[Federal Register Volume 59, Number 232 (Monday, December 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29831]
[[Page Unknown]]
[Federal Register: December 5, 1994]
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DEPARTMENT OF THE TREASURY
Customs Service
[T.D. 94-97]
Tariff Classification of Imported Magnets
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Final change of position.
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SUMMARY: This document gives notice of 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.
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 change of position is a
small decrease in the rate of duty on the subject merchandise.
DATES: The change in tariff classification resulting from this decision
will be effective on or after December 5, 1994 for all entries not
finally liquidated as well as to merchandise entered for consumption or
withdrawn from warehouse on or after this date.
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 (GRIs). 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 FR 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.
In a notice published in the Federal Register on June 28, 1994 (59
FR 33320), Customs furnished notice that the classification of the
subject merchandise was under review and requested comments from
interested parties.
Only two submissions were received in response to the notice. While
both agreed to the proposed change of position, they each provided a
substantive discussion of the legal issues involved.
Discussion of Comments
Comment: 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) are eo nomine
provided for under heading 8505 as magnets, based upon GRI 1. See
O.C.O.D. 89-1, 23 Cust. Bull. 36, dated September 6, 1989.
Response: Customs disagrees that the subject merchandise is
classifiable under GRI 1. Magnets entered unattached to any other
object are eo nomine classifiable under heading 8505, HTSUS. Magnets
placed in a plastic, textile or ceramic housing are prima facie
classifiable under headings 8505, 3926, 6307, or 6912, HTSUS,
respectively. Because the subject merchandise is comprised of two or
more articles classified under separate headings, classification cannot
be determined by use of GRI 1. Therefore, GRI 3 must be used.
Furthermore, O.C.O.D. 89-1 was issued as guidelines on the proper
interpretation and application of GRI 1 to classify merchandise to the
importing community. Since the enactment of the HTSUS, Customs has
consistently issued binding rulings which set forth the proper
interpretation of articles which are prima facie classifiable in two or
more headings under the HTSUS according to GRI 3.
Comment: The proposed change in the method of classification of the
subject merchandise should apply to all relevant protested and
unliquidated entries, as well as to future entries.
Response: Because Customs believes that our previous interpretation
was incorrect and this change in position results in a slight reduction
in duties, we believe that the benefit should be available to importers
immediately for all entries not finally liquidated.
Conclusion
It is now our position 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 composite goods. 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.
The change in tariff classification resulting from this decision
will be effective immediately for all entries not finally liquidated as
well as to merchandise entered for consumption or withdrawn from
warehouse on or after this date. By this action, those rulings which
are inconsistent with our current position are revoked.
Approved: November 22, 1994.
Michael H. Lane,
Acting Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 94-29831 Filed 12-2-94; 8:45 am]
BILLING CODE 4820-02-P