CBP Rules That Tool Set Is Subject to Multiple Section 301 Tariffs
Tool sets imported from China by the Apex Tool Group can be hit with multiple Section 301 tariffs, CBP said in an April 10 ruling. As was the case in a September 2018 ruling involving Apex (see 1810100040), the tool set is classified based on the article subject to the highest rate of duty under General Rule of Interpretation 1. CBP ruled that the tool sets are dutiable at a 38.9% rate.
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CBP's previous ruling on Apex, which is represented by Marilyn-Joy Cerny at Sandler Travis, said that a similar tool set's classification can consider the Section 301 tariffs in determining the article subject to the highest duty rate. The same is true of this tool set, using the applicable duty rate for 8466.10.0175 of 28.9%, based on the regular 3.9% rate plus the Section 301 25 percent tariff. This set is classifiable as 8206.00.00 as "Tools of two or more headings of 8202-8205, put up in sets for retail sale."
Since the Apex ruling last year, though, the Office of the U.S. Trade Representative instituted the third tranche of Section 301 tariffs. Those 10 percent tariffs include subheading 8206.00.00 and, as a result, increase the duty rate on the tool set up to 38.9%. Apex argued that the 28.9% rate should apply and the application of the 10 percent tariff "would result in an 'anomalous result' of a 38.9% duty rate for the merchandise that USTR did not intend."
CBP disagreed. "Our analysis here focuses on the language of the provision," the agency said. "The Section 301 measures applicable to the set itself, however, state that '[a]ll products of China that are classified in the subheadings enumerated in U.S. note 20(f) to subchapter III are subject to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.03.' The inclusion of 'additional' in the text of this provision indicates that the 10% Section 301 measures are added to any other duties owed on the merchandise. Because the language of these provisions is clear, we find Apex’s argument that USTR did not intend for such a high rate of duty to apply to the product unpersuasive."