OT:RR:CTF:VS H323765 UBB
Mark S. Stepien
Center Director – Automotive/Aerospace
477 Michigan Ave.
Detroit, MI 48226
RE: Internal Advice Request; Actual Use; 9817.00.60, HTSUS
Dear Center Director:
This is in response to the request for internal advice (“IA”) initiated by counsel for OTR Wheel Engineering (“OTR”) on February 9, 2022, concerning an entry for which OTR sought duty free treatment pursuant to subheading 9817.00.60, Harmonized Tariff Schedule of the United States (“HTSUS”).
FACTS:
OTR is a global group of companies that design, engineer, sell, and distribute specialty wheels and tires that are used on a variety of machines and equipment, including lawnmowers. OTR imports, among other types of merchandise, lawn mower tires in a wide variety of sizes and treads. This IA relates to 868 tires entered on January 5, 2022, under subheading 9817.00.60, HTSUS, with statistical reporting number 4011.90.8010, Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”). Separately, subheading 9903.99.03, HTSUS also applies here, indicating the merchandise is subject to section 301 tariffs, unless CBP agrees that the tires are classifiable under subheading 9817.00.60, HTSUS and properly entered as such, pursuant to the relevant regulations at 19 CFR 10.131-10.139.
OTR describes the subject merchandise tires as lawn mower tires that are low-speed rated (10 mph) and are designed, engineered, and marketed for use on riding and standing lawn mowers. OTR further notes that heading 8433 includes lawn mowers. OTR argues that Headquarters Ruling Letter (“HQ”) H264768, dated September 7, 2017, is dispositive on the issue that OTR’s lawn mower tires are classifiable under subheading 9817.00.60, HTSUS. The CEE disagrees and maintains that the proper classification of these tires is under subheading 4011.90.8010, HTSUSA.
ISSUE:
Whether the subject tires are classifiable under subheading 9817.00.60, HTSUS.
LAW AND ANALYSIS:
As there does not appear to be any dispute regarding the classification of tires under subheading 4011.90.80, HTSUS, the issue in this case is whether the provisions of 9817.00.60, HTSUS, apply.
Subheading 9817.00.60, HTSUS, applies to parts to be used in articles provided for in headings 8432, 8433, 8434 and 8436, whether or not such parts are principally used as parts of such articles and whether or not covered by a specific provision within the meaning of additional U.S. rule of interpretation 1(c).
Additional U.S. Rule of Interpretation 1(c) states:
(c) a provision for parts of an article covers products solely or principally used as a part of such articles but a provision for “parts” or “parts and accessories” shall not prevail over a specific provision for such part or accessory;
Furthermore, U.S. Note 2, Subchapter XVII, Chapter 98, HTSUS, sets forth articles excluded from subheading 9817.00.60, treatment. Specifically, U.S. Note 2(t) excludes:
articles provided for in subheadings 8419.81.50, 8419.81.90, 8427.10, 8427.20, 8427.90 and 8431.20, headings 8432, 8433 and 8434, subheadings 8435.10 and 8435.90, heading 8436, subheadings 8438.80, 8468.10, 8472.90.40, 8479.83, 8479.89, 8485.10, 8485.30 and 8485.80, subheadings 8482.10.10 through 8482.99.65 (other than subheading 8482.91) and subheadings 8483.10.50 and 8487.10.
Thus, articles provided for in heading 8433 are excluded from subheading 9817.00.60. Headquarters Rulings Letter (HQ) H264768, dated September 7, 2017, addressed the interpretation of U.S. Note 2(t), also in the context of lawn mower tires. According to HQ H264768, the exclusion in Note 2(t) refers only to “articles” and not “parts” of articles provided for in 8433. OTR notes that lawn mowers are provided for in heading 8433. However, OTR argues that its tires are indisputably parts of lawn mowers and not complete lawn mowers, and therefore not excluded by operation of U.S. Note 2(t). OTR and your office agree that the subject tires are classified under subheading 4011.90.8010, HTSUSA, as new pneumatic tires of rubber, other, other. As such, the tires at issue do not fall within the exclusions enumerated in Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2.
