Newly Released CBP HQ Rulings for Sept. 30
The Customs Rulings Online Search System (CROSS) was updated Sept. 30 with the following headquarters rulings (ruling revocations and modifications will be detailed elsewhere in a separate article as they are announced in the Customs Bulletin):
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H317748: Request for Reconsideration of NY N317139; Classification of Communicating Adjustable Bed Base
| Ruling: 9403.20.0035, free, “Other furniture and parts thereof: Other metal furniture: Household: Other: Mechanically adjustable bed or mattress base, not foldable, having the characteristics of a bed or bed frame, of a width exceeding 91.44 cm, of a length exceeding 184.15 cm, and of a depth exceeding 8.89 cm." Secondary classification: 9903.88.03, 25%. |
| Issue: Whether the communicating adjustable bed base is classified in heading 8517, HTSUS, as a machine for conversion of data, or heading 9403, HTSUS, as other metal furniture |
| Item: Bluetooth or Wi-Fi enabled adjustable bed bases with a regulable metal sub-frame with vibration motors. The textile-covered steel or wood platform is comprised of four articulated sections corresponding to a person’s upper torso, hips, thighs, and calves/feet. Ports mounted on the frame allow for the connection and control of accessories that may include a heating pad, audio-vibration feedback, a cooling fan, a temperature sensor, etc. In its imported condition, the adjustable bed is disassembled and it does not include either a mattress or the aforementioned accessories. |
| Reason: The bed base is not a class or kind of machine that is principally used for data processing under heading 8517. Applying the Carborundum factors, the physical characteristics of the merchandise indicate that it is a piece of metal furniture that is designed for use in a household for sleep. The manufacturer advertises the merchandise as furniture that is utilized for sleep, not as a machine for communication or data processing. Consumers of the merchandise do not purchase or seek out the bed base for its communication features; instead, they purchase the bed base for its use in sleeping. In relation to the use of the merchandise as furniture, the communication features are auxiliary as such features do not effectively contribute to the utilitarian purpose of a bed base: to equip private dwellings, such as bedrooms, and to support a mattress for the user’s sleep. |
| Ruling Date: Sept. 26, 2021 |
H319592: 46 U.S.C. § 55102; 19 CFR § 4.80b(a); New and Different Product; Proposed Transportation of Gasoline Blendstock
| Ruling: The proposed blending operations would result in the creation of a new and different product, so the proposed transportation by a non-coastwise-qualified vessel would be in compliance with the Jones Act. |
| Issue: Whether, based on the product specifications provided, the proposed blending operation would result in the creation of a “new and different product” within the meaning of 19 CFR 4.80b(a), such that the proposed transportation by a non-coastwise-qualified vessel would not be in violation of 46 USC 55102 |
| Item: The transportation of alkylate and gasoline blendstock from a U.S. coastwise port to a foreign port, onboard a non-coastwise-qualified vessel. The blendstock to be laden in the United States will not meet either the (1) ASTM standard for engine fuel nor (2) the published Colonial pipeline specifications for conventional blendstock for oxygenated blending (“CBOB”) and ASTM standard for engine fuel. Upon arrival at the foreign port, the blendstock and alkylate will be discharged and blended on-shore to produce a product that will meet ASTM and Colonial Pipeline Company Product Codes and Specifications for CBOB. The resulting CBOB will then be transported onboard the vessel to a second U.S. coastwise port. |
| Reason: The blended product meets ASTM D4814-21a and Colonial Pipeline specifications for CBOB. However, the gasoline blendstock’s AKI will need to be low enough such that the addition of ethanol will keep it below 87. Accordingly, a new and different product will be produced assuming that the gasoline blendstock’s AKI remains below 87 if ethanol were to be added to it. Consequently, test records should be retained for each batch of gasoline blendstock and alkylate undergoing this proposed blending operation to ensure that they do not meet ASTM D4814-21a and Colonial Pipeline specifications for CBOB. |
| Ruling Date: Sept. 23, 2021 |
H320778: Valuation of Leased Machinery
| Ruling: The merchandise in this case can be appraised based on the fallback method as the full purchase price in the rental agreement (i.e., $750,000). |
| Issue: What is the proper method of appraisement for the leased highway grinder? |
| Item: A “highway grinder” designed for high production grinding/profiling of concrete and asphalt pavements that the Importer plans to bring to the U.S. from Mexico. It was produced in the U.S. in 2019, and currently has 1,380 hours on it. Before importation, the Importer has entered into a lease agreement the lessor, an unrelated entity located in Chile. According to the terms of the draft lease agreement, the Lessor has agreed to lease the highway grinder to the Importer for a term of 12 months. The payment terms state that the monthly fee comprises both a fixed sum of $16,596 plus a variable amount of $37.20 for each hour if monthly use exceeds 180 hours. The agreement also contains a purchase clause allowing the Importer to buy the equipment for $750,000 at the termination of the lease. The purchase clause provides that the agreed purchase price of $750,000 “may be reduced setting off against the purchase price all rental payments effectively paid by the Lessee during the rental period.” |
| Reason: In lease transactions, CBP has accepted appraisement under the fallback method using a modified transaction value based on the option to purchase in the rental contract. Although in this case the right to purchase the merchandise accrues at the end of the lease, rather than at any time during the lease period, in both cases the prices in the option to purchase are net of any rental payments made. Therefore, the merchandise in this case can be appraised based on the full purchase price in the rental agreement (i.e., $750,000). |
| Ruling Date: Sept. 23, 2021 |
H312963: Application for Further Review of Protest No. 3501-20-101587; Lawn Mower Engines; 9817.00.60, HTSUS
| Ruling: The lawn mower engines are not eligible for duty-free treatment under subheading 9817.00.60, HTSUS. The lawn mower engines should be classified under subheading 8407.90.10. |
| Issue: Whether the lawn mower engines are eligible for duty-free treatment under subheading 9817.00.60 |
| Item: Lawn mower engines produced and imported for sale to Toro Company for installation on Toro lawn mowers, classified under heading 8433 |
| Reason: The lawn mower engines were entered by the protestant under subheading 8407.90.90, rather than subheading 9817.00.60. Further, the protestant did not file a written declaration of intent at time of entry. Accordingly, the protestant does not meet the requirements of 19 C.F.R. § 10.133(a) and 19 C.F.R. § 10.134. |
| Ruling Date: July 28, 2021 |