Customs
Export
HTSUS
Tariff Classification
Articles that are
classifiable under two or more headings.
Composite goods
within the meaning of HTSUS General Rule of Interpretation (“GRI”) 3(b).
GRI 3 provides that
when goods are prima facie classifiable under two or more headings,
classification shall be effected according to the three subsections of GRI 3:
GRI 3(a), 3(b), and 3(c).
Appeal from the
United States Court of International Trade in No. 1:14-cv-00061-RWG.
This tariff
classification case comes to us from the Court of International Trade (“the
Trade Court”). The case involves the proper classification under the Harmonized
Tariff Schedule of the United States (“HTSUS”) of certain products imported by
appellant Home Depot U.S.A., Inc. (“Home Depot”).
The products are
doorknobs with integral locks, such as those used on the outer entry doors of
homes. U.S. Customs and Border Protection (“Customs”) classified the products
as locks under HTSUS heading 8301, and the Trade Court affirmed. Home Depot
argues that the products should have been classified under HTSUS heading 8302
as metal fittings for doors, including metal doorknobs.
We vacate the
decision of the Trade Court and hold that the products are properly classified
as composite goods within the meaning of HTSUS General Rule of Interpretation
(“GRI”) 3(b). We remand to the Trade Court to make a finding as to the
“essential nature” of the composite goods, as directed by GRI 3(b), in order to
determine under which of the two competing headings the goods should be
classified.
(…) Knobs in the
third class, known as entry knobs, are the type of knobs at issue in this case.
The subject entry knobs all have a keyed cylinder lock mechanism by which the
door can be locked and unlocked by a key from the outside, and they all have a
thumbturn by which the door can be locked and unlocked from the inside.
The subject imported
articles are four types of Defiant-brand entry knobsets. The knobsets are
primarily made of steel, and each consists of an interior knob assembly, an
exterior knob assembly, a key cylinder, a latch mechanism assembly, a flanged
strike plate, and mounting hardware.
Customs liquidated
the articles under HTSUS subheading 8301.40.6030, which covers “locks (key,
combination or electrically operated), of base metal,” and in particular “door
locks, locksets and other locks suitable for use with interior or exterior
doors (except garage, overhead or sliding doors).” Home Depot protested
Customs’ classification of the merchandise. Home Depot argued that the articles
should have been liquidated under HTSUS subheading 8302.41.60, which covers
“base metal . . . fittings and similar articles suitable for . . . interior and
exterior doors.” Customs denied the protest, after which Home Depot filed this
action in the Trade Court.
On cross-motions for
summary judgment, the Trade Court held that Customs had appropriately
classified the subject articles under HTSUS heading 8301. The court therefore
denied Home Depot’s motion for summary judgment and granted the government’s
cross-motion for summary judgment.
The Trade Court
concluded that the subject articles are described in whole by heading 8301, in
that (1) the articles are made of base metal, (2) each article is a “lock,” as
it is a “device for securing a door consisting . . . of a bolt or system of
bolts propelled and withdrawn by a mechanism by a key, dial, etc.,” and (3)
each article is “key-operated,” because “a key produces an appropriate effect
of locking or unlocking the device.” The court explained that “knobs can be,
and are here, parts of a lock.” A lock, the court added, “is a multi-component
device, of which one component is a lever. In some types of locks, the lever is
a door knob.”
The court held that
the subject articles are not described in whole by heading 8302. While
acknowledging that the articles are clearly “knobs for doors,” as described in
Explanatory Note (D)(7) to heading 8302, the court noted that the articles
nonetheless constitute more than simply doorknobs. Each article, the court
explained, “is a device for securing a door, consisting of many parts.
Together, those parts constitute a lock. The interior and exterior knobs are
just two of those many parts.” For that reason, the court concluded that
although “the subject articles in-clude ‘knobs for doors, including
those for locks’ [as provided in Explanatory Note (D)(7) for heading 8302], the
subject articles are not described in whole by heading [8302] or by the term ‘knobs
for doors.’”
Home Depot appealed
to this court. We review the Trade Court’s grant of summary judgment without
deference. We also afford de novo review to questions of law, including the
interpretation of the terms of the HTSUS.
We conclude that the products
are prima facie classifiable under both headings and that the case must be
resolved by resort to GRI 3, which deals with articles that are classifiable
under two or more headings.
(…) The term “lock”
is not defined in the HTSUS, and for terms not defined in the tariff schedule,
we have held that the common and commercial meaning of the term governs. See
LeMans Corp. v. United States, 660 F.3d 1311, 1316 (Fed. Cir. 2011); Rollerblade,
Inc. v. United States, 282 F.3d 1349, 1352 (Fed. Cir. 2002); Brookside
Veneers, Ltd. v. United States, 847 F.2d 786, 789 (Fed. Cir. 1988).
(…) We do not find
the Explanatory Notes to be decisive in favor of either party.
(…) GRI 3 in turn
provides that when goods are prima facie classifiable under two or more headings,
classification shall be effected according to the three subsections of GRI 3:
GRI 3(a), 3(b), and 3(c).
GRI 3(a) states that
the heading “which provides the most
specific description shall be preferred to headings providing a more
general description. However, when two or more headings each refer to part only
of the materials or substances contained in mixed or composite goods . . .
those headings are to be regarded as equally specific in relation to those
goods, even if one of them gives a more complete or precise description of the
goods.”
GRI 3(b) provides, in
pertinent part, that composite goods made up of different components that
“cannot be classified by reference to 3(a), shall be classified as if they
consisted of the material or component which gives them their essential character, insofar as this
criterion is applicable.” See La Crosse Tech., Ltd. v. United States,
723 F.3d 1353, 1359–60 (Fed. Cir. 2013).
GRI 3(c) provides
that “when goods cannot be classified by reference to 3(a) or 3(b), they shall
be classified under the heading which
occurs last in numerical order among those which equally merit
consideration.”
We conclude that GRI
3(b) governs the classification of the subject articles in this case. As to the
specificity of the description of the articles in the competing headings, we
conclude that GRI 3(a) does not apply, because the two headings “each refer to
part only” of the materials in the composite goods, and thus, according to GRI
3(a), the competing headings must be regarded as equally specific. In
particular, heading 8301 refers to the lock component of the subject articles,
which functions to lock and unlock the door, while heading 8302 refers to the
doorknob component, which functions to allow the door to be grasped, opened,
closed, and latched.
(…) One example of an
article that has been found to be a composite good under GRI 3 is the type of
product that was at issue in CamelBak Prods., LLC v. United States, 649
F.3d 1361 (Fed. Cir. 2011). That case involved back-mounted packs that had one
compartment for storing personal effects and a separate insulated compartment
for storing liquid and delivering the liquid to the user in a “hands-free”
fashion. The Trade Court ruled that the products were backpacks, but we
disagreed. We held that the products were classifiable both under the
subheading for “travel, sports, and similar bags” and under the separate
subheading for “beverage bags.” We therefore held that the products at issue
were composite goods whose classification was governed by GRI 3(b). CamelBak,
649 F.3d at 1367–69.
(…) In CamelBak,
we remanded so that the Trade Court could make the factual determination as to
the “essential character” of the subject articles and make the classification
determination based on its conclusion. 649 F.3d at 1369. We follow the same
course here and remand to the Trade Court for further proceedings consistent
with this opinion.
(U.S. Court of
Appeals for the Federal Circuit, February 15, 2019, Home Depot U.S.A., Inc., v.
United States, Docket 2018-1206)
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