[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withdrawn from warehouse on or after this date.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