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HQ 088051


January 3, 1991

CLA-2 CO:R:C:G 088051 KWM

CATEGORY: CLASSIFICATION

TARIFF NO.:

Mr. James L. Gregory
C.F. Liebert, Inc.
P.O. Box L
Blaine, Washington 98230

RE: Wall panel system

Dear Mr. Gregory:

This will acknowledge receipt of your letter dated June 18, 1990, requesting tariff classification of a "wall panel system" manufactured in Canada. Your letter has been forwarded to this office for a ruling.

FACTS:

Your letter refers to the merchandise at issue as a "wall panel system." It is a modular wall system described as:

. . . panels made of expanded polystyrene connected through the use of specially designed wooden members and splines, also made of polystyrene. Once the panels are installed, they may be sheathed with conventional siding or sheetrock.

The system is essentially an alternative to conventional wood framing construction techniques. The panels are prefabricated and installed at the building site. They are not sheathed at the time of entry. Illustrative literature which accompanied your request describes the wall system as "a highly efficient exterior wall system" which is used to create "a structurally sound, easily assembled load-bearing wall." The literature highlights the energy efficient contributions of the polystyrene panels. However, the literature also recognizes the role of the wood studs in providing load-bearing capabilities, faster single operation erection of the walls, and ease of installation. The cost breakdown provided indicates that the cost of the wood exceeds that of the plastics. In addition, we believe that the panel is in chief weight of wood, but that the bulk of the product is polystyrene.

ISSUE:

How are these goods classified under the Harmonized Tariff Schedule of the United States Annotated?

LAW AND ANALYSIS:

Classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is made in accordance with the General Rules of Interpretation (GRI's). The systematic detail of the harmonized system is such that virtually all goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relevant Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI's may be applied, taken in order.

Subheading 4418.90.4050, HTSUSA, provides for:

4418 Builders' joinery and carpentry of wood, including cellular wood panels and assembled parquet panels; shingles and shakes:

4418.90 Other:

4418.90.40 Other:

4418.90.4050 Prefabricated partitions and panels for buildings......................

(Emphasis added). This heading would appear to include the instant goods, if we consider them to be "of wood." The Explanatory Notes to Chapter 44, HTSUSA, give some guidelines to use in determining the classification of building panels:

As a general rule, building panels composed of layers of wood and plastics are classified in this Chapter. Classification of these panels depends on their external surface or surfaces which normally give them their essential character in terms of their intended uses. Thus, for example, a building panel, used as a structural element in roofing, wall or floor applications and consisting of an external layer of particle board and a layer of insulating material of plastics, is classified in heading 44.10, whatever the thickness of the layer of plastics, since it is the rigid, strong, wood portion which allows the panel to be used as a structural element, the plastics having a subsidiary insulation function. On the other hand, a panel in which a wood backing serves merely as a support for an exterior surface of plastics is, in most cases, classified in Chapter 39.

(Emphasis in the original). The gist of the explanatory note is that building panels are classified by the material which provides "their essential character in terms of their intended uses." In most cases, the panels at issue are used on or for the surface treatment of a building wall, and the material is that which comprises the external surface of the panels. In this case, the wall panels are the interior of the walls, and provide the load bearing structure and insulation components. However, the rationale for inclusion in the heading still applies. In terms of use, we find that the wood component provides the essential character of the panels.

Though insulation is an important function of the panel, it is by no means the only function. The primary use of the panels will be in the construction of walls. The wood studs incorporated into the panels provide the structural integrity without which the polystyrene would be merely another form of bulk insulation. Based on our evaluation of the facts, cost and weight breakdowns, and recognition that the structural or load- bearing nature of the panels is provided by the wood component, we find that the essential character of the panels is that of the wood. Therefore, these are more properly described by the terms "builders' joinery or carpentry of wood . . . prefabricated partitions or panels for buildings" of subheading 4418.90.4050, HTSUSA.

HOLDING:

The building panels at issue here, comprised of expanded polystyrene bonded to wooden studs, and used to form the structural or load bearing portion of walls for homes and other buildings, are classified in subheading 4418.90.4050, HTSUSA, as described above. The applicable rate of duty for these goods will be 5.1 percent ad valorem.

Articles that meet the definition of "goods originating in the territory of Canada" (see General Note 3(c)(vii)(B), HTSUSA) are subject to reduced rates of duty under the United States-Canada Free Trade Agreement Implementation Act of 1988. If the merchandise constitutes "goods originating in the territory of Canada," the applicable rate of duty would be 4 percent ad valorem. Further, goods meeting the description of subheading 9905.44.10, HTSUSA, may be eligible for entry free of duty.

Sincerely,

John A. Durant
Director
Commercial Rulings Division

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