Newly Released CBP HQ Rulings Jan 19 - Jan. 23
The Customs Rulings Online Search System (CROSS) was updated between Jan. 19 and Jan. 23 with the following headquarters ruling (ruling revocations and modifications will be detailed elsewhere in a separate article as they are announced in the Customs Bulletin):
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H336783: Internal Advice Request; Method of Appraisement for “Obsolete Merchandise”; Related Parties; Fallback Method; 19 U.S.C. § 1401a(f)
| Ruling: Appraising the imported merchandise under the fallback method, using a modified deductive value as proposed by the importer, would be acceptable under the Customs valuation law of 19 U.S.C. § 1401a. |
| Issue: Is the correct method of appraisement of the “obsolete merchandise” the modified deductive value under 19 U.S.C. § 1401a(f)? |
| Item: Giorgio Armani Corporation's obsolete merchandise, consisting of apparel that could not be sold in Japan via Giorgio Armani Japan so was transferred to GAC to be sold at GAC factory outlets in the U.S. |
| Reason: The entered values of two entries, dated March 22, 2023 and March 23, 2023, were appraised at the retail prices of the goods, less a 35% markdown. GAC asserts that because of this appraisement, the entered value has resulted in the shipments being grossly overvalued and duties grossly overpaid. Because the obsolete merchandise cannot be appraised under any of the methods set forth in 19 U.S.C. § 1401a(a)-(e), GAC asserts that the value of the obsolete merchandise must be determined based on a fallback method set forth in 19 U.S.C. § 1401a(f). GAC has proposed a fallback method of appraisement using a modified deductive value. In determining the price at which the obsolete inventory will be sold at GAC’s factory outlets, GAC expects that much of this merchandise might not be sold within the next year, and that some of the merchandise is damaged or worn and cannot be sold. Thus, GAC explains that it will not know the prices for which the subject merchandise will be sold at retail in the U.S. for a long time. CBP noted that due to the nature of the merchandise at issue, which in some instances, may not be sold for over a year, it is difficult for the importer to accurately assess the value of the merchandise until it arrives in the United States. As such, CBP encouraged the importer to use reconciliation to report any changes in the value of the imported articles. |
| Ruling Date: Nov. 6, 2024 |
H342569: Tariff classification of reusable transport tanks
| Ruling: The 120-liter and 300-liter transport tanks are classified in heading 8609, specifically in subheading 8609.00.00, which provides for “Containers (including containers for the transport of fluids) specially designed and equipped for carriage by one or more modes of transport.” |
| Issues: Are the reusable tanks classified under Harmonized Tariff Schedule heading 7309, heading 7310, heading 8419 or heading 8609? |
| Item: 120-liter and 300-liter reusable transport tanks used to repeatedly transport liquid drug materials and medicines. The tanks may also be used to store such substances, or they may be shipped empty between global manufacturing sites, ports of destination, and storage facilities. |
| Reason: These containers (including lift vans) are packing receptacles specially designed and equipped for carriage by one or more modes of transport (e.g., road, rail, water or air). They are equipped with fittings (hooks, rings, castors, supports, etc.) to facilitate handling and securing on the transporting vehicle, aircraft or vessel. They are thus suitable for the “door to door” transport of goods without intermediate repacking and, being of robust construction, are intended to be used repeatedly. The instant transport tanks are packing receptacles specially designed for carriage by certain modes of transport. For the 120-liter tanks, they are wheeled directly onto trucks or into other containers via integrated heavy-duty casters attached to the bottom of the tanks. Similarly, the 300-liter tanks are lifted and moved using integrated forklift skid channels attached to the bottom of the tanks. Both tanks contain substantial side handles that serve as anchor points for tie-down straps that secure the tanks once loaded onto transit containers. For these reasons, CBP found that the subject tanks are described by heading 8609. |
| Ruling Date: Dec. 19, 2024 |
H328382: Application for Further Review of Protest No. 3302-18-100018; NAFTA Eligibility of Natural Gas Imported from Canada; NAFTA Certificates of Origin; Demonstration of Producers and Production Records for Imported Natural Gas
