Trade knowledge / When Classifying Parts Using HTS Codes, Read the Notes!
Date: 2016-10-01
When Classifying Parts Using HTS Codes, Read the Notes!
We all know intuitively what a part is. Nearly every company has a parts department. These are the areas of the company staffed by those magical people who never throw anything away and always seem to be able to find that one widget or what is needed to repair a product and satisfy a customer.
It comes as a surprise to some that the Harmonized Tariff Schedule (HTS) uses the word part with a much narrower and precise definition. What we call a part in industry is rarely what the HTS code refers to as a “part” or “parts thereof.” As examples, it is not uncommon to find headings in the tariff such as:
8508 Vacuum cleaners; parts thereof, or
8409 Parts suitable for use solely or principally with the engines of heading 8407 or 8408
You might logically presume, based on the description to heading 8508, that a specifically designed machine screw required to assemble a vacuum cleaner would be classified in heading 8508 as a part. You would, however, be incorrect. General Rule of Interpretation 1 (GRI 1) of the HTS exhorts us to classify “… according to the terms of the headings and any relative section or chapter notes….”
When we take the time to read and study the notes of the tariff we run across the following in Section XV.
Section XV
2. Throughout the tariff schedule, the expression "parts of general use" means:
(a) Articles of heading 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metals;
(b) Springs and leaves for springs, of base metal, other than clock or watch springs (heading 9114); and
(c) Articles of heading 8301, 8302, 8308 or 8310 and frames and mirrors, of base metal, of heading 8306.
In Chapters 73 to 76 and 78 to 82 (but not in heading 7315) references to parts of goods do not include references to parts of general use as defined above.
I don’t know about you, but when I read a list of numbers like that above, my eyes glaze over. Let’s decipher this note and review the headings it references.
HeadingDescription
7307Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel:
7312Stranded wire, ropes, cables, plaited bands, slings and the like, of iron or steel, not electrically insulated:
7315Chain and parts thereof, of iron or steel
7317Nails, tacks, drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, of iron or steel, whether or not with heads of other material, but excluding such articles with heads of copper:
7318Screws, bolts, nuts, coach screws, screw hooks, rivets, cotters, cotter pins, washers (including spring washers) and similar articles, of iron or steel:
8301Padlocks and locks (key, combination or electrically operated), of base metal; clasps and frames with clasps, incorporating locks, of base metal; keys and parts of any of the foregoing articles, of base metal:
8302Base metal mountings, fittings and similar articles suitable for furniture, doors, staircases, windows, blinds, coachwork, saddlery, trunks, chests, caskets or the like; base metal hat racks, hat-pegs, brackets and similar fixtures; castors with mountings of base metal; automatic door closers of base metal; and base metal parts thereof:
8306Bells, gongs and the like, nonelectric, of base metal; statuettes and other ornaments, of base metal; photograph, picture or similar frames, of base metal; and base metal parts thereof:
8308Clasps, frames with clasps, buckles, buckle clasps, hooks, eyes, eyelets and the like and parts thereof, of base metal, of a kind used for clothing, footwear, awnings, handbags, travel goods or other made up articles; tubular or bifurcated rivets of base metal; beads and spangles of base metals:
8310Sing plates, name plates, address plates and similar plates, numbers, letters and other symbols, and parts thereof, of base metal, excluding those of heading 9405...
A brass screw would not be classified in heading 7318; rather it would be within heading 7415, which allows for screws of copper. (Read the notes to Chapter 74 to learn that brass articles are classified in this chapter.) Nevertheless, a brass screw is also considered a part of general use per the terms of note 2 of section XV.
To reinforce the idea of parts of general use we find the following note, or a version thereof, at the beginning of sections XVI and XVII and to chapters 90 through 96:
This chapter (section) does not cover parts of general use, as defined in note 2 to section XV, of base metal (section XV), or similar goods of plastics (chapter 39).
This note applies to goods from chapters 84 through 96, the majority of manufactured articles.
By reading these notes we now know that whenever we encounter metal or plastic articles like screws, nuts, bolts, cable, buckles, locks, chains and tubing we should classify these items, not as parts of a finished good, but within the appropriate heading in which they are specifically mentioned. This note applies even when the part of general use was specifically engineered for a good.
Interestingly, the electric motor for the vacuum isn't even considered a part because it's not specified in the list of parts of general use we've been discussing. The reasons why are found within the notes. This time it's a much longer note at the beginning of Section XVI:
Section XVI
2. Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:
(a) Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;
(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;
(c) All other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548.
To understand this note we need to read between the lines, or the headings as the case might be. The headings mentioned in the note, 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548, are all parts headings for goods mentioned within Chapters 84 and 85 of the HTS.
Part (a) of this note directs us to first ignore the parts headings in favor of a more specific description elsewhere within chapters 84 and 85. Let us look at a few of those specific headings. While it may seem so, the following list is not comprehensive.
