CLA-2 OT:RR:CTF:TCM H249299 NCD
Mr. Bryan S. Bellamy
LCB/CCS Case-Mate Incorporated
2048 Weems Rd.
Tucker, GA 30084
RE: Revocation of NY N233902, NY N231545, NY N004618 and NY N232914; Modification of NY N233370; Classification of rechargeable battery packs
Dear Mr. Bellamy:
This letter is in reference to New York Ruling Letter (“NY”) N233902, issued to you on October 16, 2012, concerning the tariff classification of an external battery pack for iPhone 4/4s. In that ruling, U.S. Customs and Border Protection (“CBP”) classified the subject battery pack in subheading 8504.40.85, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Electrical transformers, static converters (for example rectifiers) and inductors; parts thereof: Static converters: For telecommunication apparatus.”
We have reviewed N233902, and found it to be incorrect. We have also reviewed NY N231545, dated September 11, 2012, and NY N004618, dated December 26, 2006, and NY N232914, dated September 11, 2012, which classify similar merchandise, and found them to be incorrect. We have also reviewed NY N233370, dated October 15, 2012, and found it to be partially incorrect. For the reasons that follow, we hereby revoke NY N233902, NY N231545, NY N004618, and NY N232914, and modify NY N233370.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice of the proposed action was published in the Customs Bulletin, Vol. 49, No. 16, on April 22, 2015. No comments were received in response to the notice.
FACTS:
The subject merchandise consists of various types of rechargeable battery packs. In NY N233902, NY N233370, NY N231545, and NY N232914, CBP classified external rechargeable battery packs for iPhones and other electronic devices. Each of these batteries is a lithium ion battery that is built into a plastic cover for the iPhone or other electronic device. In NY N233370, the battery pack also contained a built-in paging alarm. In NY N231545, the battery pack was imported with two sets of plugs and mini-outlets, a combination car/wall charger, and an adapter that are imported within a zippered carrying case and packaged ready for retail sale. In each of these rulings, CBP classified the instant merchandise in subheading 8504.40.85, HTSUS, which provides for “Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof: Static converters: For telecommunication apparatus.”
In NY N004618, CBP classified two types of portable rechargeable power stations that jump-start stranded vehicles. They contain rechargeable batteries, cables, lights, adapters, sockets and fuses, all contained in a single plastic housing. The top of this housing has a handle that makes the item portable. In NY N004618, CBP classified this merchandise in subheading 8504.40.95, HTSUS, which provides for “Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof: Static converters: Other.”
ISSUE:
Whether battery packs that charge electronic devices are classified as static converters of heading 8504, HTSUS, or as electric storage batteries of heading 8507, HTSUS?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes.
The HTSUS provisions under consideration are as follows:
8504 Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof:
8507 Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof:
Note 3 to Section XVI, HTSUS, of which headings 8504 and 8507, HTSUS, are a part, provides that:
Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN to heading 8504, HTSUS, states, in pertinent part, the following:
The apparatus of this group are used to convert electrical energy in order to adapt it for further use. They incorporate converting elements (e.g., valves) of different types. They may also incorporate various auxiliary devices (e.g., transformers, induction coils, resistors, command regulators, etc.). Their operation is based on the principle that the converting elements act alternatively as conductors and non-conductors.
The fact that these apparatus often incorporated auxiliary circuits to regulate the voltage of the emerging current does not affect their classification in this group, nor does the fact that they are sometimes referred to as voltage or current regulators.
This group includes:…
(D) Direct current converters by which direct current is converted to a different voltage…
This heading also includes stabilised suppliers (rectifiers combined with a regulator), e.g., uninterruptible power supply units for a range of electronic equipment.
The EN to heading 8507, HTSUS, states, in pertinent part, the following:
Electric accumulators (storage batteries or secondary batteries) are characterised by the fact that the electrochemical action is reversible so that the accumulator may be recharged. They are used to store electricity and supply it when required. A direct current is passed through the accumulator producing certain chemical changes (charging); when the terminals of the accumulator are subsequently connected to an external circuit these chemical changes reverse and produce a direct current in the external circuit (discharging). This cycle of operations, charging and discharging, can be repeated for the life of the accumulator.
Accumulators consist essentially of a container holding the electrolyte in which are immersed two electrodes fitted with terminals for connection to an external circuit. In many cases the container may be subdivided, each subdivision (cell) being an accumulator in itself; these cells are usually connected together in series to produce a higher voltage. A number of cells so connected is called a battery. A number of accumulators may also be assembled in a larger container. Accumulators may be of the wet or dry cell type…
Accumulators are used for supplying current for a number of purposes, e.g., motor vehicles, golf carts, fork-lift trucks, power hand-tools, cellular telephones, portable automatic data processing machines, portable lamps….
Accumulators containing one or more cells and the circuitry to interconnect the cells amongst themselves, often referred to as "battery packs", are covered by this heading, whether or not they include any ancillary components which contribute to the accumulator’s function of storing and supplying energy, or protect it from damage, such as electrical connectors, temperature control devices (e.g., thermistors), circuit protection devices, and protective housings. They are classified in this heading even if they are designed for use with a specific device.
NY N233902, NY N233370, NY N231545, NY N232914, and NY N004618 classified the subject merchandise as static converters of heading 8504, HTSUS. In HQ H176833, dated November 17, 2011, CBP defined “static converter” as:
“[a] unit that employs solid state devices such as semiconductor rectifiers or controlled rectifiers (thyristors), gated power transistors, electron tubes, or magnetic amplifiers to change ac power to dc power, dc power to ac power, or fixed frequency ac power to variable frequency ac power.” According to EN 85.04(II), a static converter is “used to convert electrical energy in order to adapt it for further use.” EN 85.04(II) further states that rectifiers, inverters, alternating current converters, cycle converters and direct current converters are all examples of static converters.
