CLA-2-73:OT:RR:NC:N5:121
M Jason Cunningham
Sonnenberg & Cunningham PA
780 Fifth Ave South, Suite 200 Naples, FL 34102
RE: The tariff classification, country of origin, marking, and applicability of Section 301 Trade Remedies of two stainless steel sink kits
Dear Mr. Cunningham:
In your letter dated September 13, 2023, you requested a tariff classification, country of origin, marking, and applicability of Section 301 Trade Remedies determination ruling for two kitchen sink kits on behalf of Kraus Plumbing USA, LLC.
The first kitchen sink kit under consideration is identified as model number KHU110-27 and commercially known as the “Standart PRO”. This sink kit includes 1) a handmade, rectangular, 27-inch, undermount, 16-gauge, stainless-steel kitchen sink, 2) a rectangular, custom-fit, stainless-steel grid/dish rack that fits into the sink to protect the sink surface and to keep dishes elevated for optimal draining, and 3) a stainless-steel drain assembly, i.e., strainer, with a drain cap. Mounting hardware, an installation template, and instructions are also included. You state the sink component predominates by weight and value.
The second kitchen sink kit is identified as model number KCH-1000 and commercially known as the “Loften”. This sink kit includes 1) a handmade, rectangular, 33-inch, drop-in/undermount, stainless steel kitchen sink, 2) a pull-down faucet, 3) a rectangular, custom-fit, stainless-steel, dishwasher-safe grid/dish rack, and 4) a stainless-steel drain assembly with drain cap. Mounting hardware, an installation template, and instructions are also included. You state the sink component predominates by weight and value.
According to your documentation, the handmade stainless steel sink in both of the kitchen sink kits is fabricated in Thailand. All the other components are made in China and sent to Thailand for packaging with the sink. Each sink kit is packaged for sale directly to the customer and then exported from Thailand to the United States.
The Explanatory Notes to the Harmonized Tariff System of the United States (HTSUS) provide guidance in the interpretation of the Harmonized Commodity Description and Coding System at the international level. Explanatory Note X to GRI 3(b) provides that the term "goods put up in sets for retail sale" means goods that: (a) consist of at least two 2 different articles which are, prima facie, classifiable in different headings; (b) consist of articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking. Goods classifiable under GRI 3(b) are classified as if they consisted of the material or component which gives them their essential character, which 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. This office considers the subject kitchen sink kits to be sets for tariff classification purposes. We find that the stainless steel sink, which predominates by weight, value, and function, imparts the essential character to each set.
The applicable subheading for the kitchen sink kits, model number KHU110-27 (“Standart PRO”) and model number KCH-1000 (“Loften”) will be 7324.10.0050, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Sanitary ware and parts thereof, of iron or steel… Sinks and wash basins, of stainless steel… Other. The rate of duty will be 3.4 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.
Country of Origin and Section 301 Applicability:
The "country of origin" is defined in 19 CFR 134.1(b) as "the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the 'country of origin' within the meaning of this part.” The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff'd, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
Regarding the origin of the subject kitchen sink kits, it is the opinion of this office that the kitchen sinks originating in Thailand impart the essential character of the finished article as they predominate by value, weight, and function. The addition of the other components originating in China does not substantially transform the sinks into new and different articles of commerce with a name, character, and use distinct from the individual components.
When importing goods put up in sets for retail sale (in accordance with General Rule of Interpretation 3) that contain articles subject to the Section 301 remedy, if the product that imparts the essential character to the set (i.e., the HTSUS provision under which the entire set is classified) is covered by the Section 301 remedy, then the entire set will be subject to the additional 25% duties. For the two kitchen sink kits, model numbers KHU110-27 (“Standart PRO”) and KCH-1000 (“Loften”), the sink, which originates in Thailand, imparts the essential component. As such, these kitchen sink kits are not subject to the additional duties applicable to products of China under Section 301 of the Trade Act of 1974, as amended, upon importation into the United States.
Country of Origin Marking:
You suggest the Chinese component grid/dish rack, drain assembly, and mounting hardware are “relatively inconsequential components” and therefore do not need to be marked. We disagree.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.
The principles governing the country of origin marking of sets, mixtures, and composite goods, were addressed by CBP in Treasury Decision 91-7. In that decision, CBP determined in relevant part that for purposes of 19 U.S.C. § 1304, the relevant inquiry is whether the materials or components have been substantially transformed as a result of their inclusion in a set, mixture, or composite good. If the materials or components have not been substantially transformed, each component must be individually marked to indicate its own country of origin. If the marking would not be visible through the retail packaging, then the retail packaging must be marked to identify the origin of these articles. In this case, the grid/dish rack, drain assembly with drain cap, and the pull-down faucet, although packaged and classified together as a set, do not lose their separate identities. However, as the mounting hardware will be incorporated into the installation of the sink it does not retain its separate identity. For marking purposes under 19 U.S.C. § 1304, the grid/dish rack, drain assembly with drain cap, and the pull-down faucet from China must be marked to identify their country of origin. The mounting hardware for this set does not need country of origin markings.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
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, please contact National Import Specialist Jennifer Jameson at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division