes weighing 4.5 kgs, PE fabric at 1.2 kgs and the plastic part with a weight of 0.3kgs. The steel tubes outline the frame and a fire retardant PE cover forms the roof. The PE roof is placed over the steel frame. All components will be packed in one box and assembly is required.
The applicable subheading for the gazebo will be 7308.90.9590, Harmonized Tariff Schedule of the United States (HTSUS) which provides for structures…
PE stands for “polyethylene,” and in this context the product is a PE tarp, a waterproof laminate of woven strips and sheet material. Atico’s ruling request submission stated that the PE cover or shroud measures 10’ x 10’ along the top, and 10’ x 10’ along the floor, forming a square, is PE 100G, and is treated with fire retardant material which satisfies CPAI-84, a flammability standard written by the Industrial Fabrics Association International. It does not have fabric “walls.” The steel tube legs measure 24 mm, and the roof measures 18 mm.
CBP stated in NY N236254 the following:
The product to be imported is a canopy shelter identified as model number 25757. It consists of a one-piece cover, a 10’ x 20’ steel frame, bungee cords, footplates and spike anchors. The canopy fabric is woven of polyethylene strips that measure not over 5mm in width and is laminated on both sides with a plastic material which renders it waterproof. The applicable subheading for the gazebo will be 7308.90.95, Harmonized Tariff Schedule of the United States (HTSUS) which provides for structures…
BDP’s ruling request submission stated that the canopy has been treated so as to be UV protectant, with added fade blockers and anti-aging and anti-fungal agents. It does not have fabric “walls.” It is advertised as being quick and east to set up, and is “Great for: camping, decks/patios, special/corporate events, shade and protection.”
ISSUE:
Whether the subject gazebos are classified as an article of plastic of heading 3926, HTSUS, or whether they are structures of heading 7308, HTSUS.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). 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:
3926 Other articles of plastics and articles of other materials of headings 3901 to 3914:
**
7308 Structures (excluding prefabricated buildings of heading 9406) and parts of structures (for example, bridges and bridge sections, lock gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures of iron or steel:
The Court of International Trade (CIT) addressed the scope of “tents” of heading 6306, HTSUS, in Target Stores v. United States, Court No. 06-00444 (Slip Op. 12-41, March 22, 2012) when it considered certain products described as “gazebos.” There the CIT noted that “tents” are typically lightweight, portable shelters, which form an enclosure around the user to protect users from weather elements other than mere sunshine. They are designed to set up and collapse quickly, are easily transported, and they are not landscape design features nor are they akin to permanent shelters. Conversely, the products before the CIT in Target Stores, supra, were substantial in nature, could accommodate furniture, were assembled and disassembled in a manner that is time-consuming and requires the use of components, tools, and other techniques not associated with the easy setting up or taking down of tents. Moreover, the subject merchandise in Target Stores, supra, are frequently used as a landscape design feature in a sight plan. They are often made of steel and wood, and not fabric or textiles. The CIT thus ruled that because the gazebos were not prima facie classified under heading 6306, HTSUS, as tents, they were classified under heading 7308, HTSUS, as structures of steel.
This decision is instructive here with respect to whether the instant merchandise falls under the scope of heading 6306, HTSUS. Although the instant merchandise is designed to facilitate easy assembly or set-up, we note that when in use, neither product protects the user from weather elements other than sunshine any more or less than the merchandise subject to Target Stores, supra. Accordingly, we find that the instant merchandise is not prima facie classifiable under heading 6306, HTSUS, as “tents.”
That said, the subject gazebos are also not prima facie classifiable as a “structure of iron or steel”, as the Court determined the gazebos before it was, in Target Stores, supra. The gazebos in NY N230084 are lightweight, portable, “pop-up” canopies, which require little expert knowledge to assemble, and can likely be done by only one or two persons with minimal external tools. They are clearly advertised as great for picnics, temporary or seasonal events. They are not permanent shelters, they are not made of heavy metal, and there is no indication they are used as a landscape design feature.
