[Federal Register Volume 81, Number 26 (Tuesday, February 9, 2016)]
[Notices]
[Pages 6880-6882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02555]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

[USCBP-2016-0007]


Receipt of Domestic Interested Party Petition Concerning the 
Tariff Classification of a Steel Tube Fitting

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice; solicitation of comments.

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SUMMARY: U.S. Customs and Border Protection (CBP) has received a 
petition submitted on behalf of a domestic interested party requesting 
the reclassification under the Harmonized Tariff Schedule of the United 
States (HTSUS) of a steel tube fitting from Taiwan. CBP classified the 
steel tube fitting under subheading 7307.99.50, HTSUS, which provides 
for: ``Tube or pipe fittings (for example, couplings, elbows, sleeves), 
of iron or steel: Other: Other: Other.'' The 2015 column one, general 
rate of duty is 4.3 percent ad valorem. Petitioner contends that the 
proper classification for the steel tube fitting is under subheading 
8412.90.90, HTSUS, which provides for: ``Other engines and motors, and 
parts thereof: Parts: Other.'' Petitioner asserts that some of its 
competitors are classifying all or a substantial portion of similar 
fittings as parts of hydraulic systems, under subheading 8412.90.90, 
HTSUS,

[[Page 6881]]

which is duty free, thus placing Petitioner at a competitive 
disadvantage. This document invites comments with regard to the 
correctness of the current classification.

DATES: Comments must be received on or before April 11, 2016.

ADDRESSES: You may submit comments, identified by docket number, by one 
of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments via docket number 
USCBP-2016-0007.
    <bullet> Mail: Trade and Commercial Regulations Branch, Regulations 
and Rulings, Office of International Trade, Customs and Border 
Protection, 90 K St. NE., 10th Floor, Washington, DC 20229-1177.
    Instructions: All submissions received must include the agency name 
and docket number for this notice of domestic interested party petition 
concerning the tariff classification of steel tube fittings. All 
comments received will be posted without change to http://www.regulations.gov, including any personal information provided.
    Docket: For access to the docket to read background documents, 
exhibits, or comments received, go to http://www.regulations.gov. 
Submitted comments may also be inspected during regular business days 
between the hours of 9 a.m. and 4:30 p.m., at Trade and Commercial 
Regulations Branch, Regulations and Rulings, Office of International 
Trade, Customs and Border Protection, 90 K Street NE., 10th Floor, 
Washington, DC. Arrangements to inspect submitted comments should be 
made in advance by calling Joseph Clark, Trade and Commercial 
Regulations Branch, at (202) 325-0118. Please note that any submitted 
comments that CBP receives by mail will be posted on the above-
referenced docket for the public's convenience.

FOR FURTHER INFORMATION CONTACT: Dwayne Rawlings, Tariff Classification 
and Marking Branch, Regulations and Rulings, Office of International 
Trade, Customs and Border Protection, at (202) 325-0092.

SUPPLEMENTARY INFORMATION:

Background

    A petition has been filed under section 516 of the Tariff Act of 
1930, as amended (19 U.S.C. 1516), on behalf of Brennan Industries, 
Inc. (``Petitioner''), which manufactures various hydraulic connectors, 
fittings and adapters in Solon, Ohio. Brennan meets all of the 
requirements of a domestic interested party set forth in 19 U.S.C. 
1516(a)(2) and section 175.3(a) in Title 19 of the Code of Federal 
Regulations (CFR).
    In New York Ruling (NY) E83408, dated July 8, 1999, a steel tube 
fitting from Taiwan is described as a ``cold forged nonalloy steel male 
threaded connector body having a center hex nut, one flare tube end and 
one male pipe end. These tube fittings connect a piece of rigid tubing 
to a valve, manifold or another piece of rigid tubing in a hydraulic 
system.'' CBP classified the steel tube fitting in subheading 
7307.99.50, Harmonized Tariff Schedule of the United States (HTSUS), as 
a tube or pipe fitting of iron or steel, other, other, other. 
Petitioner contends that the proper classification for the fitting is 
subheading 8412.90.90, HTSUS, which covers ``Other engines and motors, 
and parts thereof: Parts: Other.'' In 1999, the column one, general 
rate of duty for subheading 7307.99.50, HTSUS, was 4.3 percent ad 
valorem, and for heading 8412, HTSUS, it was ``Free'' (the current duty 
rates are respectively 4.3% ad valorem and ``Free'').
    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 be applied, in numerical 
order.
    The Harmonized Commodity Description and Coding System Explanatory 
Notes (ENs) constitute the official interpretation of the Harmonized 
System at the international level. While not legally binding on the 
contracting parties and, therefore, not dispositive, the ENs provide a 
commentary on the scope of each heading of the Harmonized System and 
are thus useful in ascertaining the classification of merchandise under 
the system. CBP's position is that the ENs should always be consulted. 
See Treasury Decision (T.D.) 89-80, 54 FR 35127, 35128 (Aug. 23, 1989).