See HQ H176833; ENI Technology Inc. v. United States, 641 F. Supp. 2d 1337, 1353 -1354 (Ct. Int’l Trade 2009), citing The Authoritative Dictionary of IEEE Standards Terms (IEEE 100) 912, 1103 (7th ed. 2000).
In HQ H176833, no electrical conversions occurred within the subject battery module. To the contrary, the notebook computer of which the battery module was a component contained DC regulators and DC to DC converters. These items converted the voltage from the battery to specific voltages required by different circuits within the computer. Because no electrical conversion occurred within the subject battery module, CBP declined to classify it as a static converter. See HQ H176833.
Here, the subject merchandise is capable of two functions: 1. converting alternate current to direct current and converting direct current to a different voltage (a function of heading 8504, HTSUS) and 2. storing that current in a battery and producing that current to recharge the device to which the merchandise is connected (a function of heading 8507, HTSUS). Thus, it meets the terms of Note 3 to Section XVI, HTSUS, because it is designed for the purpose of performing two complementary or alternative functions. As such, we classify it according to its principal function. In NY N233370, the subject battery pack also contained a built-in paging alarm of heading 8531, HTSUS, which is an alarm that sends the merchandise’s owner a message if the merchandise is in the process of being stolen. As a result, this battery pack also meets the definition of a composite good of Note 3 to Section XVI, HTSUS, and it will too be classified according to its principal function.
The subject merchandise functions by storing electricity and supplying it to the batteries of the electronics and cars to which they are connected. The consumer charges the subject merchandise before use. Once it is charged, the subject merchandise is then connected to the iPhone, iPad, car battery, or other item that needs recharging, and its charge flows into that item. This cycle can be repeated continuously throughout the life of the subject merchandise. Thus, the subject items are essentially rechargeable batteries. For all of these reasons, we find that the battery function constitutes the principal function.
Heading 8507, HTSUS, provides for “Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof.” Electric accumulators of this heading, which the ENs specifically call storage batteries or secondary batteries, are characterized by the fact that the electrochemical action is reversible so that the accumulator may be recharged. See EN 85.07. Furthermore, the merchandise of this heading used to store electricity and supply it when required. This merchandise functions by way of a direct current passing through the accumulator produces certain chemical changes (i.e., the charging function of the battery itself), and when the terminals of the accumulator are later connected to an external circuit, these chemical changes reverse and produce a direct current in the external circuit (i.e., the charging of the device to which it is connected). This cycle of operations, charging and discharging, can be repeated for the life of the accumulator. See EN 85.07.
In the present case, the subject merchandise consists of lithium-ion battery packs that must be charged when they are first purchased. The batteries are then used to charge consumer electronics such as iPhones and other smart phones, iPads, etc. In the case of the battery pack at issue in NY N004618, the battery pack is used to jump start and provide battery power to a motor vehicle. In each case, it is the battery that is doing the work to recharge these items. As such, the subject merchandise meets the terms of heading 8507, HTSUS, and will be classified there. This classification is consistent with prior CBP rulings. See, e.g., HQ H070632, dated January 10, 2011 (classifying lithium-ion cell phone battery packs in heading 8507, HTSUS); HQ 966268, dated May 21, 2003 (classifying battery packs for cell phones in heading 8507, HTSUS, and holding that battery packs are “essentially electric storage batteries”). See also HQ 966328, dated March 31, 2003; HQ H176833, dated November 17, 2011; HQ H155376, dated June 22, 2011; HQ 963870, dated July 14, 2000; HQ H136116, dated March 2, 2011; HQ 955498, dated February 18, 1994; HQ 954061, dated May 13, 1993; NY N152037, dated April 1, 2011; NY N240050, dated April 18, 2013.
We note that in NY N231545 and NY N004618, the merchandise consisted of batteries which are imported with various cables, adapters, etc. Heading 8507, HTSUS, includes accumulators containing one or more cells and the circuitry to interconnect the cells amongst themselves, merchandise that is often referred to as “battery packs.” See EN 85.07. Such battery packs are included in heading 8507, HTSUS, whether or not they include any ancillary components which contribute to the accumulator’s function of storing and supplying energy. See EN 85.07. Such ancillary items include electrical connectors, temperature control devices (e.g., thermistors), circuit protection devices, and protective housings. See EN 85.07. As such, heading 8507, HTSUS, encompasses these types of battery packs such as the ones classified in NY N231545 and NY N004618, which are imported with various ancillary items.
Lastly, we note that the subject merchandise can be distinguished from chargers that CBP has classified in heading 8504, HTSUS. These chargers of heading 8504, HTSUS, work without a battery and charge items by connecting them directly to an electrical outlet. See, e.g., NY N018172, dated October 31, 2007. Thus, these items do not contain a battery function; as such, they do not meet the terms of heading 8507, HTSUS.
HOLDING:
Under the authority of GRI 1, the subject battery packs are classified in heading 8507, HTSUS. They are specifically provided for in subheading 8507.60.00, HTSUS, which provides for “Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof: Lithium-ion batteries.” The applicable duty rate is 3.4%.
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.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
NY N233902, dated October 16, 2012, NY N231545, dated September 11, 2012, NY N004618, dated December 26, 2006, and NY N232914, dated September 11, 2012, are REVOKED. NY N233370, dated October 15, 2012, is MODIFIED.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division