Tariff Classification of Imported Magnets

DEPARTMENT OF THE TREASURY

United States Customs Service

Tariff Classification of Imported Magnets

AGENCY: U.S. Customs Service, Department of Treasury.

ACTION: Proposed change of position; solicitation of comments.

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SUMMARY: This notice advises the public that Customs proposes a change

of position regarding the classification of imported articles

consisting of small metal or barium ferrite magnets placed in a

plastic, textile or ceramic housing (sometimes referred to as

refrigerator or household magnets), under the Harmonized Tariff

Schedule of the United States (HTSUS).

Customs has ruled in the past that based on the composition of the

magnet, it was classified either as an article of metal under heading

7323, HTSUS, or as an article of ceramic (barium ferrite) under heading

6912, HTSUS.

After intensive review, Customs now believes that because composite

goods consisting of magnets and a textile, plastic or ceramic housing

or shell, have the essential character of magnets, they are properly

classifiable as such under heading 8505, HTSUS. The result of this

proposed change of position would be a small decrease in the rate of

duty on the subject merchandise.

By this action, those rulings which are inconsistent with our

current position would be revoked. Before adopting this proposed

change, consideration will be given to any written comments timely

submitted in response to publication of the document.

DATES: Comments must be received on or before August 29, 1994.

ADDRESSES: Written comments (preferably in triplicates) may be

addressed to the U.S. Customs Service, Office of Regulations and

Rulings, Regulations Branch, Franklin Court, 1301 Constitution Avenue

NW., Washington, DC 20229. Comments filed may be inspected at the

Office of Regulations and Rulings, Regulations Branch, Franklin Court,

1099 14th Street NW., Suite 4000, Washington D.C.

FOR FURTHER INFORMATION CONTACT: Robert F. Altneu, Office of

Regulations and Rulings (202) 482-7030.

SUPPLEMENTARY INFORMATION:

Background

Classification of merchandise under the Harmonized Tariff Schedule

of the United States (HTSUS) is in accordance with the General Rules of

Interpretation (GRI's). GRI 1 provides that classification shall be

determined according to the terms of the headings and any relative

section or chapter notes.

Magnets are specifically provided for in heading 8505, HTSUS. In

several rulings, we have held that articles consisting of a magnet

placed within a decorative housing or shell made of plastic, ceramic,

or textile (sometimes referred to as refrigerator or household

magnets), were composite goods. Classification was considered under the

following subheadings and duty rates:

6912.00.50: Ceramic tableware, kitchenware, other household articles *

* *: [o]ther

The general, column one rate of duty is 7 percent ad valorem.

7323.99.90: Table, kitchen or other household articles and parts

thereof, of iron or steel .* * *: [o]ther: [o]ther: [n]ot coated or

plated with precious metal: [o]ther: [o]ther. * * *.

The general, column one rate of duty is 3.4 percent ad valorem.

8505.19.00: Electromagnets; permanent magnets and articles intended to

become permanent magnets after magnetization. * * *: [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.

Because the article was a composite good consisting of metal,

ceramic, textile, and/or plastic, it was prima facie classifiable under

two or more headings. Customs would then apply GRI 3(b) to determine

the essential character of the article.

The Harmonized Commodity Description and Coding System Explanatory

Notes (EN) constitute the Customs Cooperation Council's official

interpretation of the HTSUS. While not legally binding, 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, 54 Fed. Reg. 35127, 35128 (August 23, 1989). EN VIII to

GRI 3(b) states as follows:

[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.

In the rulings issued, Customs concluded that the magnet imparts

the essential character to the article. The plastic, textile or ceramic

portion of the article merely embellished the article and acted as a

decorative selling feature.

However, Customs precluded classification of the article under

heading 8505, HTSUS, which specifically provides for permanent magnets

based upon a portion of EN 85.05. EN 85.05, page 1341, states in

pertinent part as follows:

[T]his heading does not cover: [e]lectro-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.)

Based upon this portion of EN 85.05, we held that the magnets were

designed to form part of the article. It was concluded that because the

magnets are presented with and incorporated into a textile, ceramic or

plastic article (i.e., a hook, fruit caricature or advertising slogan),

they are precluded from classification in heading 8505, HTSUS. Because

the essential character of the article is the magnet, the article would

then be classified based upon the composition of the magnet as an

article of metal under heading 7323, HTSUS, or as an article of ceramic

(barium ferrite) under heading 6912, HTSUS.

Several rulings were issued following this rationale. See HQs

082500, 083130, 083133, 083134, 089332, 089333, 089760; NYs 860370,

862523. This list may not be exhaustive. There may be others issued by

Customs in New York or in the various Customs districts under the pre-

entry classification procedures.

Proposed Change of Position

After intensive analysis, we believe that EN 85.05 has been

misinterpreted. The exclusion in EN 85.05 is designed to cover only

those articles in which the magnet is merely an insignificant part of a

larger article (i.e., kitchen cabinets with a magnet to keep the doors

closed). In such cases, the magnet portion is ignored for

classification purposes, and the article (i.e., kitchen cabinet) is

classified as if the magnet were not present.

In regards to articles consisting of a metal or barium ferrite

magnet and a plastic, textile or ceramic shell or housing (i.e., a

hook, fruit caricature or an advertisement slogan), Customs believes

that they are a composite good. Customs will continue to apply an

essential character analysis pursuant to GRI 3(b) to find the essential

character of the merchandise. If the shell or housing portion of the

article merely embellishes the product and acts as a decorative selling

feature, and the essential character is imparted by the magnet, then

the article is properly classifiable in heading 8505, HTSUS, as a

permanent magnet. This change in position only relates to how Customs

interprets the exclusion stated in EN 85.05.

Authority

This notice is published in accordance with section 177.10, Customs

Regulations (19 CFR 177.10).

Comments

Before adopting this proposed change in position, consideration

will be given to any written comments timely submitted to Customs.

Comments submitted will be available for public inspection in

accordance with the Freedom of Information Act (5 U.S.C. 552), section

1.4, Treasury Department Regulations (31 CFR 103.11(b)), on regular

business days between the hours of 9:00 and 4:30 p.m. at the Office of

Regulations and Rulings, Franklin Court, 1099 14th Street NW., Suite

4000, Washington, D.C.

Approved: June 14, 1994.

George J. Weise,

Commissioner of Customs.

[FR Doc. 94-15646 Filed 6-27-94; 8:45 am]

BILLING CODE 4820-02-P