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HQ 953648


July 29, 1993

CLA-2 CO:R:C:M 953648 LTO

CATEGORY: CLASSIFICATION

TARIFF NO.: 8206.00.00

Ms. Elizabeth Brault
Fingerhut Corporation
4400 Baker Road
Minnetonka, Minnesota 55343

RE: 143-piece tool kit; GRI 1 set; heading 8204; heading 8205; subheading 8204.20.00; EN 82.06; GRI 3(b)

Dear Ms. Brault:

This is in response to your letter of February 16, 1993, requesting the classification of and Generalized System of Preferences (GSP) eligibility for a 143-piece tool kit under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The article in question is a 143-piece tool kit. The kit contains the following items, in addition to the blow molded plastic case (fitted):

(a) 60 - sockets including both inch and metric sizes (b) 15 - accessories including 2 quick release ratchet handles and 5 extension handles
(c) 29 - drive bit sockets
(d) 18 - hex key wrenches
(e) 1 - 16 oz. ball peen hammer
(f) 3 - flare nut wrenches
(g) 4 - piece punch set
(h) 10 - combination wrenches
(i) 1 - D.C. tester
(j) 2 - tire gauges

All of the items are produced in Malaysia except for one of the quick release ratchet handles (Taiwan), the hammer (Taiwan), the flare nut wrenches (India), the combination wrenches (India), the D.C. tester (Taiwan) and the tire gauges (Taiwan). - 2 -

ISSUE:

1. Whether the 143-piece tool kit is classifiable as a tool set under subheading 8206.00.00, HTSUS.

2. Whether the tool kit is eligible for duty-free treatment under the GSP.

LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states in pertinent part that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes . . . ." Subheading 8206.00.00, HTSUS, covers "[t]ools of two or more of headings 8202 to 8205, put up in sets for retail sale."

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the Customs Co-operation Council's official interpretation of the Harmonized System. While not legally binding, the ENs provide a commentary on the scope of each heading of the Harmonized System, and are generally indicative of the proper interpretation of these headings.

EN 82.06, pg. 1109, states that subheading 8206.00.00, HTSUS, "covers sets of tools falling at least in two or more of the headings 82.02 to 82.05 provided they are put up in sets for retail sale (e.g., in a plastic case or in a metallic tool box) [emphasis in original]."

If imported separately, the hex key wrenches, flare nut wrenches, combination wrenches and sockets (in both inch and metric sizes), would be classified under heading 8204, HTSUS, which provides for hand-operated spanners and wrenches, socket wrenches and base metal parts thereof. The punch set and ball peen hammer would be classified under heading 8205, HTSUS, which provides for hand tools, not elsewhere specified or included.

While the kits include tools of at least two of the headings 8202 to 8205, HTSUS, they also include articles which are not covered by these headings, for example, the drive bit sockets, D.C. tester and tire gauges. However, EN 82.06, pg. 1109, states that "[s]ets including tools of minor importance from other headings or Chapters of the Nomenclature remain classified in this heading, provided that such minority items do not change their [sic] essential character of sets of tools of two or more of the headings Nos. 82.02 to 82.05 [emphasis in original]."

It is our opinion that the additional tools are "of minor - 3 -
importance" to the entire kit, and do not change the essential character of the kit in question. Thus, the tool kits can be classified under subheading 8206.00.00, HTSUS, if they are "put up in sets for retail sale."

While the term "goods put up in sets for retail sale" is defined in the Explanatory Notes to GRI 3(b), pg. 4, the notes stress that this definition applies only to the classification of sets under GRI 3(b) ("For the purposes of this Rule . . . "). Moreover, unlike GRI 3(b) sets, it is unnecessary to perform an essential character analysis with the sets of subheading 8206.00.00, HTSUS, when determining the rate of duty applicable to that set. The GRI 1 sets of subheading 8206.00.00, HTSUS, are not subject to the rate of duty applicable to the subheading of the material or component which gives the set its essential character. Rather, the corresponding rate of duty for articles of subheading 8206.00.00, HTSUS, is the rate applicable to the article in the set subject to the highest rate of duty.

Based on the terms of heading 8206, HTSUS, as well as a reading of EN 82.06, it appears that the requirements for a subheading 8206.00.00, HTSUS, tool set are as follows:

(1) that the set consists of tools of two or more of headings 8202 to 8205, HTSUS (and, may include tools of minor importance from other headings if those tools do not change the essential character of the set); and
(2) that the tools are put up in a plastic case or in a metallic tool box for retail sale.

The tool kit in question consists of tools of headings 8204 and 8205, HTSUS, and the tools of other headings do not change the essential character of the entire set. Further, the tools are put up in a plastic case for retail sale. Thus, the tool kit in question is covered by subheading 8206.00.00, HTSUS, which is not a GSP eligible provision.

HOLDING:

The tool kit is classifiable, according to GRI 1, under subheading 8206.00.00, HTSUS, which provides for "[t]ools of two or more of headings 8202 to 8205, put up in sets for retail sale." The corresponding rate of duty for articles of this subheading is the duty rate applicable to the article in the set subject to the highest rate of duty. The articles in the tool kit subject to the highest rate of duty are the sockets, which are classifiable under subheading 8204.20.00, HTSUS. The - 4 -
corresponding rate of duty for articles of this subheading, and therefore, the tool kit, is 9% ad valorem.

The tool kit is not eligible for duty-free treatment under the Generalized System of Preferences.

Sincerely,

John Durant, Director

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