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HQ 950320


May 4, 1992

CLA-2 CO:R:C:F 950320 ALS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9608.99.4000

District Director of Customs
Lincoln Juarez Bridge, Bldg. #2
P. O. Box 3130
Laredo, Texas 78044-3130

RE: Request for Further Review of Protest 2304-91-000038, dated February 13, 1991, Concerning Parts of Ball Point Pens Imported Together

Dear Mr. Castellano:

This ruling is on a protest that was filed against your decisions of November 16, 23 and 30, 1990, in the liquidation of 28 entries, covering the referenced items, filed between December 29, 1989, and October 11, 1990.

FACTS:

The merchandise under consideration consists of barrels, caps and ink cartridges for ball point pens which, subsequent to importation, are assembled with similar components from the same shipment, other shipments or parts of domestic origin. In addition, as part of the assembly process, a button of domestic origin is placed on the open end of each pen's barrel in order to seal that opening and prevent the ink from drying out. The pens are then ready for packaging and marketing. The assembled pens are available in five models with some models having fine writing points and others having medium writing points. The assembled pens are available with cartridges containing red, blue, black or green ink except for the Accountant Fine Point Pen model which is only available with red, blue or black ink cartridges.

ISSUE:

Is the merchandise under consideration ball point pens or parts of ball point pens? - 2 -

LAW AND ANALYSIS:

Classification of merchandise under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is governed by the General Rules of Interpretation (GRI's) taken in order. GRI 1 provides that the classification is determined first in accordance with the terms of the heading and any relative section and chapter notes. If GRI 1 fails to classify the goods and if the heading and legal notes do not otherwise require, the remaining GRI's are applied taken in order.

The described ball point pen components are imported in quantities varying from shipment to shipment. These components are assembled subsequent to importation to form a complete pen. Counsel has advised us that the components utilized to assemble a particular model of pen may or may not be contained in one shipment. However, some number of barrels and ink cartridges from each shipment may be combined to form a unit that is essentially a pen. Because of this the question arises as to whether each shipment should be considered to be composed of a certain number of ball point pens classifiable under subheading 9608.1000, HTSUSA, with the remaining components considered as parts of ball point pens classifiable under subheading 9608.9944, HTSUSA. Alternatively, the question arises as to whether these components are merely inventory stock and should be considered as parts of ball point pens.

In regard to whether some quantity of the components in each shipments should be considered as complete pens with the remaining components in such shipment considered parts, we note that the essential elements of some number of pens are present in each shipment. Although it is not clear that the components in any particular shipment will be combined, it appears to be reasonable to conclude that some number of such components could be combined to form items that have the essential characteristics of pens. While it is necessary to add caps to the pens to protect their points and facilitate the carrying of the pens and to place buttons on the open ends of the barrels to seal those openings and prevent the ink from prematurely drying to make the product a commercial entity, such items are not needed for the combined barrel and ink cartridge to be utilized as a pen. Thus it appears that some number of the components of each shipment might be considered as pens.

In this regard we note that GRI 2(a) provides that headings in the HTSUSA cover not only items, although incomplete or unfinished at the time of importation, have the essential character of the completed item. Included within the scope of that rule are such incomplete articles that are unassembled or disassembled. The relevant Explanatory Notes (EN's) which represent the views of the international group of tariff classification experts that drafted the Harmonized System confirm that articles which have the essential character of the finished article at the time of importation, although incomplete, are to be classified the same as the completed item. The EN's clarify that this is true although the components might be unassembled or disassembled at the time of importation for reasons such as requirements or convenience of packing, handling or transport. EN 2(a)(VII) further states that any quantity of unassembled components in excess of that needed to form a complete article are to be considered separately. The reason why a particular shipment might contain an excess quantity of any component is not specified. It, however, would appear that this provision might cover a situation where additional parts are packed in error, where there are spare parts which might be used to replace components damaged at the time of arrival or during the assembly process, etc.

In considering whether the components are to be considered as a varying quantity of pen parts or a combination of varying quantities of pens and pen parts, we note that the components are, subsequent to importation, shipped to two domestic plants where they are combined with other components to form completed pens. The components with which the components under consideration are combined subsequent to importation may be of U.S. or Mexican origin. Some components of Mexican origin, e.g. ink cartridges may be combined with other components of U.S. origin, e.g. barrels, to form a pen. Thus, the barrels and ink cartridges must coalesce at the same location and time, in relatively equal quantities, to form a unit, complete or incomplete. Since some of the barrels and ink cartridges are primarily or solely of U.S. origin and in view of the wide disparity in the quantities of each component in any particular shipment, it is clear that the coalescence must take place subsequent to importation rather than at the time of importation or prior thereto. Thus, it appears that these components are bulk shipments destined for inventory to supply the domestic assembly line. In this regard we note that counsel states that the components are placed in "cribs" upon arrival at the assembly plants and are withdrawn therefrom on an as needed basis to supply the assembly lines.

While considering this matter we were telephonically advised by your staff that subsequent shipments of these components were each composed exclusively of one component. They advised us that it was not until the benefits of the Generalized System of Preferences (GSP) were extended to both pen and pen parts that shipments again included various components. While the importer's intentions as to utilization of the components or their manner of shipment does not dictate the appropriate classification thereof, we believe that they confirm that the shipments in question were composed of bulk inventory shipments of pen parts and not a combination of pens and pen parts.

HOLDING:

Ball point pen parts imported in bulk which are to be combined with other such parts imported in the same shipment, in other shipments or with parts of domestic origin, in order to produce ball point pens, are classifiable as parts of ball point pens under subheading 9608.99.4400, HTSUSA. Such merchandise is subject to a general rate of duty of .9? each plus 6.1 per cent ad valorem.

Parts of ball point pens, the product of Mexico, have been eligible, since at least January 1, 1989, and are currently eligible, for a free rate of duty under the Generalized System of Preferences (GSP) upon compliance with the provisions of section 10.171 et seq., Customs Regulations (19 CFR 10.171 et seq.).

Since reclassification of the merchandise as indicated above will result in the same rate of duty as claimed you are instructed to allow the protest in full. A copy of this ruling should be attached to the Form 19 and provided to the protestant as part of the notice action on the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

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