The Petitioner's Views

    Petitioner contends that the proper classification for the fitting 
is subheading 8412.90.90, HTSUS, which covers ``Other engines and 
motors, and parts thereof: Parts: Other.'' Petitioner notes that the 
ENs for Section XV, HTSUS, (which covers heading 7307, HTSUS), make 
clear that Section XV, HTSUS, does not cover ``[a]rticles of Section 
XVI (machinery, mechanical appliances and electrical goods, which 
include hydraulic system parts).'' See EN 1(f) to Section XV. Section 
XVI, HTSUS, covers heading 8412, HTSUS. Petitioner also recognizes that 
Legal Note 1(g) to Section XVI excludes certain products from Section 
XVI coverage, including, inter alia, parts of general use, as defined 
in Note 2 to Section XV, of base metal (section XV), or similar goods 
of plastics (chapter 39). See also EN 1(g) to Section XVI (``parts of 
general use'' is defined throughout the tariff schedule to mean, inter 
alia, articles of heading 7307). Referencing Note 2(b) to Section XVI, 
Petitioner then asserts that machine parts, if suitable for use solely 
or principally with a particular kind of machine of heading 8412, are 
to be classified with that machine or in heading 8409, 8431, 8448, 
8466, 8473, 8503, 8522, 8529 or 8538, as appropriate. Petitioner also 
cites to HQ 956743 (dated January 24, 1995), NY I82861 (dated June 28, 
2002), and NY K89798, supra (dated October 18, 2004; incorrectly cited 
by the Petitioner as NY K89789).
    Petitioner maintains the fitting of NY E83408 is ``solely imported, 
sold and specifically designed according to hydraulic system industry 
specifications for use in assembly of particular hydraulic engine or 
motor systems,'' and is essential to the effective and safe operation 
of the subassemblies and components to which they are parts. As such, 
according to Petitioner, it is classifiable in subheading 8412.90.90, 
HTSUS, which specifically covers ``other hydraulic engine and motor 
parts.'' Petitioner also contends that CBP's classification is 
incorrect because the fitting consists of more than one material or 
substance, thus implicating GRI 2(b) and GRI 3. Petitioner proceeds to 
reason that the fitting is prima facie classifiable as both a ``tube 
and pipe fitting'' of heading 7307, HTSUS, and an ``other hydraulic 
engine or motor part'' of heading 8412, HTSUS, and, therefore, GRI 3 is 
applicable. Petitioner then reasons that GRI 3(a) cannot determine 
classification of the fitting because the competing headings are 
equally specific, and GRI 3(b) is inapplicable as well because the 
fitting's essential character cannot be determined. Therefore, applying 
GRI 3(c), Petitioner concludes that heading 8412, HTSUS, is the proper 
heading because it is last in numerical order behind heading 7307, 
HTSUS.

Analysis Used by CBP in Prior Ruling

    In the ruling that is the subject of this petition, CBP held that a 
cold-forged, non-alloy, steel tube fitting that connects rigid tubing 
to valves, manifolds or other pieces of rigid tubing in a hydraulic 
system is classified in

[[Page 6882]]

