[Federal Register Volume 59, Number 123 (Tuesday, June 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15646]


[Federal Register: June 28, 1994]


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DEPARTMENT OF THE TREASURY
United States Customs Service


Tariff Classification of Imported Magnets

AGENCY: U.S. Customs Service, Department of Treasury.

ACTION: Proposed change of position; solicitation of comments.

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SUMMARY: This notice advises the public that Customs proposes a change 
of position regarding the classification of imported articles 
consisting of small metal or barium ferrite magnets placed in a 
plastic, textile or ceramic housing (sometimes referred to as 
refrigerator or household magnets), under the Harmonized Tariff 
Schedule of the United States (HTSUS).
    Customs has ruled in the past that based on the composition of the 
magnet, it was classified either as an article of metal under heading 
7323, HTSUS, or as an article of ceramic (barium ferrite) under heading 
6912, HTSUS.
    After intensive review, Customs now believes that because composite 
goods consisting of magnets and a textile, plastic or ceramic housing 
or shell, have the essential character of magnets, they are properly 
classifiable as such under heading 8505, HTSUS. The result of this 
proposed change of position would be a small decrease in the rate of 
duty on the subject merchandise.
    By this action, those rulings which are inconsistent with our 
current position would be revoked. Before adopting this proposed 
change, consideration will be given to any written comments timely 
submitted in response to publication of the document.

DATES: Comments must be received on or before August 29, 1994.

ADDRESSES: Written comments (preferably in triplicates) may be 
addressed to the U.S. Customs Service, Office of Regulations and 
Rulings, Regulations Branch, Franklin Court, 1301 Constitution Avenue 
NW., Washington, DC 20229. Comments filed may be inspected at the 
Office of Regulations and Rulings, Regulations Branch, Franklin Court, 
1099 14th Street NW., Suite 4000, Washington D.C.

FOR FURTHER INFORMATION CONTACT: Robert F. Altneu, Office of 
Regulations and Rulings (202) 482-7030.

SUPPLEMENTARY INFORMATION:

Background

    Classification of merchandise under the Harmonized Tariff Schedule 
of the United States (HTSUS) is in accordance with the General Rules of 
Interpretation (GRI's). GRI 1 provides that classification shall be 
determined according to the terms of the headings and any relative 
section or chapter notes.
    Magnets are specifically provided for in heading 8505, HTSUS. In 
several rulings, we have held that articles consisting of a magnet 
placed within a decorative housing or shell made of plastic, ceramic, 
or textile (sometimes referred to as refrigerator or household 
magnets), were composite goods. Classification was considered under the 
following subheadings and duty rates:

6912.00.50: Ceramic tableware, kitchenware, other household articles * 
* *: [o]ther
    The general, column one rate of duty is 7 percent ad valorem.
7323.99.90: Table, kitchen or other household articles and parts 
thereof, of iron or steel .* * *: [o]ther: [o]ther: [n]ot coated or 
plated with precious metal: [o]ther: [o]ther. * * *.
    The general, column one rate of duty is 3.4 percent ad valorem.
8505.19.00: Electromagnets; permanent magnets and articles intended to 
become permanent magnets after magnetization. * * *: [p]ermanent 
magnets and articles intended to become permanent magnets after 
magnetization: [o]ther. * * *
    The general, column one rate of duty is 4.9 percent ad valorem.

    Because the article was a composite good consisting of metal, 
ceramic, textile, and/or plastic, it was prima facie classifiable under 
two or more headings. Customs would then apply GRI 3(b) to determine 
the essential character of the article.
    The Harmonized Commodity Description and Coding System Explanatory 
Notes (EN) constitute the Customs Cooperation Council's official 
interpretation of the HTSUS. While not legally binding, 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. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). EN VIII to 
GRI 3(b) states as follows:

    [T]he factor which determines essential character will vary as 
between different kinds of goods. It may, for example, 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 goods.

    In the rulings issued, Customs concluded that the magnet imparts 
the essential character to the article. The plastic, textile or ceramic 
portion of the article merely embellished the article and acted as a 
decorative selling feature.
    However, Customs precluded classification of the article under 
heading 8505, HTSUS, which specifically provides for permanent magnets 
based upon a portion of EN 85.05. EN 85.05, page 1341, states in 
pertinent part as follows:

    [T]his heading does not cover: [e]lectro-magnets, permanent 
magnets or magnetic devices of this heading, when presented with 
machines, apparatus, toys, games, etc., of which they are designed 
to form part (classified with those machines, apparatus, etc.)

    Based upon this portion of EN 85.05, we held that the magnets were 
designed to form part of the article. It was concluded that because the 
magnets are presented with and incorporated into a textile, ceramic or 
plastic article (i.e., a hook, fruit caricature or advertising slogan), 
they are precluded from classification in heading 8505, HTSUS. Because 
the essential character of the article is the magnet, the article would 
then be classified based upon the composition of the magnet as an 
article of metal under heading 7323, HTSUS, or as an article of ceramic 
(barium ferrite) under heading 6912, HTSUS.
    Several rulings were issued following this rationale. See HQs 
082500, 083130, 083133, 083134, 089332, 089333, 089760; NYs 860370, 
862523. This list may not be exhaustive. There may be others issued by 
Customs in New York or in the various Customs districts under the pre-
entry classification procedures.

Proposed Change of Position

    After intensive analysis, we believe that EN 85.05 has been 
misinterpreted. The exclusion in EN 85.05 is designed to cover only 
those articles in which the magnet is merely an insignificant part of a 
larger article (i.e., kitchen cabinets with a magnet to keep the doors 
closed). In such cases, the magnet portion is ignored for 
classification purposes, and the article (i.e., kitchen cabinet) is 
classified as if the magnet were not present.
    In regards to articles consisting of a metal or barium ferrite 
magnet and a plastic, textile or ceramic shell or housing (i.e., a 
hook, fruit caricature or an advertisement slogan), Customs believes 
that they are a composite good. Customs will continue to apply an 
essential character analysis pursuant to GRI 3(b) to find the essential 
character of the merchandise. If the shell or housing portion of the 
article merely embellishes the product and acts as a decorative selling 
feature, and the essential character is imparted by the magnet, then 
the article is properly classifiable in heading 8505, HTSUS, as a 
permanent magnet. This change in position only relates to how Customs 
interprets the exclusion stated in EN 85.05.

Authority

    This notice is published in accordance with section 177.10, Customs 
Regulations (19 CFR 177.10).

Comments

    Before adopting this proposed change in position, consideration 
will be given to any written comments timely submitted to Customs. 
Comments submitted will be available for public inspection in 
accordance with the Freedom of Information Act (5 U.S.C. 552), section 
1.4, Treasury Department Regulations (31 CFR 103.11(b)), on regular 
business days between the hours of 9:00 and 4:30 p.m. at the Office of 
Regulations and Rulings, Franklin Court, 1099 14th Street NW., Suite 
4000, Washington, D.C.

    Approved: June 14, 1994.
George J. Weise,
Commissioner of Customs.
[FR Doc. 94-15646 Filed 6-27-94; 8:45 am]
BILLING CODE 4820-02-P