| Ruling: Although some of the natural gas originated from Canada, CBP has been unable to verify whether all of the natural gas originated from Canada. Since insufficient documentation was presented to substantiate the origin of the imported natural gas shipments, these shipments are ineligible for the NAFTA duty preference and the protest is denied in full. |
| Issues: Are the entries of imported natural gas from Canada eligible for preferential tariff treatment under NAFTA? |
| Item: Livingston International on behalf of Sierra Pacific Power Co. concerning whether importations of natural gas from Canada were eligible for preferential tariff treatment under the North American Free Trade Agreement, or NAFTA |
| Reason: In the instant case, whether the importer possessed a NAFTA Certificate Origin at the time the claim for NAFTA was made is not at issue. However, pursuant to General Note 12, for an article to be eligible for NAFTA preference, two criteria must be satisfied. First, the article in question must be “originating” under the terms of GN 12, and second, the article must qualify to be marked as a good of a NAFTA country under the NAFTA Marking Rules. CBP acknowledged that there is evidence of sales between the protestant and its suppliers. However, there is no evidence to corroborate that the natural gas shipments originated or were obtained from a source located in Canada. CBP did not receive any documentation indicating the names of the actual producers, certificates or other production records which would verify that the natural gas was taken from wells or fields in Canada. Without evidence that the natural gas shipments in question were wholly obtained or produced entirely in the territory of Canada, or that any of the other GN 12, HTSUS, rules that convey originating treatment have been satisfied, we find that the natural gas shipments, are not eligible for the NAFTA tariff preference. |
| Ruling Date: April 5, 2024 |
H337896: Target General Merchandise Request for Internal Advice; 19 C.F.R. § 177.11; Classification of Squishmallows plush articles
| Ruling: The Squishmallows, are classified in heading 9503, and specifically in subheading 9503.00.000, which provides for “Tricycles, scooters, pedal cars and similar wheeled toys; dolls? carriages; dolls, other toys; reduced-scale models and similar recreational models, working or not; puzzles of all kinds; parts and accessories thereof.” |
| Issue: What is the proper tariff classification of various Squishmallows? |
| Item: Various sizes of Squishmallows plush articles. |
| Reason: To be classified as a toy in heading 9503, an article must belong to the same class or kind of goods which have the same principal use as toys. Accordingly, to determine whether an article is included in a particular class or kind of merchandise, CBP considers a variety of factors, often referred to as the “Carborundum” factors, to determine whether articles are classifiable as toys. The Squishmallows at issue in this Internal Advice are too similar to the Squishmallows in a previous HQ ruling to produce a different classification. The Squishmallows do not have an accompanying pillowcase, would not correctly fit into a standard pillowcase, and would rarely be used as a pillow to support a person’s head when sleeping. The size of the items, their shape, their depth, their plush squishiness, and their colorful and fun design demonstrate that the Squishmallows are primarily designed to amuse, rather than be used for utilitarian purposes. The articles are not of the correct size or flatness to support the head or the body as a utilitarian pillow and it is not designed to provide or increase comfort. The fabric and plush stuffing are extra soft because the Squishmallows are intended to be cuddled. |
| Ruling Date: Nov. 19, 2024 |
H340712: U.S. Government Procurement; Title III, Trade Agreements Act of 1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country of Origin of Alcohol Prep Pads
| Ruling: The subject alcohol prep pads are a product of Taiwan, for purposes of U.S. government procurement. |
| Issues: What is the country of origin of the subject alcohol prep pads for purposes of U.S. government procurement? |
| Item: Medline Industries' alcohol prep pads. The manufacturing of the synthetic nonwoven filament fabric takes place in Taiwan. In China, the fabric is unrolled and cut into individual rectangular pieces of fabric. The individual pads are then saturated with a sterile solution consisting of 70% by weight isopropyl alcohol and 30% purified water, prepared in China. Lastly, the individual prep pads are packaged into individual packets and then boxed into cases. |
| Reason: In Taiwan, polypropylene plastic polymer is melted and extruded into filaments. These filaments are spun and then bonded into a sheeted web of nonwoven filament textile fabric classified under subheading 5603.12.00. Because the change to subheading 5603.12.00, is a result of a fabric-making process, the merchandise complies with the requisite tariff shift rule 19 CFR 102.21(e)(2). Accordingly, the country of origin of the alcohol prep pads is Taiwan, the country in which the fabric-making process occurs. |
