OT:RR:CTF:CPMMA H336040 NAH
Mr. Patrick D. Gill, Esquire
Sandler, Travis & Rosenberg, P.A.
675 Third Avenue, Suite 1805-06
New York, NY 10017
RE: Classification of Unfinished Household Metal Cabinets; Applicability of Section 301 Duties
Dear Mr. Gill:
This letter is in reference to your correspondence, dated November 14, 2023, and November 30, 2023, submitted on behalf of your client, NewAge Products Inc., to U.S. Customs and Border Protection (CBP), seeking a binding ruling concerning the application of certain exemptions from the additional duties on products of China under Section 301 of the Trade Act of 1974 (Section 301 duties). In Headquarters Ruling Letter (HQ) H313152, dated March 9, 2023, the subject unfinished household metal cabinets were classified under subheading 9403.20.0050, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), as "Other furniture and parts thereof: Other metal furniture: Household: Other: Other". While you do not dispute CBP's tariff classification of the subject merchandise in HQ H313152, you claim that the subject unfinished household metal cabinets are excluded from Section 301 duties, as applied by subheading 9903.88.03, HTSUS. Specifically, you assert that the subject merchandise meets the exclusion described in U.S. note 20(ttt)(iii)(178) to Subchapter III of Chapter 99, HTSUS, as "Household furniture of metal and high-pressure laminated bamboo (other than ironing boards, furniture for infants or children or bed frames) (described in statistical reporting number 9403.20.0050)."
FACTS:
The products at issue are metal modular cabinet sets that are manufactured in and imported from China. The subject merchandise was described in HQ H313152, as follows:[1]
Item 1, the "Bold Series," is a group of unequipped, locking, modular, shelved, metal storage lockers and cabinets that are available in different paint finishes. First, a floor standing, 2-door shelved locker whose dimensions are 42" in width, 18" in depth, and 72" in height. Second, a floor standing, 2-door shelved locker whose dimensions are 30" in width, 18" in depth, and 72" in height. Third, a floor standing, 2-door pair of shelved lockers whose combined dimensions are 84" in width, 18" in depth, and 77.25" in height. Fourth, a floor standing, 2-door base cabinet whose dimensions are 24" in width, 16" in depth, and 35.25" in height. Fifth, a floor standing, 5-drawer project workstation and locker component whose overall dimensions are 62" in width, 18" in depth, and 35." in height. The workstation contains four casters, two that are lockable. Sixth, a floor standing, multi-level rolling tool drawer whose dimensions are 20.75" in width, 16" in depth, and 33" in height. The tool drawer contains four casters. Seventh, a wall mounted 2-door cabinet whose dimensions are 36" in width, 12" in depth, and 19.5" in height. Eighth, a wall mounted 2-door cabinet whose dimensions are 24" in width, 12" in depth, and 18" in height.
Item 2, the "Pro Series," is a group of unequipped, locking, modular, shelved, metal storage lockers and cabinets that are available in different paint finishes. First, a floor standing, 2-door, shelved multi-use locker whose dimensions are 36" in width, 24" in depth, and 80" in height. Second, a floor standing, 5-drawer tool cabinet whose dimensions are 28" in width, 22" in depth, and 32.25" in height. Third, a floor standing, multi-functional cabinet whose dimensions are 28" in width, 22" in depth, and 35.5" in height. Fourth, a floor standing, 2-door base cabinet whose dimensions are 28" in width, 22" in depth, and 32.25" in height. Fifth, a floor standing mobile locker on casters whose dimensions are 28" in width, 22" in depth, and 65" in height. Sixth, a floor standing sink-cabinet whose dimensions are 28" in width, 22" in depth, and 38.75" in height. The sink-cabinet is equipped with a sink and faucet. Seventh, a floor standing, single-door, adjustable-shelf locker whose dimensions are 15" in width, 24" in depth, and 80" in height. Eighth, a wall mounted single-shelf cabinet whose dimensions are 28" in width, 14" in depth, and 22" in height.
In your email correspondence with this office on January 22, 2024, you indicated that the scope of your request involves the products that were examined and classified in HQ H313152, except for the fact that the products "are unfinished because they are imported without their countertops." After importation, certain subunits of the metal cabinet series will have countertops attached. The countertops are of either stainless steel or bamboo.
ISSUE:
Whether the subject unfinished household metal cabinets from China are excluded from Section 301 duties.
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRIs). GRI 1 provides that classification shall be determined according to the terms of the headings of the tariff schedule, and any relative section or chapter notes. In the event the goods cannot be classified solely based on 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.
