CLA-2-91:OT:RR:NC:N5:113
William Beames
Timex Group USA
555 Christian Road Middlebury, CT 06762
RE: The tariff classification of analog wrist watches made in the Philippines and interchangeable watch straps made in China
Dear Mr. Beames:
In your letter dated September 29, 2024, you requested a tariff classification ruling.
The merchandise for which you are requesting a classification is identified as two models of box sets. Each box set will consist of a quartz analog wrist watch with a stainless steel case, stainless steel bracelet, no jewels in the movement, and a battery. The first box set will include an additional unattached leather strap that is interchangeable with the stainless steel strap already attached to the watch. The second box set will include an additional unattached stainless steel strap that is interchangeable with the stainless steel strap already attached to the watch. The watch movements are made in the Philippines, and the leather and stainless steel straps are made in China. Each box set will be imported in a single retail package.
The first model of box set with the additional leather strap contains articles that are classifiable under different headings of the tariff. The General Rules of Interpretation (GRIs) set forth the legal framework in which merchandise is to be classified under the Harmonized Tariff Schedule of the United States Annotated (HTSUS). GRI 1 requires that classification be determined first according to the terms of the headings of the tariff and any relative section or chapter notes. Since no one heading in the tariff schedules covers the components of the box set in combination, GRI 1 cannot be used as a basis for classification. Goods that cannot be classified in accordance with GRI 1 are to be classified in accordance with subsequent GRIs taken in order.
General Rule of Interpretation (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.
GRI 3 applies when goods are put up for sale collectively and are classifiable under two or more headings of the tariff. GRI 3(b) covers goods put up in sets for retail sale. Such goods: (a) consist of at least two different articles that are classifiable in different headings, (b) consist of products 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. In the opinion of our office, each box set with the additional leather strap meets the criteria for sets as the terms are defined. Having determined that the subject items constitute a set for tariff classification purposes, we must decide the essential character for the set. Essential character may be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the use of the goods. 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.
GRI 6 states that “For legal purposes, the 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. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.”
Based on the information provided, all of the items included in the first box set should be classified together in a single subheading. Based on the description provided, the set is classified under subheading 9102.11, HTSUS, which provides for “Wrist watches, pocket watches and other watches, including stop watches, other than those of heading 9101: Wrist watches, electrically operated, whether or not incorporating a stop watch facility: With mechanical display only”, with the eight digit subheading dependent on the classification of the watch straps. Given the two watch straps included in the set are interchangeable, neither strap provides the box set with its essential character under GRI 2(a) or 3(b). Pursuant to GRI 6, the box set which includes two watch straps that are classified under different eight digit subheadings of 9102.11, HTSUS, would be classified under the eight digit subheading which occurs last in numerical order among those which equally merit consideration. Therefore, the box set would be classified under the eight digit subheading that provides for a wrist watch with a leather strap.
Regarding the second box set that will include an additional unattached stainless steel strap, since the interchangeable straps are the same material the box set would be classified under the subheading that describes the straps pursuant to GRI 1. The second box set would be classified under the eight digit subheading that provides for a wrist watch with a stainless steel strap.
The determinations for the classifications of the subject box sets are supported by Chapter 91, Additional U.S. Note 2 which states that “ Watch straps, watch bands and watch bracelets entered with wrist watches and of a kind normally sold therewith, whether or not attached, are classified with the watch in heading 9101 or 9102.”
The applicable subheading for the first model of box set with an additional leather strap will be 9102.11.45, HTSUS, which provides for “Wrist watches, pocket watches and other watches, including stop watches, other than those of heading 9101: Wrist watches, electrically operated, whether or not incorporating a stop watch facility: With mechanical display only: Having no jewels or only one jewel in the movement: Other: Other.” The rate of duty will be 40 cents each, plus 8.5 percent on the case, plus 2.8 percent on the strap, band or bracelet, plus 5.3 percent on the battery.
The applicable subheading for the second model of box set with the additional stainless steel strap will be 9102.11.25, HTSUS, which provides for “Wrist watches, pocket watches and other watches, including stop watches, other than those of heading 9101: wrist watches, electrically operated, whether or not incorporating a stop watch facility: with mechanical display only: having no jewels or only one jewel in the movement: with strap, band or bracelet of textile material or of base metal, whether or not gold- or silver-plated: other.” The rate of duty will be 40 cents each plus 8.5 percent ad valorem on the case plus 14 percent ad valorem on the strap, band or bracelet plus 5.3 percent ad valorem on the battery.
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/.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 9102.11.25 and 9102.11.45, HTSUS, unless specifically excluded, are subject to an additional 7.5 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.15, in addition to subheading 9102.11.25 and 9102.11.45, 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.
Regarding how the duty would be calculated based on the different watch straps, we note Statistical Note 1 to Chapter 91, HTSUS, provides:
The calculation of duties on various watches, clocks, watch movements and clock movements requires that these articles be constructively separated into their component parts and each component separately valued. The individual components shall be separately reported under the statistical suffixes show below. In each instance the sum of the values of the individual components shall be equal to the total value of the article. In those instances where the components of an article are to be separately reported under the following reporting scheme, the entry should include all the individually named components even if not included in the shipment. In such instance the entered quantity and value would be zero. For example, entry of a battery powered watch, imported without a battery, classifiable under subheading 9101.11.40 would include a line for the statistical reporting number for the battery (9101.11.4040) with the quantity and value shown as zero. To determine the proper statistical reporting number(s) for the subheadings enumerated below, the importer shall combine the applicable 8-digit subheading number with the applicable statistical suffix found below.
Chapter 91, Statistical Note 1(a) provides further instructions on how to calculate the duties of watches under subheadings 9102.11.25 and 9102.11.45, HTSUS. Statistical Note 1(a) states the statistical suffixes for subheadings 9102.11.25 and 9102.11.45 shall be:
Stat. Suffix Article Description Unit of Quantity
10 Movement ........................................... No.
20 Case .................................................... No.
30 Strap, band or bracelet ........................ No.
40 Battery ................................................. No.
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 Ann Taub at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division