Tuesday, March 01, 2016

Ruling of the Week 2016.6: His (K)nobs

Here is a classic classification ruling I use for teaching. It is a good example of how applying General Rule of Interpretation 1 almost always gets to the result, even if that result seems counterintuitive. The ruling is NY J82174 (Mar. 31, 2003).  Just to be clear, I know the ruling was subsequently modified, but not in a way that is meaningful for this analysis. I'll deal with that at the end.

The products involved are rotary knobs for household appliances. They go on washing machines, dryers, electric stoves and gas stoves. They are all made of plastic with small amounts of metal at the insertion point for to attached to the post from the internal workings of the device. All of the knobs have an indicator mark used to line up to the control variable on the appliance. In other word, there is pointer on the knob that will show whether the stove is set to high, medium, low or what have you.

With one exception, all of the appliances are classified in Section XVI, Chapters 84 and 85. A gas stove is classifiable in Chapter 73. What to do about the classification of these essentially identical knobs?

Where might these go? Arguably, they can all be described as parts of their appliances. They might also be plastic knobs of Heading 3926.

Now, let's do the analysis following the General Rules of Interpretation, starting with GRI 1. Are there any section or chapter notes that control the outcome?

It turns out that Chapter 39, Note 2(s) excludes "Articles of section XVI (machines and mechanical or electrical appliances)." If the knobs are articles of Section XVI, they are not classifiable in Heading 3926.

So, are the knobs articles of Section XVI? There are no section notes that appear to exclude the knobs from Section XVI. Further, Note 2(b) indicates that parts that are suitable for use solely or principally with a machine of Chapter 84 or 85 should be classified with that machine unless there is a specific provision for the part. Washers and dryers are classified in Chapter 84. Electric stoves are classified in Chapter 85.

That means, according to this ruling (which gives far less of an explanation that I just gave you) the knobs should be classified as parts. Specifically, the washing machine knob goes in 8450.90.6000 as part of a washing machine. The dryer knob goes in 8451.90.30000* as part of a dryer. The electric stove knob goes in 8516.90.8000 as part of an electric stove.

Seems perfectly cromulent.

Following that logic, where do we classify the knob for a gas stove? As parts of gas stoves in Heading 7321?

Unfortunately, that logic does not work. Instead, we must follow our analysis to get to the legally correct result. There are no section notes that appear to exclude knobs from Section XV, where gas stoves are located. Similarly, there are no chapter notes excluding the knobs from Chapter 73. So far so good, but where do they go in Chapter 73?

The only place in Chapter 73 that seems to make sense is as a part in Heading 7321, which covers:

Stoves, ranges, grates, cookers (including those with subsidiary boilers for central heating), barbecues, braziers, gas rings, plate warmers and similar nonelectric domestic appliances, and parts thereof, of iron or steel

Notice anything? Look again. The "parts thereof" phrase is modified by "of iron or steel." As a result, plastic knobs are excluded from Heading 7321. The Chapter 84 and Chapter 85 headings had no similar exclusionary language.

That puts us back in Heading 3926, the only remaining possibility for these knobs. The correct classification being 3926.90.25 as plastic knobs and handles, not elsewhere specified or included. Only the knobs for gas stoves fail to be specified or included elsewhere, so they go here.

All of that was accomplished without moving beyond GRI 1.

*Now, let's deal with the modification.

In the modification, Customs realized it provided the wrong classification for the dryer knob at the eight-digit level. Originally, it had classified this knob in 8451.90.9010 as other parts of machines for washing, dry-cleaning, ironing, pressing or drying made-up textile articles or of other household or laundry type machines. On reflection, Customs realized that the correct classification was 8451.90.3000 as parts of machines of 8451.21 to 8451.29 incorporating drying chambers. That is the correct classification.

The modification of rulings, however, requires public notice and comment under 19 USC 1625(c). The notice produced one comment arguing that the knobs should be classified consistently, which makes some sense. In particular, think about gas and electric stove knobs you have seen. They are likely identical and interchangeable. Why should they be treated differently?

While this makes sense, it will require different facts. Here, the parts each had unique part numbers and were described as having different applications. From that, Customs and Border Protection reasonably concluded that the knobs were not interchangeable. Rather, consistent with the application of Section XVI, Note 2, they were used solely or principally with their designated appliance. Thus, they should be classified with those machines.

Finally, what's with the Jack of Diamonds? If you don't play cribbage, see here. If you play cribbage, you knew from the title what I was up to.

1 comment:

Maggie Collins said...

Hi Larry

I've enjoyed reading a few of your articles - quite a fan!

Couple of questions:
Are the knobs articles of Section XVI? I agree there are no exclusions but how are they included? Many headings specifically refer to parts and sometimes accessories but not 8450, 8451 or 8516, although they all have sub-headings for parts. GRI 1 refers to TOH as well as the Section & Chapter notes. These particular knobs do not appear to be articles of S XVI at the 4 digit level, so are they really excluded from Ch 39?
The comment in response to the ruling that the knobs were “likely” identical and interchangeable warrants further consideration. “The parts each had unique part numbers and were described as having different applications. From that, Customs and Border Protection reasonably concluded that the knobs were not interchangeable.” A simple physical look at the knobs would have been more informative. For marketing, inventory and sales analysis of different business segments, a business might use different part # and descriptions for what are essentially the same products. We are not so much concerned with what products are called but with what they are. If they are interchangeable across different appliances, then S XVI Note 2(b) is n/a and 2(c) applies – assuming we’ve reached the point of relying on Note 2.

Kind Regards