| Ruling Date: Jan. 17, 2025 |
H332745: U.S. Government Procurement; Title III, Trade Agreements Act of 1979 (19 U.S.C. § 2511); Subpart B, Part 177, CBP Regulations; Konica Minolta Business Solutions U.S.A., Inc.; Country of Origin of Multifunction Digital Printers; Substantial Transformation
| Ruling: Four additional subassemblies -- namely, the MFP board, the fusing unit, the image transfer belt unit, and the 1500 paper feed unit -- are manufactured in Mexico. Moreover, final assembly in Mexico includes loading Konica Minolta’s complex proprietary software onto the MFP board and other components in Mexico, along with numerous distinct physical and electronic testing, adjustment, and calibration procedures to ensure each machine’s proper operation. Through final assembly of all the subassemblies onto the MFP -- including the four subassemblies that will be manufactured in Mexico -- as well as the testing and adjustment operations, the individual subassemblies and subcomponents of Mexican and foreign origin will be subsumed into a new and distinct article of commerce that has a new name, character, and use. Accordingly, under the totality of the circumstances, we find that the country of origin of the Minerva SSBK MFP will be Mexico for purposes of U.S. Government procurement. |
| Issues: What is the country of origin of the Minerva SSBK MFPs for purposes of U.S. government procurement? |
| Item: Konica Minolta Business Solutions U.S.A.'s Minerva SSBK series multifunction digital printers (MFPs). Most of the product design and development of the Minerva SSBK series MFPs is conducted in Japan, and several of its most important and complex components and subassemblies will be manufactured either in Mexico or China using a number of Japanese, Thai, or Vietnamese parts. The Minerva SSBK MFPs will initially be assembled in China. Several assemblies of the MFPs, including more complicated or advanced assemblies, will be removed before the resulting frame is shipped to Mexico for final assembly, as well as where other Mexican-made components and assemblies will be incorporated. |
| Reason: In various rulings concerning similar merchandise, CBP has held that complex and meaningful assembly operations involving a large number of components will generally result in a substantial transformation. Although the assembly of the Minerva SSBK MFP will take place in Mexico and China, there are also operations that contribute to this assembly that will take place in Japan. Thus, where no one country imparts the dominant portion of the work conducted, CBP will employ a totality of the circumstances approach in determining the country of origin of the finished Minerva SSBK MFPs. |
| Ruling Date: Jan. 17, 2025 |
H340257: Application for Further Review of Protest 530123109577; Country of Origin; Herbicide; Section 301 Measures
| Ruling: The manufacturing process that takes place in Taiwan constitutes a substantial transformation. The country of origin for purposes of Section 301 remedies of the imported Sparrow herbicide product is Taiwan and is not subject to Section 301 measures. |
| Issues: What is the country of origin of the herbicide product for purposes of Section 301 trade remedies? |
| Item: Albaugh's Sparrow, an herbicide product used for postemergence grass and broadleaf weed control. The subject merchandise is composed of two active ingredients (Rimsulfuron and Nicosulfuron) as well as other inert ingredients used as formulation aids, such as dispersants, wetting agents, diluents, etc., to improve the form, and effectiveness of the final product. Rimsulfuron and Nicosulfuron are both active ingredients produced in China and imported into Taiwan for manufacturing. |
| Reason: CBP consulted CBP Laboratories and Scientific Services Directorate (LSSD), concerning the instant case. LSSD informed CBP that the production process of the herbicide takes place in Taiwan does not result in “a chemical reaction with each other or any of the other components during the process of manufacture.” However, in mixing operations of herbicides, pesticides, and other agricultural finished products, where no chemical reaction occurs, “the active ingredient provides the essential character regardless of the origin of the other constitutes.” LSSD stated that another proceeding and this case are analogous as two active ingredients from the same country are being mixed in another country yielding a distinct final product. Therefore, CBP found that the subject ingredients are substantially transformed by the mixing and formulation operations occurring in Taiwan. |
| Ruling Date: Jan. 23, 2025 |