CLA-2-73:OT:RR:NC:N1:113
Mr. Henry Yeh
Kuehne + Nagel, Inc.
20000 S Western Ave.
Torrance, CA 90501
RE: The tariff classification of the Dinghy Rings FLEX system made in China
Dear Mr. Yeh:
In your submission dated March 13, 2023, you requested a tariff classification ruling on behalf of your client, RW Richter Group, LLC. Photographs, drawings, and product specifications were submitted with your ruling request for our review.
The product under consideration is identified as Dinghy Rings, the davit FLEX system to be used for hoisting and fastening an inflatable dinghy to a boat. The Dinghy Rings are a complete unassembled system at the time of importation into the United States. Each of the components that comprise the system is made in China, and the packaging materials and instructions are made in Sweden. All of the components are packed in a cardboard box ready for retail sale in Sweden. The boxes are shipped to the United States for sale to users without the need for repacking. The system must be assembled by the customer on the vessel.
In condition as imported, the components that comprise the Dinghy Rings FLEX system consist of two ringed mounting pipes made of stainless steel, two circular foam wheels made of ethylene-vinyl acetate (EVA), and other fastening components including ratchet straps, hoisting cords/ropes made of polyester, and plastic protective bushings. You stated in your letter that “When installed, the system functions as a davit for hoisting a multi-person, inflatable dinghy onto a pleasure vessel. The system allows the user to raise the dinghy onto and lower the dinghy from a boat either at dock or on the water. The system also allows the dinghy to be fastened and stored in space-saving upright or horizontal positions on the vessel.”
The operating manual for the Dinghy Rings instructs the user to position the end points of the dinghy to open rings on the mounting pipes, to raise the dinghy by pulling on two cords/ropes to the desired angle, and to secure the dinghy in place by ratchet straps to the vessel. The foam wheels provide a base for the system to rest against the transom of the vessel. The rings are attached to each other through a pipe that is located within the center of each ring. Once the dinghy is positioned in the rings, the foam wheels act as a leverage point by which the dinghy is raised out of the water. The pipe and rings rotate from within the center of the foam wheels such that the dinghy goes from a horizontal position in the water to a vertical position resting in the rings.
You suggest the Dinghy Rings FLEX system functions as a davit and is classified under subheading 8425.19.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for "Pulley tackle and hoists other than skip hoists; winches and capstans; jacks: Pulley tackle and hoists other than skip hoists or hoists of a kind used for raising vehicles: Other." We disagree. The Dinghy Rings do not incorporate or use a pulley tackle, hoist, or other equipment to facilitate raising a dinghy, but merely allow an operator to manually rotate a dinghy about a point so that it can be stored against a boat. Thus, classifying the Dinghy Rings FLEX system in heading 8425, HTSUS, would not be appropriate.
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 and any relative section or chapter notes. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRI's taken in order. We note that the stainless steel, EVA/plastic, and polyester components that comprise the complete Dinghy Rings FLEX system are imported unassembled in a cardboard box. GRI 2(a) states as follows:
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 failing to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
Furthermore, the Explanatory Notes to the Harmonized Commodity Description and Coding System (ENs) represent the official interpretation of the Harmonized System at the international level. While neither 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. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989). The EN for GRI 2(a) states in “Rule 2(a) (Articles presented unassembled or disassembled) (V)”:
The second part of Rule 2 (a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport.
The Dinghy Rings FLEX system is a complete unassembled system that is comprised of stainless steel, EVA/plastic, and polyester components that are classified in different headings. Since no one heading in the tariff schedules covers the components of the system in combination, GRI 1 cannot be used as a basis for classification. GRI 3(b) provides that mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale shall be classified as if they consisted of the material or component which gives them their essential character. The essential character of an item may 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 article. GRI 3(c) states that when goods cannot be classified by reference to GRI 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
In the opinion of this office, the stainless steel, EVA/plastic, and polyester components are of equal importance. In this case, none of the components impart the essential character since each performs a significant role in the function of the Dinghy Rings FLEX system. The subject system would not function as intended without the stainless steel, EVA/plastic or polyester components. In addition, based on the submitted value breakdown for the stainless steel and EVA components, neither the stainless steel nor the EVA components significantly predominate by value. Therefore, the stainless steel, EVA/plastic, and polyester components merit equal consideration. In accordance with GRI 3(c), the Dinghy Rings FLEX system will be classified under the heading which occurs last in numerical order among those which equally merit consideration. The system will be classified in heading 7326, HTSUS, which provides for other articles of iron or steel.
Heading 7326 covers a wide range of iron or steel articles that are not more specifically provided for elsewhere/in any other heading in the tariff. Noting that the Dinghy Rings FLEX system is not more specifically provided for in heading 8425, or in any other heading of the tariff, the system under consideration will be classifiable under heading 7326, which provides for other articles of iron or steel.
The applicable subheading for the Dinghy Rings FLEX system will be 7326.90.8688, HTSUS, which provides for other articles of iron or steel, other, other…other. The rate of duty will be 2.9 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 at https://hts.usitc.gov/current.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 7326.90.8688, 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, in addition to subheadings 7326.90.8688, HTSUS, listed above.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Ann Taub at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division