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HQ 953201

March 30, 1994

CLA-2 CO:R:C:M 953201 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8505.19.00

Area Director
U.S. Customs Service
J.F.K. Airport
Building 178
Jamaica, NY 11430

RE: IA 63/92; Magnetic Holder; Permanent Magnets; Explanatory Note 85.05; 3926.90.95; 6914.90.00; 7326.90.90

Dear Sir:

This is in response to your memorandum of September 14, 1992 (CLA-2-K:C:A2 GS), relating to a request for internal advice initiated by Gibney, Anthony & Flaherty, on behalf of International Visual Corp., concerning the tariff classification of magnetic holders under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The merchandise consists of magnetic holders which are sold and used exclusively as holders for retail store sign displays. The holder is comprised of three components. One of the components is an "L" shaped molded plastic framework which is electro-plated to give the article a highly polished and reflective surface. A round hole in the shorter leg of the "L" allows it to accept inserts and signs attached to a round peg. This feature allows a sign to rotate 360 degrees. The other two components consist of two ceramic permanent magnets and four steel plated pole plates. The pole plates are assembled between the magnets to prevent demagnetization.

The device is placed on a metal display rack or similar metal merchandise display, where it is held in place by the two ceramic magnets inserted into the longer leg of the "L".

The subheadings under consideration are as follows:

3926.90.95: [o]ther articles of plastics . . .: [o]ther.

The general, column one rate of duty is 5.3 percent ad valorem.

6914.90.00: [o]ther ceramic articles: [o]ther.

The general, column one rate of duty is 8 percent ad valorem.

7326.90.90: [o]ther articles of iron or steel: [o]ther: [o]ther: [o]ther: [o]ther.

The general, column one rate of duty is 5.7 percent ad valorem.

8505.19.00: [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.

ISSUE:

Whether the magnetic holder is classifiable under subheading 3926.90.95, HTSUS, as an other article of plastics, under subheading 6914.90.00, HTSUS, as an other ceramic article, under subheading 7326.90.90, HTSUS, as an other article of steel, or under subheading 8505.19.00, HTSUS, as a permanent magnet.

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

Counsel for the importer claims that the subject merchandise is classifiable under subheading 8505.19.00, HTSUS, as a permanent magnet. In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive, are to be used to determine the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). In part, Explanatory Note 85.05 (pp. 1340) states that:

[t]his heading covers electro-magnets, those electro-magnet operated appliances specially listed in the heading, permanent magnets and permanent magnet work holders.

(2) Permanent magnets and articles intended to become permanent magnets after magnetisation.

Permanent magnets consist of pieces of hard steel, special alloys or other materials . . . which have been rendered permanently magnetic. Their shape varies according to the use for which they are designed. . . Permanent magnets remain classified here whatever their use, including small magnets used, inter alia, as toys.

It is our position that, based upon Explanatory Note 85.05, the magnetic holder is described as a permanent magnet under heading 8505, HTSUS. It is stated that permanent magnets remain classified under heading 8505, HTSUS, whatever their use.

It is claimed that the magnetic holder is precluded from classification under heading 8505, HTSUS, because of the exclusion in Explanatory Note 85.05. It states that:

[t]he heading does not cover:

(b) Electro-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.).

We do not agree that the magnetic holder is precluded from classification under heading 8505, HTSUS, because of the above exclusion. The permanent magnet in the holder is not presented with any article, and it is not designed to form part of another article. It is, however, incorporated in the subject holder along with the steel and plastic pieces. It is our position that the above exclusion does not contemplate articles such as the magnetic holder. Consequently, we find that it is described under subheading 8505.19.00, HTSUS.

It is our position that the magnetic holder is a composite good consisting of different components and is described under headings 6914, 3926, and 7326, and 8505, HTSUS.

GRI 3 states that:

[w]hen, by application of 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to a part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.

(c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

Because the magnetic holder is a composite good made up of different components which are described under different provisions of the HTSUS, those headings are to be regarded as equally specific under GRI 3(a). Therefore, GRI 3(a) fails in establishing classification, and GRI 3(b) becomes applicable. Because the magnetic holder is a composite good, under GRI 3(b), we must determine its essential character.

Explanatory Note 3(b)(VIII) (p. 4) states that:

[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.

We find that the essential character of the magnetic holder is imparted by the permanent magnets, because without the magnets the article could not adhere to its intended surface. The article would lose its identity as a magnetic holder and would be of little commercial use.

Although the permanent magnets are ceramic articles, they are not classifiable under heading 6914, HTSUS, because heading 8505, HTSUS, a use provision, is more specific. A designation by specific use prevails over a designation of general character without special limitations as to use or other qualifications, a classification by composition, and an eo nomine designation, unless there is a clear legislative intent to the contrary. Henley & Co., Inc. v. U.S., 49 CCPA 66, C.A.D. 793 (1962).

Therefore, under GRI 3(b), the magnetic holder is classifiable under subheading 8505.19.00, HTSUS.

HOLDING:

The magnetic holder is classifiable under subheading 8505.19.00, HTSUS, as a permanent magnet.

This decision should be mailed by your office to the internal advice requester no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Ruling Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act, and other public access channels.

Sincerely,

John Durant, Director

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