CLA-2-RR:CTF:TCM 967519 IOR
Tariff No.: 8537.10.90; 8538.90.80
Stanley J. Marcus, Esq.
Bryan Cave LLP
700 Thirteenth Street, NW
Washington DC 20005-3960
Re: Fisher-Rosemount Delta VTM process control system and MD controller module; NY K88152
Dear Mr. Marcus:
This is in response to your letter of December 22, 2004, on behalf of Fisher-Rosemount Systems, Inc., concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS), of the Delta VTM process control system (Delta VTM) and MD controller module, requesting reconsideration of New York Ruling (NY) K88152, dated August 18, 2004, issued by the Customs and Border Protection (CBP), National Commodity Specialist Division. This decision follows a December 22, 2005 teleconference between you, a representative of Emerson Process Management, and a member of the Tariff Classification and Marking Branch.
In your submission of December 22, 2004, you describe the Delta VTM as an Ethernet-based system that receives information from an industrial plant’s process control instruments about the instruments’ readings of specified conditions, and communicates to those instruments information about how they should adjust the functions they perform to enable an industrial plant to operate and function properly. The Delta VTM is used in various industries, including the pharmaceuticals and biotech industries, the oil, gas and hydrocarbons industries, the chemicals industries, the pulp and paper industries, the food and beverage industries, and the metals, mining and minerals industries. The Delta VTM consists of a computer with Windows NT workstation 4.0, input, output, interface and power supply modules, terminal blocks, the MD Controller module, an Ethernet switch and various kinds of cables. A sample of the MD Controller, input, output and power supply modules installed on a rack was provided for our examination. You state in the submission that there is no need for human beings at central control to determine what they should or should not do as a consequence of data received from a device monitor, as the system communicates information and instructions automatically. For further description you refer to enclosed product literature, including diagrams.
The MD Controller module is described as being an integral part of the Delta VTM system. It is largely made from printed circuit assemblies (PCAs). An examination of a sample reveals that the MD Controller module consists of several PCAs enclosed within a plastic housing that is inserted into a rack. Its function is the communication of information among the process control field devices and the other components of the Delta VTM, so that each device knows what the other is doing and necessary adjustments in rate of flow, temperature or other variables in the production process can be made. The communication is done through digital communications at a speed of 100MB per second, utilizing a 200MHz processor chip. You state that the MD Controller module consists of an electrical apparatus for line telephony. According to the literature, the MD Controller module provides communication and control between the field devices and the other nodes on the control network, and has memory for large batch and other memory-intensive applications. The MD Controller module manages all control activities for the input/output (I/O) interface channels. It also manages all communication functions for the system. The MD Controller can identify all process control field instruments and I/O channels located on the network system. The controller executes control strategy. Information from an input channel is received, control strategy applied, and data sent to output channels.
Examination of the sample indicates that the I/O modules consist of PCAs within a plastic housing. The I/O modules are also inserted into the rack. The I/O modules are connected to the plant equipment through terminal blocks.
You provide the following examples of how the Delta VTM functions:
It can…communicate among the flow metering devices in a natural gas plant to determine whether the flow is in accordance with plan and instruct that the flow-rate in a given part of the system be increased or decreased in order to insure that all parts of the system be increased or decreased in order to insure that all parts of the system are working in accordance with the overall flow-rate. It can also communicate among the temperature monitoring devices in a soft-drink facility to determine whether the temperature at a given location is in accordance with specifications at that location and order that appropriate modifications be made.
In NY K88152, the Delta VTM was classified under heading 8537, HTSUS, as “[b]oards, panels, consoles…, and other bases,…,for electric control or the distribution of electricity,…. ” The MD Controller module was classified in heading 8538, HTSUS, as “[p]arts suitable for use solely or principally with the apparatus of heading 8535, 8536 or 8537.” It is your position that the Delta VTM and the MD Controller module should be classified under heading 8517, HTSUS, as “[e]lectrical apparatus for line telephony or line telegraphy” and parts thereof, on the basis that the function of the Delta VTM is communications rather than electric control.
What is the classification of the Delta VTM Process Control System, and the MD Controller Module, under the HTSUS?
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS provisions under consideration for the Delta VTM Process Control System, and the MD Controller Module are as follows:
8517 Electrical apparatus for line telephony or line telegraphy, including
line telephone sets with cordless handsets and telecommunication
apparatus for carrier-current line systems or for digital line systems;
videophones; parts thereof:
8517.80 Other apparatus:
Other parts, incorporating printed circuit assemblies:
Parts for articles of subheadings 8517.22,
8517.30, 8517.50.50 and 8517.80.10:
8537 Boards, 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, …:
8537.10 For a voltage not exceeding 1,000 V:
8538 Parts suitable for use solely or principally with the apparatus of
heading 8535, 8536 or 8537:
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive nor legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The ENs 85.17 provide as follows for 85.17:
The term “electrical apparatus for line telephony or line telegraphy” means apparatus for the transmission of speech or other sounds (telephony) or codes which represent characters, graphics or images or other data (telegraphy) between two points by variation of an electric current or optical wave flowing in a line communications medium….
The heading covers all such electrical apparatus designed for this purpose, including the special apparatus used for carrier-current line systems or for digital line systems.