GRI 2 provides, in relevant part:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
GRI 6 provides that for legal purposes, classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable.
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The 2024 HTSUS subheadings under consideration are the following:
9403 Other furniture and parts thereof:
9403.20.00 Other metal furniture:
Household:
Other:
9403.20.0050 Other
9903.88.03 Except as provided in headings 9903.88.13, 9903.88.18, 9903.88.33, 9903.88.34, 9903.88.35, 9903.88.36, 9903.88.37, 9903.88.38, 9903.88.40, 9903.88.41, 9903.88.43, 9903.88.45, 9903.88.46, 9903.88.48, 9903.88.56, 9903.88.64, 9903.88.66, 9903.88.67 or 9903.88.68, articles the product of China, as provided for in U.S. note 20(e) to this subchapter and as provided for in the subheadings enumerated in U.S. note 20(f).
9903.88.67 Effective with respect to entries on or after October 12, 2021 and through May 31, 2024, articles the product of China, as provided for in U.S. note 20(ttt) to this subchapter, each covered by an exclusion granted by the U.S. Trade Representative.
U.S. Note 20 to Subchapter III of Chapter 99, HTSUS, states, in part:
(e) For the purposes of heading 9903.88.03, products of China, as provided for in this note, shall be subject to an additional 25 percent ad valorem rate of duty. The products of China that are subject to an additional 25 percent ad valorem rate of duty under heading 9903.88.03 are products of China that are classified in the subheadings enumerated in U.S. note 20(f) to subchapter III. All products of China that are classified in the subheadings enumerated in U.S. note 20(f) to subchapter III are subject to the additional 25 percent ad valorem rate of duty imposed by heading 9903.88.03, except products of China granted an exclusion by the U.S. Trade Representative and provided for in (1) heading 9903.88.13 and U.S. note 20(p) to subchapter III of chapter 99; (2) heading 9903.88.18 and U.S. note 20(w) to subchapter III of chapter 99; (3) heading 9903.88.33 and U.S. note 20(ll) to subchapter III of chapter 99; (4) heading 9903.88.34 and U.S. note 20(mm) to subchapter III of chapter 99; (5) heading 9903.88.35 and U.S. note 20(nn) to subchapter III of chapter 99; (6) heading 9903.88.36 and U.S. note 20(oo) to subchapter III of chapter 99; (7) heading 9903.88.37 and U.S. note 20(pp) to subchapter III of chapter 99; (8) heading 9903.88.38 and U.S. note 20(qq) to subchapter III of chapter 99; (9) heading 9903.88.40 and U.S. note 20(ss) to subchapter III of chapter 99; (10) heading 9903.88.41 and U.S. note 20(tt) to subchapter III of chapter 99; (11) heading 9903.88.43 and U.S. note 20(vv) to subchapter III of chapter 99; (12) heading 9903.88.45 and U.S. note 20(xx) to subchapter III of chapter 99; (13) heading 9903.88.46 and U.S. note 20(yy) to subchapter III of chapter 99; (14) heading 9903.88.48 and U.S. note 20(aaa) to subchapter III of chapter 99; (15) heading 9903.88.56 and U.S. note 20(iii) to subchapter III of chapter 99; (16) heading 9903.88.64 and U.S. note 20(qqq) to subchapter III of chapter 99; (17) heading 9903.88.66 and U.S. note 20(sss)(iii) to subchapter III of chapter 99; (18) heading 9903.88.67 and U.S. note 20(ttt)(iii) to subchapter III of chapter 99; or (19) heading 9903.88.68 and U.S. note 20(uuu)(iii) to subchapter III of chapter 99. [Compiler's note: only subdivisions (ttt) and (uuu) are now in effect.]
Notwithstanding U.S. note 1 to this subchapter, all products of China that are subject to the additional 25 percent ad valorem rate of duty imposed by heading 9903.88.03 shall also be subject to the general rates of duty imposed on products of China classified in the subheadings enumerated in U.S. note 20(f) to subchapter III.
...