subheading 7307.99.50, HTSUS, as other tube or pipe fitting (for 
example, couplings, elbows, sleeves), of iron or steel. It is CBP's 
position that the subject fitting is a part of general use that can 
connect tubes and pipes, and is thus classified under heading 7307, 
HTSUS, by application of GRI 1 and the exclusionary effect of Legal 
Note 1(g) to Section XVI. In order for classification by application of 
GRI 3 to be appropriate, a good must be unable to be classified by 
application of GRIs 1 or 2, and the good must be prima facie 
classifiable in two or more headings. In this instance, goods of 
heading 7307, HTSUS, are explicitly excluded from heading 8412, HTSUS, 
by application of Legal Note 1(g) to Section XVI. Therefore, GRI 3 is 
not applicable. Historically, CBP has recognized that, for tariff 
purposes, hoses are not interchangeable with pipes or tubes. In HQ 
088393, dated March 26, 1991, CBP examined the difference between hose 
fittings, and tube or pipe fittings. In that ruling, CBP first noted 
that the courts have long recognized that although a ``hose'' may be 
considered a ``tube'' in common meaning, they are not interchangeable 
terms for tariff purposes. Citing John V. Carr & Son, Inc. v. United 
States, 76 Cust.Ct. 162, C.D. 4652 (1976) (interpreting the meanings of 
the terms ``hose'' and ``pipes and tubes'' within the context of the 
Tariff Schedule of the United States (TSUS)); see also J.E. Bernard & 
Co., Inc. v. United States, 64 Cust.Ct. 425, C.D. 4029 (1970) (in 
comparing the TSUS tariff terms ``copper tubing'' and ``flexible metal 
tubing,'' the court expressed the principle that quite often articles 
that literally appear to respond to the common meaning of a tariff term 
are not the articles classified in a tariff sense); R.J. Saunders & 
Co., Inc. v. United States, 49 C.C.P.A. 87, C.A.D. 801 (1962). Thus, 
under the TSUS, CBP consistently held that hose fittings are not 
properly classifiable under the TSUS provision for pipe and tube 
fittings. See C.I.E. 953/63 (July 2, 1963), C.I.E. 1684/65 (October 18, 
1965), TC 465.251 M (June 18, 1968), TC 426.89 AS (November 27, 1968), 
MFG 423.371 G (September 8, 1970), and HQ 064538 (April 17, 1980). 
While prior TSUS cases are not dispositive, ``[n]evertheless, on a 
case-by-case basis prior decisions should be considered instructive in 
interpreting the HTSUS, particularly where the nomenclature previously 
interpreted in those decisions remains unchanged and no dissimilar 
interpretation is required by the text of the HTSUS.'' H.R. Conf. Rep. 
No. 100-576, at 549-50 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 
1582-83; see also NY 870421, dated February 7, 1992.
    The text of heading 7307, HTSUS, provides for ``tube or pipe 
fittings,'' which is similar to the TSUS text in the cases discussed 
above (``pipe and tube fittings,'' heading 613, TSUS). Thus, with 
regard to the competing HTSUS provisions at issue, CBP's position is 
that if an iron or steel fitting is a part of general use and is 
designed in such a manner where it can be used in conjunction with 
tubes or pipes, or tubes, pipes and hoses, that fitting is classified 
in heading 7307. See NY K87518, dated July 21, 2004; see also NY 
H87517, dated February 20, 2002.
    However, and again with regard to the competing headings at issue, 
if such fittings meet the terms of Note 2 to Section XVI and are 
considered to be parts of hydraulic systems, such as hose fittings (as 
opposed to ``parts of general use'' of heading 7307, HTSUS), they are 
classified in heading 8412, HTSUS. See NY K89798, dated October 18, 
2004; NY N006172, dated February 28, 2007; NY H82321, dated June 25, 
2001; NY N242950, dated June 26, 2013; see also HQ 956743, dated 
January 24, 1995 (stating the general principle).
    CBP concludes that the subject fittings are parts of general use 
that can connect tubes and pipes, and are thus classified under heading 
7307, HTSUS, by application of GRI 1 and the exclusionary effect of 
Legal Note 1(g) to Section XVI. Finally, with regard to Petitioner's 
argument that GRI 3 is applicable, in order for classification by 
application of GRI 3 to be appropriate, a good must be unable to be 
classified by application of GRIs 1 or 2, and the good must be prima 
facie classifiable in two or more headings. In this instance, goods of 
heading 7307, HTSUS, are explicitly excluded from heading 8412, HTSUS, 
by application of Legal Note 1(g) to Section XVI. Therefore, GRI 3 is 
not applicable. In addition, GRI 3 does not apply because the fittings 
do not consist of more than one material or substance.

Comments

    Pursuant to section 175.21, CBP Regulations (19 CFR 175.21), before 
making a determination on this matter, CBP invites written comments on 
the petition from interested parties.
    The domestic interested party petition concerning the tariff 
classification of hydraulic system fittings, as well as all comments 
received in response to this notice, will be available for public 
inspection on the docket at www.regulations.gov. Please note that any 
submitted comments that CBP receives by mail will be posted on the 
above-referenced docket for the public's convenience.

Authority

    This notice is published in accordance with 19 U.S.C. 1516 and 
section 175.21 of the CBP Regulations (19 CFR 175.21).

     Dated: February 4, 2016.
R. Gil Kerlikowske,
Commissioner, U.S. Customs and Border Protection.
[FR Doc. 2016-02555 Filed 2-8-16; 8:45 am]
 BILLING CODE 9111-14-P