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HQ H005081




March 8, 2007

CLA-2 RR:CTF:TCM H005081 ADK

CATEGORY: CLASSIFICATION

TARIFF NO.: 3925.90.00

Heidar Nuristani
Central Purchasing, LLC.
Import Operations Group
3491 Mission Oaks Blvd.,
Camarillo, CA 93012

RE: Classification of the Nut and Bolt Storehouse

Dear Mr. Nuristani:

This is in response to your letter dated November 27, 2006, to United States Customs and Border Protection (CBP) in New York, in which you requested a binding ruling pertaining to the classification of the Nut and Bolt Storehouse under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter was referred to this office for a response.

FACTS:

The subject merchandise, style number 927, is a hardware caddy identified as the Nut and Bolt Storehouse (Storehouse). The Storehouse is comprised of 40 heavy-duty polypropylene bins which are ready to stack or mount to a wall, as evidenced by its plastic mounting rails, and over 1000 pieces of grade 5 fasteners of various sizes, including machine bolts, nuts, split lock washers and flat washers. Each bin is individually labeled with the size and type of hardware it carries. A cost breakdown submitted by the importer indicates that the cost of the bins is 18 percent of the total while the cost of the hardware components is 82 percent of the total.

ISSUES:

Are the subject products put up in a set for retail sale? What is the proper classification under the HTSUS for the Storehouse?

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative 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 GRIs 2 through 6 may then be applied in order. When goods are prima facie classifiable under two or more headings, GRI 3 must be consulted. GRI 3(b), which specifically provides for classification of retail sets, states, in pertinent part:
goods put up in sets for retail saleshall be classified as if they consisted of the material or component which gives them their essential character.

At issue is whether the Storehouse is put up in a set for retail sale. If it is, we must also determine which material or component imparts the essential character. The HTSUS provisions under consideration are as follows:

3925 Builders’ ware of plastics, not elsewhere specified or included:

3925.90.00 Other

7318 Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles, of iron or steel: Threaded articles:

7318.15 Other screws and bolts, whether or not with their nuts or washers:

Other:

7318.15.80 Having shanks or threads with a diameter of less than 6 mm.

7318.16.00 Nuts

Non-threaded articles:

7318.21.00 Spring washers and other lock washers 7318.22.00 Other washers

Chapter 39, Note 11:

Heading 3925 applies only to the following articles, not being products covered by any of the earlier headings of subchapter II:

(ij) Fittings and mountings intended for permanent installation in or on doors, windows, staircases, walls or other parts of buildings, for example, knobs, handles, hooks, brackets, towel rails, switch plates and other protective plates.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80. The relevant ENs are as follows:

39.24 – Tableware, kitchenware, other household articles and hygienic or toilet articles, of plastics

This heading covers the following articles of plastics:

(D) Howeverarticles intended for permanent installation in or on walls or other parts of buildingsare excluded (heading 39.25). (Emphasis in original)

The Explanatory Notes to GRI 3(b) indicate, in pertinent part, that "goods put up in sets for retail sale" means goods which:

(a) consist of at least two different articles which are prima facie classifiable in different headings;

(b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and

(c) are put up in a manner suitable for sale directly to users without repacking.

The Storehouse’s 40 heavy-duty polypropylene bins with mounting rails and component hardware consist of more than two different articles which are prima facie classifiable in different headings. The polypropylene bins with their mounting rails are together classifiable in chapter 39, HTSUS, and the fasteners are classifiable in various provisions in chapter 73, HTSUS.

Furthermore, the merchandise consists of articles put up together to carry out a specific activity. The items are for use in various carpentry projects and are sold together to meet the needs of the carpenter in his or her work. The individually labeled polypropylene bins also facilitate this work by allowing for easy selection of the appropriate fastener or hardware component.

Finally, the components are put up in a manner suitable for sale directly to users without repacking. All of the items are sold together in one large box which features a picture of the Storehouse and all varieties of component hardware. The seller, Harbor Freight, advertises the product as a “full range of grade 5 bolts, nuts, and washers, all neatly organized in 40 heavy duty labeled polypropylene bins, ready to stack or mount,” (emphasis added). The manner of packaging and text on the outside of the box establishes that it is intended for sale directly to users.

We find that the assortment constitutes a set for tariff purposes. However, in order to classify this merchandise, we must determine that component which imparts the essential character to the set. The term ‘essential character,’ refers to “the attribute which strongly marks or serves to distinguish what an article is; that which is indispensable to the structure, core or condition of the article.” HQ 956538, dated November 29, 1994. Explanatory Note VIII to GRI 3(b) explains, "[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 the constituent material in relation to the use of the goods." Court decisions on essential character for GRI 3(b) purposes have looked primarily to the role of the constituent material in relation to the use of the good. See Better Home Plastics Corp. v. U.S., 915 F. Supp. 1265 (CIT 1996), aff'd 119 F. 3d 969 (Fed. Cir. 1997); Mita Copystar America, Inc. v. U.S., 966 F. Supp. 1245 (CIT 1997), rehear'g denied, 994 F. Supp. 393 (1998); Vista Int'l Packing Co. v. U.S., 890 F. Supp. 1095 (CIT 1995). See also Pillowtex Corp. v. U.S., 893 F. Supp. 188 (CIT 1997), aff'd 171 F. 3d 1370 (Fed. Cir. 1999); Avenues in Leather, Inc. v. U.S., 2004 Ct. Int'l Trade LEXIS 39, aff'd 423 F.3d 1326 (Fed. Cir. 2005); HQ 968226, dated August 8, 2006