In addition, subheading 9817.00.60, HTSUS, requires that the article under consideration must qualify as a part, and that it must be used with an article of headings 8432, 8433, 8434, or 8436. In HQ H264867, CBP held that lawn mower tires constitute parts of a lawn mower. OTR claims its tires are “all but identical to the tires at issue in H264768” and that they are “parts of exactly the same type of lawn mowers at issue in that ruling.” Additionally, OTR notes that its tires are designed for an intended use as lawn mower tires, and highlights the maximum speed rating, the zero-turn capability and treads designed not to damage lawn surfaces as indicators of this specific design. In HQ H264768, we explained that with respect to the first part of the 9817.00.60, a part must be either an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article (see United States v. Willoughby Camera Stores, 21 C.C.P.A. 332, T.D. 46851 (1933)), or it must be dedicated solely for use with another article (see United States v. Pompeo, 43 C.C.P.A. 9, C.A.D. 602 (1955)). As was the case in HQ H264768, the instant tires in this case are integral parts without which the lawn mowers could not function.
OTR also argues that since lawn mowers are provided for in heading 8433, HTSUS, the lawn mower tires are parts to be used in an article provided for in heading 8433, HTSUS. Although the tires would not be classified as parts in heading 8433 due to Additional Rule of Interpretation 1(c) and Note 1(a) to Section XVI (which excludes from the section “[t]ransmission, conveyor, or elevator belts or belting, of plastics of chapter 39, or of vulcanized rubber (heading 4010), or other articles of a kind used in machinery or mechanical or electrical appliances or for other technical uses, of vulcanized rubber or other than hard rubber (heading 4016)”), they appear to be dedicated solely or principally for use with the lawn mowers, which are provided for in heading 8433. Further, per U.S. Note 1, Chapter 98, HTSUS, the tires may be considered as parts of the lawnmowers, as they are not subject to the rule of relative specificity in GRI 3(a), and as indicated in subheading 9817.00.60, whether or not they are covered by a specific provision within the meaning of additional U.S. rule of interpretation 1(c). As such, the tires may be considered parts that are used with an article in heading 8433.
Lastly, Additional U.S. Rule of Interpretation 1(b) sets forth the requirements for using an actual use tariff classification:
(b) a tariff classification controlled by the actual use to which the imported goods are put in the United States is satisfied only if such use is intended at the time of importation, the goods are so used and proof thereof is furnished within 3 years after the date the goods are entered;
Therefore, the merchandise must meet the actual use conditions required in accordance with sections 10.131 10.139 of the Customs Regulations (19 CFR §§10.131 10.139).
19 C.F.R. § 10.133 provides that three conditions must be met in order to qualify for a free or lower rate of duty pursuant to an actual use provision. These are:
Such use is intended at the time of importation.
The article is so used.
Proof of use is furnished within 3 years after the date the article is entered or withdrawn from warehouse for consumption.
Further, § 10.134 provides that:
A showing of intent by the importer as to the actual use of imported merchandise shall be made by filing with the entry for consumption or for warehouse a declaration as to the intended use of the merchandise, or by entering the proper subheading of an actual use provision of the Harmonized Tariff Schedule of the United States (HTSUS) and the reduced or free rate of duty on the entry form. Entry made under an actual use provision of the HTSUS may be construed as a declaration that the merchandise is entered to be used for the purpose stated in the HTSUS, provided the Center director is satisfied the merchandise will be so used. However, the Center director shall require a written declaration to be filed if he is not satisfied that merchandise entered under an actual use provision will be used for the purposes stated in the HTSUS.
At the time of entry, OTR entered the merchandise under subheading 9817.00.60, HTSUS (and also indicated the statistical reporting number as subheading 4011.90.8010, HTSUSA, as well as subheading 9903.88.03, HTSUS). By entering the merchandise under subheading, 9817.00.60, HTSUS, OTR has satisfied the requirement that the actual use must be intended at the time of importation, as set forth in 19 CFR 10.133(a) and 10.134.