(f) Heading 9903.88.03 applies to all products of China that are classified in the following 8-digit subheadings, except products of China granted an exclusion by the U.S. Trade Representative and provided for in (1) heading 9903.88.13 and U.S. note 20(p) to subchapter III of chapter 99; (2) heading 9903.88.18 and U.S. note 20(w) to subchapter III of chapter 99; (3) heading 9903.88.33 and U.S. note 20(ll) to subchapter III of chapter 99; (4) U.S. note 20(mm) to subchapter III of chapter 99; (5) heading 9903.88.35 and U.S. note 20(nn) to subchapter III of chapter 99; (6) heading 9903.88.36 and U.S. note 20(oo) to subchapter III of chapter 99; (7) heading 9903.88.37 and U.S. note 20(pp) to subchapter III of chapter 99; (8) heading 9903.88.38 and U.S. note 20(qq) to subchapter III of chapter 99; (9) heading 9903.88.40 and U.S. note 20(ss) to subchapter III of chapter 99; (10) heading 9903:88.41 and U.S. note 20(tt) to subchapter III of chapter 99; (11) heading 9903.88.43 and U.S. note 20(vv) to subchapter III of chapter 99; (12) heading 9903.88.45 and U.S. note 20(xx) to subchapter III of chapter 99; (13) heading 9903.88.46 and U.S. note 20(yy) to subchapter III of chapter 99; (14) heading 9903.88.48 and U.S. note 20(aaa) to subchapter III of chapter 99; (15) heading 9903.88.56 and U.S. note 20(iii) to subchapter III of chapter 99; (16) heading 9903.88.64 and U.S. note 20(qqq) to subchapter III of chapter 99; (17) heading 9903.88.66 and U.S. note 20(sss)(iii) to subchapter III of chapter 99; (18) heading 9903.88.67 and U.S. note 20(ttt)(iii) to subchapter III of chapter 99; or (19) heading 9903.88.68 and U.S. note 20(uuu)(iii) to subchapter III of chapter 99. [Compiler's notes: only subdivisions (ttt) and (uuu) are now in effect. The list of subheadings may begin on following page; read numbers from left to right.]
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(ttt)
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(iii) The U.S. Trade Representative determined to establish a process by which particular products classified in heading 9903.88.03 and provided for in U.S. notes 20(e) and 20(f) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.03, and by which particular products classified in heading 9903.88.04 and provided for in U.S. note 20(g) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.04. See 83 Fed. Reg. 47974 (September 21, 2018) and 84 Fed. Reg. 29576 (June 24, 2019). Pursuant to the product exclusion process, the U.S. Trade Representative has determined that, as provided in heading 9903.88.67, the additional duties provided for in heading 9903.88.03 or in heading 9903.88.04 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:
...
(178) Household furniture of metal and high-pressure laminated bamboo (other than ironing boards, furniture for infants or children or bed frames) (described in statistical reporting number 9403.20.0050)
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As an initial matter, CBP notes that you accept the conclusions reached in HQ H313152, dated March 9, 2023, classifying the subject unfinished household metal cabinets under subheading 9403.20.0050, HTSUSA, which provides for "Other furniture and parts thereof: Other metal furniture: Household: Other: Other." In regard to the subject unfinished household metal cabinets, which are imported without stainless steel or bamboo countertops on specific subunits, CBP finds that the unfinished household metal cabinets have the essential character of the finished household metal cabinets as classified in HQ H313152. As such, GRI 2(a) directs the unfinished versions to be classified under subheading 9403.20.0050, HTSUSA. As products of China that are classified under subheading 9403.20.0050, HTSUSA, unless specifically excluded, the unfinished household metal cabinets are subject to Section 301 duties under subheading 9903.88.03, HTSUS. See U.S. Note 20(f) to Subchapter III of Ch. 99.
You claim that the subject unfinished household metal cabinets qualify for the exclusion from Section 301 duties, pursuant to U.S. note 20(ttt)(iii)(178) to Subchapter III of Chapter 99, HTSUS, which provides for "Household furniture of metal and high-pressure laminated bamboo (other than ironing boards, furniture for infants or children or bed frames) (described in statistical reporting number 9403.20.0050)."[2] The exclusion specifically requires the corresponding product of China to be of following: (1) household furniture; (2) metal; (3) high-pressure laminated bamboo; (4) not ironing boards, furniture for infants or children, or bed frames; and (5) described in statistical reporting number 9403.20.0050, HTSUSA.
As determined in HQ H313152, the products at issue are household furniture of metal, and are classified under subheading 9403.20.0050, HTSUSA. Based on the facts previously considered and currently before CBP, the products are neither ironing boards, nor furniture for infants or children, nor bed frames. Furthermore, the products are not "of high-pressure laminated bamboo." In fact, at the time of importation, the metal cabinets are unfinished and made entirely of metal. The finishing, which occurs after importation, includes the addition of a countertop to specific subunits of the modular sets. Some of the added countertops will be of bamboo while others will be of stainless steel.[3] However, the bamboo countertops are not part of the modular cabinets at the time of importation and not all of the modular sets will be incorporated with the bamboo countertops. Thus, the unfinished household metal cabinets are not described in U.S. note 20(ttt)(iii)(178) to Subchapter III of Chapter 99, HTSUS, and are therefore not excluded from Section 301 duties.