In Headquarters Ruling (HQ) 083712, dated May 18, 1989, CBP addressed the issue of hardware caddy sets such as the Storehouse. With respect to essential character, we determined:
that the organizer imparts the essential character to the assortment due to its role in the use of the fasteners. It greatly facilitates the storage of numerous fasteners in various compartments where they can be clearly and quickly identified for use.

Subsequent decisions on hardware caddy sets have relied on the above ruling in making essential character determinations. See HQ 084687, September 7, 1989 (Citing HQ 083712 in determining that the plastic cabinet portion of a cabinet/fastener set imparted essential character); New York Ruling (NY) K87574, dated July 23, 2004, (essential character of a hardware caddy set was imparted by the plastic storage organizer, not the fasteners); NY H82003, June 14, 2001 (essential character of a 25 drawer plastic cabinet containing tools was imparted by the plastic cabinet, not the fasteners); NY L82324, dated February 25, 2005 (essential character of the plastic organizer containing steel fasteners was imparted by the plastic organizer, not the fasteners).

Applying the court decisions and recognizing our longstanding administrative precedent, we find that the 40 polypropylene bins impart the essential character. In relationship to the rest of the merchandise, the bins serve the most important role. They “greatly [facilitate] the storage of numerous fasteners in various compartments where they can be clearly and quickly identified for use” in order to meet the needs of the carpenter in his or her work. Furthermore, the bins are individually labeled which allows for easy selection of the appropriate fastener or hardware component. Finally, the 40 bins are the most bulky component of the entire set and the product after which the set is named. While the fasteners account for 82% of the total cost of the set, this “fact in itself is not indicative of essential character.” HQ 083712. Without more, the cost disparity alone is insufficient to affect the essential character determination. The Storehouse will therefore be classified as if it consists only of the polypropylene bins.

Plastic hardware caddies, such as the Storehouse, are classifiable in chapter 39. See HQ 084687 (Hardware caddy set classified in subheading 3924.90 HTSUS), NY K87574 (Hardware caddy set classified in subheading 3924.90, HTSUS), NY H82003 (Hardware caddy set classified in subheading 3924.90, HTSUS). Unlike the plastic containers in these rulings, however, the subject Storehouse is “intended for permanent installation in or on walls.” This is evidenced by the fact that it is sold with customized mounting rails. As such, EN 39.24 mandates its exclusion from heading 3924, HTSUS and instead directs classification in heading 3925, HTSUS.

Finally, we must consider whether the Storehouse is classifiable in heading 3925, HTSUS, as indicated by EN 39.24. Chapter 39, note 11, provides an exclusive list of merchandise which is classifiable in heading 3925, HTSUS. Included in that list are “fittings and mountings intended for permanent installation in or on doors, windows, staircases, walls or other parts of buildings.” In HQ 089833, dated October 2, 1991, CBP determined that a “plastic organizer designed, through incorporated adhesive on the back or with screws, to be attached to a household wall or appliance” was covered by note 11(ij). Like the subject Storehouse, the plastic organizer was sold with other merchandise, such as memo paper and a small flashlight. Also like the subject Storehouse, the plastic organizer was intended to facilitate various chores by providing a central location for numerous different products. Consistent with chapter 39, note 11 and HQ 089833, therefore, the Nut and Bolt Storehouse is classifiable in heading 3925, HTSUS.

HOLDING:

By application of GRI 3(b), the Storehouse hardware caddy set is classifiable under heading 3925, HTSUS. Specifically, it is classifiable under subheading 3925.90.00, HTSUS, which provides for: “[b]uilders’ ware of plastics, not elsewhere specified or included: Other.” The 2007 general, column one rate of duty is 5.3 percent ad valorem.

Please note that some of the hardware components may be subject to antidumping duties or countervailing duties. A list of AD/CVD proceedings at the Department of Commerce (DOC) and their product coverage can be obtained from the DOC website at: http://ia.ita.doc.gov, or you may write to them at the U.S. Department of Commerce, International Trade Administration, Office of Antidumping Compliance, 14th Street and Constitution Avenue, N.W. Washington, DC 20230. Written decisions regarding the scope of AD/CVD orders are issued by the Import Administration in the Department of Commerce and are separate from tariff classification and origin rulings issued by CBP.

Sincerely,

Gail A. Hamill, Chief
Tariff Classification and Marking Branch

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