The subject Delta VTM is not for line telephony or line telegraphy. The object of the Delta VTM is not to transmit speech, sounds, codes or data, but to implement specific functions, and to control various types of equipment and apparatus. Communication is inherent in such control functions. In the examples of the natural gas plant and the soft-drink facility applications, the communication results in instructions to appropriately modify the functioning of a particular piece of equipment. We note that with respect to the MD Controller you proposed classification in subheading 8517.90.34, HTSUS. However, we note that if the Delta VTM were classified in subheading 8517.80.10, HTSUS as you propose, the correct subheading for the MD Controller would be 8517.90.32, HTSUS.
The ENs to 85.37 provide that the goods of the heading “vary from small switchboards with only a few switches, fuses, etc. (e.g., for lighting installations) to complex control panels for machine-tools, rolling mills, power stations, radio stations, etc., including assemblies of several of the articles cited in the text of this heading.” The ENs to 85.37 indicate that the heading also covers “’Programmable controllers’ which are digital apparatus using a programmable memory for the storage of instructions for implementing specific functions such as logic, sequencing, timing, counting and arithmetic, to control, through digital or analog input/output modules, various types of machines.” Inherent in the “control” function of the Delta VTM is the ability to communicate, and such communication ability does not preclude classification in heading 8537.
The Delta VTM consists of several interconnected units. Under Section XVI Note 4, such machines composed of interconnected units, intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or 85, falls to be classified as a functional unit in the heading appropriate to that function. We find that the subject system is intended to contribute together as an article of heading 8537, HTSUS. In order to be classified in heading 8537, HTSUS, the “boards, panels, consoles, desks, cabinets and other bases” must be equipped with two or more apparatus of heading 8535 or 8536. We find that at a minimum, the rack which the I/O modules and MD Controllers are plugged into is equipped with connectors classifiable under headings 8535 or 8536, HTSUS. Although Fisher Rosemount considers the rack an insignificant aspect of the Delta VTM, without it the system could not function as there would not be any connection between the I/O modules and MD Controller. In addition, the terminal blocks by which the I/O modules are connected to the plant equipment are apparatus of headings 8535 or 8536, HTSUS.
It is your position that the principal function of items covered in heading 8537, HTSUS, is the connection or protection of electrical circuits, such as switches, relays, plugs, sockets, lamp-holders, junction boxes, fuses, lightning arresters, voltage limiters and surge suppressors, and in contrast the purpose of the Delta VTM is to communicate. However, CBP has consistently ruled that apparatus, which uses electricity but functions to control machinery or equipment, is classifiable in heading 8537, HTSUS. See, e.g., HQ 085281, dated November 8, 1989 (optimizer system in which dimensions of logs and boards are digitally input to a process controller which makes necessary calculations for optimal method to cut logs, and then instructs the saws how to slice the logs), HQ 950120, dated May 13, 1992 (laser vision system in which controller directs servomotors to move welding apparatus), HQ 954972, dated January 23, 1994 (brake and steering control unit (BSCU) in which the pilot sends instructions to the BSCU in the form of database signals, which the BSCU processes and transmits to servovalves on each wheel, and sensors on brakes and nose wheel transmit positional data back to the cockpit to insure proper brake function), and NY H82946, dated July 25, 2001 (a process control system which allowed a cement truck driver to make selections on a self-service loading kiosk, which interfaces with a controller, resulting in the automatic loading of cement into the truck).
The Delta VTM operates to control plant equipment by receiving data from the equipment, forwarding the data to central control, receiving instructions from the central control and in turn sending the instructions to the plant equipment. Your submission does not provide any information or argument which persuades us that heading 8537, HTSUS, is not the appropriate heading for the Delta VTM. The Delta VTM is classified under heading 8537, HTSUS, specifically under subheading 8537.10.90, HTSUS, as “[b]oards, 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, …: For a voltage not exceeding 1,000 V: Other.”
As a part of the Delta VTM, the MD Controller, if imported separately, is classified in heading 8538, HTSUS, specifically subheading 8538.90.80, HTSUS, as “[p]arts suitable for use solely or principally with the apparatus of heading 8535, 8536 or 8537: Other: Other: Other.”
You assert that components of a system similar to the MD Controller have been classified in heading 8517, HTSUS, in HQ 962564, dated March 2, 2000. HQ 962564 pertained to components of Fisher-Rosemount’s RS3 Control System. In NY 803970, dated December 2, 1994, the RS3 system was classified in heading 8543, HTSUS, as “[e]lectrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter.” The distinction between the RS3 and the Delta VTM, is that the RS3 appears to be a supervisory control system that oversees the operations of systems such as the Delta VTM. In HQ 962564, only the parts of the RS3 were at issue.
Based on the above analysis, we affirm the holding in NY K88152, dated August 18, 2004.
By application of GRI 1, the Delta VTM process control system is classified in heading 8537, HTSUS, specifically subheading 8537.10.9070, HTSUSA, which provides for: “[b]oards, 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, …: For a voltage not exceeding 1,000 V: Other….Other: Other,” with a column one, general duty rate of 2.7% ad valorem. By application of GRI 1, the MD Controller, if imported separately, is classified in heading 8538, HTSUS, specifically 8538.90.8080, HTSUSA, which provides for: “[p]arts suitable for use solely or principally with the apparatus of heading 8535, 8536 or 8537: Other: Other: Other…Other: Other,” with a column one, general duty rate of 3.5% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usits.gov/tata/hts/.
Myles B. Harmon, Director
Commercial and Trade Facilitation Division