You further assert that U.S. note 20(ttt)(iii)(178) to Subchapter III of Chapter 99, HTSUS, describes two products "namely, (1) household furniture of metal and, (2) high pressure laminated bamboo." In your request, you state the following:
The two products are listed in the conjunctive in the statutory language and, as such, they cannot be treated as a single product. This is basic statutory interpretation. In order to have the products treated as a single product, the provision would have had to read "Household furniture of metal and of high pressure laminated bamboo." Or it otherwise could have provided for "household furniture made of metal and high pressure laminated bamboo." Our position is that so long as the unfinished cabinets are household furniture of metal, they are provided for in the exclusionary language since they are described in statistical reporting number 9403.20.0050.
Your argument points to how the conjunctive, "and," operates. On its face, and with no other context, the conjunction-"and"-in U.S. note 20(ttt)(iii)(178) to Subchapter III of Chapter 99, HTSUS, may be read as denoting two separate types of products that fall under the exclusion, or one type of product with two unique elements. CBP must note that common sentence structure would lead the reader of U.S. note 20(ttt)(iii)(178) to Subchapter III of Chapter 99, HTSUS, to conclude that the exclusion is a simple sentence with the subject, "Household furniture"; the preposition, "of"; and the predicate conjunction, "metal and high-pressure laminated bamboo." Furthermore, the U.S. note 20(ttt)(iii)(178) to Subchapter III of Chapter 99, HTSUS, is explicitly limited to products "described in statistical reporting number 9403.20.0050." Subheading 9403.20.00, HTSUS, specifically provides for "other metal furniture" and thus, furniture of only "high pressure laminated bamboo" cannot be classified in that subheading. See also U.S. note 20(ttt)(iii)(178) to Subchapter III of Chapter 99, HTSUS (excluding "Household furniture of high-pressure laminated bamboo, other than babies' or children's furniture (described in statistical reporting number 9403.82.0015)" from additional Section 301 duties).
Finally, the factor weighing most heavily against your interpretation comes from examination of the procedural history of this specific exclusion. The U.S. Trade Representative (USTR) established a process by which stakeholders can request an exclusion from Section 301 duties for specific products of China that are classified within an eight-digit subheading under the HTSUS. See 84 FR 29576 (June 24, 2019). On September 30, 2019, the Home Furnishings Resource Group, Inc. (HFRG) submitted a request for an exclusion from Section 301 duties that encompassed 19 products, including TV stands, tables, and stackable drawers. Each product was "made of metal and high pressure laminated bamboo." None of the products were of metal only. On February 4, 2020, the USTR granted the exclusion request, and the exclusion for "household furniture of metal and high-pressure laminated bamboo" was published in the Federal Register on February 5, 2020. See 85 FR 6674. As such, CBP concludes that the exclusion is intended for importations of household furniture comprised of both metal and high pressure laminated bamboo at entry. Therefore, the subject unfinished household metal cabinets are not excluded from Section 301 duties.
HOLDING:
By application of GRIs 2(a) and 6, the unfinished household metal cabinets are classified in heading 9403, HTSUS, specifically subheading 9403.20.0050, HTSUSA, which provides for "Other furniture and parts thereof: Other metal furniture: Household: Other: Other". The 2024 column one, general rate of duty is free.
Pursuant to U.S. note 20 to Subchapter III of Chapter 99, HTSUS, products of China classified under subheading 9403.20.00, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, HTSUS, in addition to subheading 9403.20.0050, HTSUSA, listed above.
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 at https://hts.usitc.gov/.
Sincerely,
Andrew M. Langreich, Chief
Chemicals, Petroleum, Metals and Miscellaneous Articles Branch
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[1] HQ H313152, dated March 9, 2023, revoked New York Ruling Letter (NY) N310710, dated Apr. 14, 2020. The description of the products, which is reproduced here, was initially provided in NY N310710.
[2] On December 29, 2023, the notice was published in the Federal Register, 88 FR 90225, extending the effective date of the exclusion through May 31, 2024.
[3] U.S. note 20(ttt)(iii)(178) to Subchapter III of Ch. 99, HTSUS, requires "high-pressure laminated bamboo" and not any kind of bamboo. Your submission does not reflect whether the "bamboo countertops," which are attached to the subject merchandise after importation, are "of high-pressure laminated bamboo." However, CBP need not determine the exact nature of the bamboo countertops because, as explained above, the countertops are not attached to the subject products of China at the time of importation.