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Classification Case Remanded After Court Rules Products are Composite Goods

Tuesday, February 19, 2019
Sandler, Travis & Rosenberg Trade Report

In Home Depot U.S.A. Inc. v U.S., the Court of Appeals for the Federal Circuit has vacated the Court of International Trade’s decision that key-operated locking hardware articles (entry door knobs) are classified as door locks suitable for use with interior or exterior doors under HTSUS 8301.40.6030 (5.7 percent duty).

The subject goods are made of stainless steel, brass, or nickel and are packaged and sold with the following constituent parts: an exterior door knob with trim, an interior door knob with trim, a latch component, a flanged strike plate, keys, and installation hardware. Each knob has a locking feature: a thumbturn on the interior knob and a slot for a key on the exterior knob.

The CIT ruled that these articles are locks in that they are devices for securing a door consisting of a bolt or system of bolts propelled and withdrawn by a key, dial, etc. The fact that these particular locks incorporate door knobs while others do not, the court stated, does not mean they are in character or function something other than described by HTSUS heading 8301.

The CIT rejected Home Depot’s argument that the articles are classified as metal fittings suitable for interior and exterior doors under HTSUS 8302.41.6045 (3.9 percent duty). The CIT added that the door knob components do not render the articles composite goods under GRI 3(b).

However, the CAFC has vacated this decision and holds that the products are properly classified as composite goods under GRI 3(b). The CAFC explains that the products are classified under both heading 8301, because they consist in part of key-operated locks, and heading 8302, because its terms are broad enough to include knob sets regardless of whether they are fitted for locking mechanisms.

The case has therefore been remanded to the CIT to determine the essential nature of the products and thus which subheading under which they should be classified.

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