HeadingDescription
8407Spark-ignition reciprocating or rotary internal combustion piston engines:
8408Compression-ignition internal combustion piston engines (diesel or semi-diesel engines):
8412Other engines and motors, and parts thereof:
8413Pumps for liquids, whether or not fitted with a measuring device; liquid elevators; part thereof:
8414Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; parts thereof:
8425Pulley tackle and hoists other than skip hoists; winches and capstans; jacks:
8480Molding boxes for metal foundry; mold bases; molding patterns; molds for metal (other than ingot molds), metal carbides, glass, mineral materials, rubber or plastics:
8481Taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves; parts thereof:
8482Ball or roller bearings, and parts thereof:
8483Transmission shafts (including camshafts and crankshafts) and cranks; bearing housings, housed bearings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints); parts thereof:
8484
Gaskets and similar joints of metal sheeting combined with other material or of two or more layers of metal; sets or assortments of gaskets and similar joints, dissimilar in composition, put up in pouches, envelopes or similar packings; mechanical seals:
8501Electric motors and generators (excluding generating sets):
8502Electric generating sets and rotary converters:
8504Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof:
8505Electromagnets; permanent magnets and articles intended to become permanent magnets after magnetization; electromagnetic or permanent magnet chucks, clamps and similar holding devices; electromagnetic couplings, clutches and brakes; electromagnetic lifting heads; parts thereof:
8506Primary cells and primary batteries; parts thereof:
8507Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof:
8511Electrical ignition or starting equipment of a kind used for spark-ignition or compression-ignition internal combustion engines (for example, ignition magnetos, magneto-dynamos, ignition coils, spark plugs and glow plugs, starter motors); generators (for example, dynamos, alternators) and cut-outs of a kind used in conjunction with such engines; parts thereof:
8512Electrical lighting or signaling equipment (excluding articles of heading 8539), windshield wipers, defrosters and demisters, of a kind used for cycles or motor vehicles; parts thereof:
8518Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof:
8523Discs, tapes, solid-state non-volatile storage devices, "smart cards" and other media for the recording of sound or of other phenomena, whether or not recorded, including matrices and masters for the production of discs, but excluding products of Chapter 37:
8531Electric sound or visual signaling apparatus (for example, bells, sirens, indicator panels, burglar or fire alarms), other than those of heading 8512 or 8530; parts thereof:
8532Electrical capacitors, fixed, variable or adjustable (pre-set); parts thereof:
8533Electrical resistors (including rheostats and potentiometers), other than heating resistors; parts thereof:
8534Printed circuits
8535 -
8536Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for example, switches, fuses, lightning arresters, voltage limiters, surge suppressors, plugs and other connectors, junction boxes), for a voltage exceeding 1,000 V:
8537Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517:
8539Electrical filament or discharge lamps, including sealed beam lamp units and ultraviolet or infrared lamps; arc lamps; parts thereof:
8541Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes; mounted piezoelectric crystals; parts thereof:
8542Electronic integrated circuits; parts thereof:
8544Insulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors:
8546Electrical insulators of any material:
8547Insulating fittings for electrical machines, appliances or equipment, being fittings wholly of insulating material apart from any minor components of metal (for example, threaded sockets) incorporated during molding solely for the purposes of assembly, other than insulators of heading 8546; electrical conduit tubing and joints therefor, of base metal lined with insulating material:
While it took some work, we find that by applying Note 2 of Section XVI, we cannot classify an electric motor as a part of vacuum under 8508 because it is specifically mentioned in heading 8501 and must be classified there first.
Not intending to leave out our friends working with automotive and other vehicles we find a similar note in Section XVII that states:
Section XVII
2. The expressions "parts" and "parts and accessories" do not apply to the following articles, whether or not they are identifiable as for the goods of this section:
(a) Joints, washers or the like of any material (classified according to their constituent material or in heading 8484) or other articles of vulcanized rubber other than hard rubber (heading 4016);
(b) Parts of general use, as defined in note 2 to section XV, of base metal (section XV) or similar goods of plastics (chapter 39);
(c) Articles of chapter 82 (tools);
(d) Articles of heading 8306;
(e) Machines or apparatus of headings 8401 to 8479, or parts thereof; articles of heading 8481 or 8482 or, provided they constitute integral parts of engines or motors, articles of heading 8483;
(f) Electrical machinery or equipment (chapter 85);
(g) Articles of chapter 90;
(h) Articles of chapter 91;
(i) Arms (chapter 93);
(j) Lamps or lighting fittings of heading 9405; or
(k) Brushes of a kind used as parts of vehicles (heading 9603).
This rule opens up nearly the entire tariff, and again points the classifier first to the specific heading naming the article before resorting to the parts classification. The issues we have discussed to this point also apply to vehicles in Section XVII. The parts provisions, however, are even broader.
A detailed discussion of vehicle parts can be found at the Customs and Border Protection website.
The information we've discussed thus far is by no means a comprehensive explanation of the section and chapter notes involving parts. This is an introduction to a few of the more important notes buried within the tariff. Note the guidance is not exclusive to products in Sections XVI and XVII, but applies to all parts classifications. Read each sections' notes and chapters carefully to glean additional details and instructions relating to parts.
When is it appropriate to use the parts provisions? The parts provisions are there for instances when:
The part is not elsewhere specifically provided for within the tariff; and
The part is identifiable by shape or other characteristic as being an article solely or principally used as a part.
Parts have other characteristics:
They cannot be used on their own; or
They must be combined with other articles to be used; or
They are integral components, without which the goods to which they are attached would not function; or
They lend to the safe and efficient functioning of a product.
More generally stated composite subassemblies, body panels, housings, and structural elements of a good can be considered parts. Materials and individual functioning components usually have their own classification.
I often refer to GRI 1 as the needle-in-the-haystack rule. How do you find a needle in a haystack? Well you either search until you find it or you remove all of the hay and you are left with a needle.
A part is like a needle. You search the HTS until you find its specific classification. You can also eliminate all of the other classifications until you are left with nothing but the parts classification. But, of course, the HTS gives you instructions as you search in the form of the section and chapter notes.
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