The gazebos of NY N236254 are heavier; advertisements indicate they weigh around seventy (70) pounds and feature six legs and may require two persons to assemble. But they too require little expert knowledge, or outside tools, and the product’s packaging included with the original submission as well as the aforementioned online advertisements state that they are for seasonal shade, great for camping, commercial job sites, picnic areas, backyard events, pools or patio use. They are not permanent shelters as was the case with wooden and steel gazebos. Though they share some characteristics, they are distinguishable from the products considered by the Target Stores Court. Neither of the subject canopies is akin to the exemplars listed in the EN to chapter 73, nor are they characterized by the fact that “once they are put in position, they generally remain in that position” or are “expected to remain so configured for extended periods of time.” Target Stores v. United States, supra, * 11.
All seven sets of comments received by this office argue that CBP is misinterpreting the Court’s holding in Target Stores, and impermissibly narrowing the scope of heading 7308, HTSUS. Arguments raised will be addressed in turn.
Four sets of comments argue that the characteristics laid out by the CIT explaining why the subject gazebos are “structures” of heading 7308, HTSUS, which CBP applied in the proposed ruling published in the Customs Bulletin, are irrelevant, and represent flawed logic, “because the cited factors have never been considered in determining what qualifies as structures in heading 7308, HTSUS.” It is true that factors such as weight, dimensions, amount of expert knowledge needed to assemble, advertised use to consumers, permanence, or use as a landscape design feature, have not been previously used by CBP to determine what is and is not a structure of 7308, HTSUS. But as the CIT used those exact characteristics to distinguish among goods which have some characteristics of a tent and some characteristics of a structure, CBP will interpret and apply those characteristics in the instant case to determine whether the subject merchandise is within the intended scope of heading 7308, HTSUS, as was clarified by the CIT.
Four sets of comments point to HQ 082489, dated October 31, 1988, a ruling decided under the HTSUS’ predecessor, the Tariff Schedule of the United States. While prior TSUS cases may be instructive in interpreting identical language in the HTSUS, they are not dispositive. H.R. Conf. Rep. No. 100-576, at 549-50 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 1582-83. The commenters continue to cite the House Conference Report which accompanies the Omnibus Trade and Competitiveness Act of 1988, which enacted the HTSUS which says, in relevant part:
In light of the significant number and nature of changes in nomenclature from the TSUS to the HTSUS, decisions by the Customs Service and the courts interpreting the nomenclature under the TSUS are not to be deemed dispositive in interpreting the HTSUS. Nevertheless, on a case-by-case basis prior decisions should be considered instructive in interpreting the HTSUs, particularly where the nomenclature previously interpreted in those decisions remains unchanged and no dissimilar interpretation is required by the text of the HTSUS.
In the instant case, the tariff provisions for both headings at issue remain unchanged as between the TSUS to the HTSUS. However, the consideration this office gives to TSUS rulings is outweighed by judicial changes in classification. Customs Regulations 19 C.F.R. 152.16(e) provides that the principles of a Court of International Trade decision are to be applied subsequent to that decision. The CIT in Target Stores, supra, proffered a chart which specifically stated the characteristics of a tent which are classified as such, versus a gazebo, classified as a structure. The Court used these diverging characteristics to determine that gazebos were not “tents” but were instead, because of the enumerated characteristics, more akin to “structures.” Target Stores v. United states, supra * 11 (“Rather, plaintiff’s goods become essentially structures of metal or wood bolted together external to individual homes and expected to remain so configured for extended periods of time.” [Emphasis added]). Thus, moving forward, this office is charged with the responsibility to determine, on a case-by-case basis, whether an article “becomes essentially” a structure, or rather, if that article is something other than a “structure” because it does not share the Court’s enumerated characteristics of a “structure” of iron or steel. The instant pop-up canopies share almost no characteristics with the Target gazebo, nor with any of the other named exemplars of structures, found in the ENs.
The CIT in Target Stores, supra, did not state which GRI it applied when it determined that gazebos were structures of heading 7308, HTSUS. However, the subject merchandise is composed of a plastic textile cover, steel tube legs and frame, and various small metal screws and parts, packaged together for assembly as a single article post-importation. The case law is very clear that a composite good is found where two or more headings each refer to part only of the materials contained therein, and therefore, classification is made pursuant to GRI 3. See Pomeroy Collection Ltd. v. United States, 893 F. Supp. 2d 1269, 1280 (Ct. Int’l Trade 2013). The subject merchandise is, therefore, a composite good. GRI 3 (b) provides:
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in set 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.