19 CFR 10.133 also requires that the article is used in accordance with its intended use and that proof of such use be provided within three years of the date of entry. 19 CFR 10.138 addresses this requirement. Section 10.138 provides that:
Within 3 years from the date of entry or withdrawal from warehouse for consumption, the importer shall submit in duplicate in support of his claim for free entry or for a reduced rate of duty a certificate executed by (1) the superintendent or manager of the manufacturing plant, or (2) the individual end-user or other person having knowledge of the actual use of the imported article. The certificate shall include a description of the processing in sufficient detail to show that the use contemplated by the law has actually taken place. A blanket certificate covering all purchases of a given type of merchandise from a particular importer during a given period, or all such purchases with specified exceptions, may be accepted for this purpose, provided the importer shall furnish a statement showing in detail, in such manner as to be readily identified with each entry, the merchandise which he sold to such manufacturer or end-user during such period.
C.S.D. 83-32 discusses the issue of certifying actual use in detail. C.S.D. 83-32, dated Nov. 29, 1982 (069623); see also HQ 085308, dated Dec. 8, 1989 (affirming the guidelines set forth in C.S.D. 83-32); HQ 965330 dated July 15, 2002 (citing HQ 085308 in discussion on sufficiency of evidence under 19 CFR 10.138). Although the guidelines in C.S.D. 83-32 were issued for the Tariff Schedule of the United States (TSUS) items 870.40 and 870.45, the predecessor headings to 9817.00.50 and 9817.00.60, HTSUS, respectively, and although the scope of subheading 9817.00.60, HTSUS, is broader, the language of the headings remains unchanged and no different interpretation of that language is required under the HTSUS. As such, the discussion of the types of evidence that would satisfy the requirements of 19 CFR 10.138 remain relevant here. As stated in C.S.D. 83-32, actual use certification proceeds on a case-by-case basis. The burden of satisfying the actual use requirement is on the importer and the certifications submitted for the entry must be substantiated by evidence of use acceptable to CBP and verifiable from the importer’s records or the records of a certifying person. C.S.D. 83-32. The ultimate question is whether the merchandise is entered into a chain of commerce that will result in the required end-use, and the importer may show this through evidence of a sale to an appropriate end-user or distributor, or by tracing the articles along the distribution chain until such use can be established. When evaluating the sufficiency and type of evidence presented, CBP may consider a range of factors, including, but not limited to, the nature of the imported article, level and type of distribution, value and size of the importation, whether the part may be used with multiple types of equipment and machinery and whether the importer has genuine knowledge of end-use.
It is in this instance that OTR may be challenged to satisfy the requirements of 19 CFR 10.138. OTR is the importer of record for the subject merchandise; however, OTR is not the end-user of said merchandise. Based on the information provided by OTR, it does not appear that OTR sells to end-users. Rather, OTR relies on distributors to sell the merchandise, and it is unclear from OTR’s website whether the distributors themselves sell to end-users. OTR has provided an actual use certificate to cover the subject merchandise that states that “the imported articles are actually used in items classified under heading 8433.” However, as OTR does not sell directly to end-users and its authorized distributors’ place in the chain is unclear, here your office may consider whether the actual use certificate satisfies the requirements of 19 CFR 10.138. Further, your office should verify within three years from the date of entry that OTR is able to provide materials that corroborate that the intended actual use has in fact taken place, in accordance with 19 CFR 10.138. OTR should provide such information regarding all of the end users of the tires.
For the purposes of this IA and the entry of the subject merchandise at this time, OTR has satisfied the actual use criteria required in accordance with sections 10.131-10.134 of the Customs Regulations (19 CFR §§10.131 10.134). As noted above, OTR’s certificate of actual use may be insufficient to meet the requirements of 19 CFR 10.138 since OTR does not appear to sell to end users of the merchandise tires. However, OTR has three years from the date of entry to furnish sufficient information to confirm to the satisfaction of CBP that the subject merchandise was used as intended, pursuant to 19 CFR 10.138.
HOLDING:
The instant lawn mower tires are eligible for duty free treatment under subheading 9817.00.60, HTSUS. However, if your office determines that the certificate of actual use submitted herein is not adequate to meet the requirements of 19 CFR 10.138, OTR has three years from the date of entry to meet these requirements.
Sixty days from the date of this decision, the Office of Trade, Regulations and Rulings, will make this decision available for CBP personnel, and to the public on the CBP Home Page at http://www.cbp.gov by means of the Freedom of Information Act, and other methods of publication.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch