Sets (or kits, for the general public), represent a unique tariff classification challenge. This is because they generally do not have an easily identifiable identity other than “just a box of stuff we sell to rebuild a motor” or make a meal (see below).
If you’ve ever tried to assign an HTS code to a product bundle and felt like you were solving a riddle written by lawyers, you’re not alone. Classifying goods that come packaged as sets, kits, or multiple components is often the definition of gray area.
And yet, getting it right can mean the difference between smooth customs clearance and an expensive dispute. Whether you’re shipping a boxed toolkit, a home gym set, or a “free” product bundled with another, the questions always come down to this:
General Rule of Interpretation 3b states in part “Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for
retail sale…shall be classified as if they consisted of the material or component
which gives them their essential character…”
What drives the classification, and how can you defend it?
Let’s break it down.
First: “set” vs “kit”
A “kit” is something that is disassembled. Think of knockdown furniture from Ikea: you buy a box with a bunch of furniture parts in it that, when assembled, becomes a table. Per General Rule of Interpretation 2, this is an unassembled table. Therefore, it is a kit.
Next: What Qualifies as a “Set” Under the HTS?
Customs doesn’t consider everything bundled in a box a “set.” To qualify as a set under the Harmonized Tariff Schedule, the combined goods must:
- Consist of at least two different articles that are classifiable under separate headings,
- Be packaged together for retail sale, and
- Meet a specific need or carry out a particular activity.
Think: a fondue kit with a burner, pot, skewers, and fuel. Or a shotgun sold with a case and a box of shells. A toolkit is a set, not a kit.
However, a coffee cup packaged with a ballpoint pen meets criteria 1 and 2 above but fails criterion 3. The coffee cup and the pen do not work together to meet a common goal. Therefore, the coffee cup and the pen cannot be treated, for tariff classification purposes, as a set. If sold under one SKU, then for tariff classification purposes, they each must be broken out, with separate HTSUS classifications, separate valuations, and separate countries of origin.
But just because it meets the definition of a set doesn’t mean you’re home free. That’s where “essential character” enters the picture.
Essential Character: Who’s Really in Charge Here?
In classification, essential character is the main driver when it comes to sets. Customs looks at the product bundle and asks: What gives this set its identity?
Take the shotgun example:
- A shotgun, a case, and one box of shells = a set where the shotgun imparts the essential character, so the whole set is classified under the code for the shotgun.
But flip the script:
- 500 cases of shells and a “free” shotgun? Now the shells dominate. The essential character has changed, and with it, the classification.
Essential character is defined any way one chooses: by value, size, weight, cost, role of one item in the set compared to other items, by color, or by any other defensible criterion.
Take the 500 cases of shells and a “free” shotgun. What if the shotgun was a beautiful, fully engraved Fabbri that cost £150,000? The shotgun, not the shells predominates. Therefore, instead of 500 cases of shells with a free shotgun, one is instead buying a very expensive shotgun and getting 500 cases of free shotgun shells (that I would never fire out of that Fabbri).
This isn’t theoretical hair-splitting. CBP leans heavily on essential character to determine duty rates and enforce compliance. When in doubt, they look at what’s driving the consumer’s purchase, the use of the items, and how the product is marketed.
Principal Function: When It’s Not Just About One Part
When there is a multifunction machine Customs will look at the principal function of the item to guide classification.
In the Harmonized System (HS) and the U.S. Harmonized Tariff Schedule (HTSUS), “principal function” and “essential character” are distinct but related concepts used to classify goods, particularly composite goods, sets, and multi-function devices. Each plays a role in interpreting the General Rules of Interpretation (GRIs), especially GRIs 1, 3, and 6.
Principal function typically applies to multifunction products or systems made up of several components, like a home security system with cameras, sensors, a hub, and a monitor.
If the system’s main purpose is surveillance, then it may be classified according to the cameras, even if the other parts are significant.
Principal function is all about the intended use, not just which item is largest or most expensive. If the components work together to achieve a single outcome, the function that defines that outcome leads the classification.
- Essential character is qualitative and requires evaluating nature, role, volume, weight, value, and function.
- Principal function is purpose-driven and often guided by marketing, design intent, and user perception.
It’s 2025. Do people still use clock radios? Of course they do. I have one. However, I cannot tell you the last time I used the radio functionality of the device. I use it as a clock. However, I’ve seen people put clock radios in their work stations so they can listen to the radio all day, only occasionally glancing over at the clock.
Is a clock radio “a clock, with a radio” or “a radio with a clock?”
A pertinent example is the Sony ICF-C1iP, an AM/FM clock radio with a built-in iPod docking station. In CBP Ruling N024500, Customs determined that the principal function of this device was as a radio with a clock, despite its additional iPod docking capability. Therefore, the classification was based on the radio function.
This case illustrates how Customs evaluates the primary purpose of a multifunction product to determine its classification.
The General Electric Spacemaker® Coffee Maker
In the 1970s GE invented and marketed a programmable coffee maker meant to be mounted under a kitchen cabinet, saving counter space. It had a clock, which allowed the machine to be programmed to begin the brew process at a predetermined time. The intention was that the user would add the coffee, add the water, program the machine, then when the user woke up the next day there was fresh coffee waiting to be enjoyed.
Because the coffee maker had a programmable clock, some lateral thinkers had other ideas. They put these multifunction machines in their bedrooms. In the morning, rather than wake to the cacophony of an alarm, or the doomsaying of the news, they would hear the gentle sound of percolation, and smell the rich aroma of freshly brewed 100% Arabica beans.
To them, the Spacemaker(r) was, ultimately, an alarm clock.
But let’s be realistic: the machine’s principal function (essential character), its predominant use, its intended use, and how it is marketed is as a coffee maker.
Classification Isn’t Black and White. It’s Defensible or It’s Not
Like much of trade compliance, HTS classification for kits and sets isn’t about finding the “right” answer. It’s about building a defensible one.
CBP may not always agree with your classification, but if you’ve documented your reasoning based on essential character, principal function, and the relevant legal notes, you have a position worth standing on.
That’s where we come in.
Need Help Navigating the Gray Areas?
At O’Meara & Associates, we specialize in helping importers make confident, compliant classification decisions, even when the goods aren’t so simple.
If your shipments include sets, bundles, kits, or complex systems, we’ll help you get it right and make sure you’re ready if CBP ever asks questions.
Contact us to build a classification strategy that holds up under scrutiny and keeps your goods moving.
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