The Courts have discussed the application of GRI 3(b) on several occasions. See Conair Corp. v. United States, 29 CIT 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). In particular, in Home Depot, Inc. v. United States, supra, the court stated: “[a]n essential character inquiry requires a fact intensive analysis.” 427 F. Supp. 3d at 1284 (Ct. Int’l Trade 2006). The EN (VIII) to GRI 3(b) is also instructive. Therein it provides:
The 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 a constituent material in relation to the use of the goods.
In Home Depot, Inc. v. United States, supra, the CIT examined all the factors listed in the EN (VIII) to GRI 3(b) to determine the classification of merchandise. The court also noted that the EN list is not exhaustive and that other factors should be considered, including the article’s name, primary function, and the “attribute which strongly marks or serves to distinguish what it is. Its essential character is that which is indispensable to the structure, core or condition of the article, i.e. what it is.” Id quoting A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378 (1971).
In this case, the composite good at issue is composed of a large plastic canopy of heading 3926, HTSUS, and a steel frame with steel legs of Chapter 73, HTSUS. The quantity of each component does not weigh in favor of either component. There are multiple steel components, but it makes up one frame, and there is one large canopy. The frames of each product are heavier than its respective canopy. Therefore, this factor weighs in favour of the frame imparting the good’s essential character. Neither importer provided CBP with pricing information. Some commenters, in analogizing similar products, stated that the steel frame makes up about 52% of the cost of the shelter, with the cover making up about 43%. Another commenter noted that the frame is 65%, with the cover being 32%. Therefore, in cases where the frame is more expensive, then this factor does weigh in favour of the frame. The bulk of the product is made up by the plastic canopy, which is larger in coverage or square footage than the frame, and is the more cumbersome of the two components for users to assemble. This factor weighs in favour of the canopy imparting the goods’ essential character. Six commenters stated that the steel frame was highly engineered and so imparts the essential character. But a collapsible accordion frame is not so technologically advanced, specialized, or complex that the entire product should be classified pursuant to this factor.
As regards the nature and role of the components, multiple commenters claim the cover is not essential to the product, and therefore cannot be considered as imparting the goods essential character. Yet, both the subject canopies, as well as all of the substantially similar products submitted to this office from commenters, advertise their goods as being temporary shelters, under which users may park their cars, store plants or other supplies, or set up a farmer’s market or flea market, have a picnic or tailgate. The concept of shelter or sheltering cannot be accomplished without a means of being covered or protected. The primary role of the subject merchandise is to provide shade and minimal cover for users in fair weather. The consumer’s expectation is to purchase a means of providing temporary, moveable, outdoor shade. The metal frame cannot serve this purpose alone; rather its sole purpose is to provide physical support for the canopy, under which users will sit or stand. Moreover, the canopies have been treated so as to be waterproof, fire retardant, anti-fungal, and/or UV-resistant, whereas the steel frames have no special treatments on them which benefit users. All of these very important factors weigh in favour of the canopy imparting the goods’ essential character. The essential character of the subject gazebos is thus, imparted by the canopy itself. It follows then that the subject merchandise is classified according to the constituent material of the canopy, as, “Other plastic articles” under heading 3926, HTSUS.
As regards the canopies not being a “permanent shelter”, a few of the submitted comments noted that permanence is not required for an article to be classifiable as a structure of heading 7308, HTSUS. Indeed, it is not. In S.G.B. Steel Scaffolding & Shoring Co., 82 Cust. Ct. 197 (Cust. Ct. 1979), the Court first conducted a lexicographic analysis, and then an ejusdem generis analysis with respect to the scope of the tariff term “structures,” noting “[t]he master rule of statutory construction, of course, is to interpret the provision so as to carry out the legislative intent.” S.G.B. Steel Scaffolding & Shoring. Co. v. United States, 82 Cust. Ct. 197, 213 (Cust. Ct. 1979), citing United States v. American Trucking Ass’ns., 310 U.S. 534, 542 (1940); United States, etc. v. Simon Saw & Steel Co., 51 CCPA 33, at 40. The Court concluded that, pursuant to the words’ common meaning, “scaffolding” which was meant to support humans and materials (including concrete), but which is inherently temporary in nature, was still a “structure” for tariff purposes, and also was of a like class with the items particularly described in heading 7308, HTSUS. S.G.B. Steel Scaffolding & Shoring. Co. v. United States, 82 Cust. Ct. 197, at 215. The Court continued, that this was because scaffold-type shoring is generally assembled in tower structures consisting of a pair of prefabricated frames and towers are provided for specifically as an exemplar in the heading text of 7308, HTSUS. Id at 216.
However, scaffolding which can support the weight of humans and materials, including concrete, is not at all similar to a lightweight, seasonal canopy which sets up and collapses easily via an accordion-style frame and which, when not in use, is stored in a bag for easy transport. One commenter’s submitted instructions of a substantially similar product states clearly: “Do not use in any potentially windy or rainy weather”, and “Do not rely on your [canopy shelter] for protection in heavy or prolonged rain storms”, and “The [canopy shelter] product is designed as a temporary shelter. Do not leave it up for extended periods”, and “Do not leave your [canopy shelter] product unattended.” In fact, doing so could void the warranty of the canopy. None of these instructions indicate the product is akin to scaffolding structures or towers of steel. Regardless of how broadly the Court found heading 7308, HTSUS to be when it considered steel scaffolding, no reading of S.G.B. Steel Scaffolding & Shoring. Co. v. United States, supra, would conclude the Court also meant to include a pop-up canopy.
Furthermore, the EN does not require structures to be permanent, but durability is contemplated. The EN to Chapter 73 states, and the Court in Target Stores, supra, relies upon, the clarification that goods classified therein are done so because they will “remain so configured for extended periods of time.” Target Stores v. United States, supra * 11. As has been addressed, and which is evidenced by the product’s own warnings to consumers, these pop-up canopies should not be erected for, or left standing for extended periods of time.
One commenter pointed to several CBP rulings regarding furniture, to argue that CBP has previously recognized the importance of structural framing components of composite articles. See HQ H069895, dated March 22, 2010, as well as NY N251114, dated April 3, 2014, and NY N06531, dated February 23, 2007. However, in each of those circumstances, this office recognized that the form and shape and purpose of the article was as a door, and the structural frame thus imparts the form and shape of a door. Here, the purpose of the article is as a shelter, and the form and shape of the sheltering component is imparted by the canopy and not the frame.
Some commenters argued that neither the canopy nor the frame imparted the goods essential character, and as such, they should be classified under the heading which occurs last in numerical order among those which equally merit consideration, pursuant to GRI 3(c). However, as explained, the purpose of the canopy shelter is to shelter the people and things underneath it. Therefore the canopy imparts the goods’ essential character, and classification pursuant to GRI 3(c) is unnecessary.
Classification pursuant to the canopy is consistent with previous HQ rulings whereby CBP classified outdoor canopies according to the material of the cover itself. See NY856811, dated October 17, 1990, (classifying a dining canopy of polyethylene strips covered on both sides with a visible plastic coating under heading 3926, HTSUS as an other article of plastic); NY 802307, dated October 4, 1994 (classifying a dining canopy made of polyethylene under heading 3926, HTSUS as an other article of plastic); NY I88445, dated December 2, 2002 (classifying a sun shelter/dining canopy made from clear polyethylene strips under heading 3936, HTSUS, as an other article of plastic) and NY L81420, dated December 17, 2004 (classifying a dining canopy composed of clear polyethylene fabrics under heading 3926, HTSUS as an other article of plastic).
HOLDING:
In accordance with GRI 3(b), the subject gazebos are classified in heading 3926, HTSUS. They are specifically provided for in subheading 3926.90.9995, HTSUSA, as an “Other article of plastic: Other: Other: Other.” The duty rate is 5.3 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
NY N230084, dated August 29, 2012, and NY N236254, dated December 14, 2012 are 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