CLA-2 OT:RR:CTF:TCM H270400 PJG
Kasey Twohig
Allmand Brothers, Inc.
P.O. Box 888
Holdrege, NE 68949
RE: Revocation of NY N026470; tariff classification of portable light towers
Dear Ms. Twohig:
On May 2, 2008, U.S. Customs and Border Protection (“CBP”) issued Allmand Brothers, Inc. New York Ruling Letter (“NY”) N026470. The ruling pertains to the tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of a portable light tower. We have reconsidered NY N026470 and found it to be in error.
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, of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), notice of the proposed action was published on July 6, 2016, in Volume 50, Number 27, of the Customs Bulletin. No comments were received in response to this notice.
FACTS:
In NY N026470, the subject portable light towers were described as follows:
The Night-Lite Pro™ NL6/NL8 and Maxi-Lite® ML6/Ml8 (sic) are four portable light towers designed for providing light to open spaces and jobsites. They consist of diesel powered generators with fuel tanks mounted onto a metal chassis with a trailer hitch and two automotive type wheels, and a telescopic tower with a cluster of lighting fixtures with high output flood lights. The telescopic towers are constructed of galvanized steel with either a manual, electric or hydraulic system for raising the cluster of lights depending on the options ordered. The Allmand light towers are manufactured with all necessary lighting in a self powered portable system capable of being towed by a motor vehicle to various locations, and feature adjustable outriggers for securing the system at the desired location during use.
Additionally, according to the product specifications found in www.allmand.com,
the Maxi-Lite® ML 6/ML 8 models include metal halide lamps and two 120 VAC and one 240 VAC convenience outlets that can be used to power other machinery. Moreover, the Maxi-Lite® ML 6 generators have a 6 kilowatt (“kW”) output of power and the Maxi-Lite® ML 8 generators have an 8 kW output of power.
The Night-Lite Pro™ NL6/NL8 models include metal halide lamps and one 120 VAC duplex GFCI convenience outlet that can be used to power other machinery. Moreover, the Night-Lite Pro™ NL6 generators have a 6 kW output of power and the Night-Lite Pro™ NL8 generators have an 8 kW output of power.
ISSUE:
Whether the subject portable light towers are classifiable in heading 8502, HTSUS, as electric generating sets, or in heading 9405, HTSUS, as lamps.
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. 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 may then be applied.
The 2016 HTSUS provisions under consideration are as follows:
8502 Electric generating sets and rotary converters:
9405 Lamps and lighting fittings including searchlights and spotlights and parts thereof, not elsewhere specified or included; illuminated signs, illuminated nameplates and the like, having a permanently fixed light source, and parts thereof not elsewhere specified or included:
GRI 3 states, in relevant part:
When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
…
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as the criterion is applicable.
…
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).
EN to GRI 3(b) states, in pertinent part:
RULE 3 (b)
(VIII) The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
(IX) For the purposes of this Rule, composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.
* * *
EN to 85.02 states, in pertinent part:
The expression “generating sets” applies to the combination of an electric generator and any prime mover other than an electric motor (e.g., hydraulic turbines, steam turbines, wind engines, reciprocating steam engines, internal combustion engines). Generating sets consisting of the generator and its prime mover which are mounted (or designed to be mounted) together as one unit or on a common base (see the General Explanatory Note to Section XVI), are classified here provided they are presented together (even if packed separately for convenience of transport).
The portable light towers consist of diesel powered electric generators mounted onto a metal chassis and a telescopic tower with high output flood lights. Heading 8502, HTSUS, provides for “Electric generating sets and rotary converters.” We find that the diesel powered electric generators components of the portable light towers at issue are described as electric “generating sets” because they include a combination of an electric generator and a diesel engine mounted together on a metal chassis. See EN 85.02. Similarly, heading 9405, HTSUS provides for “Lamps and lighting fittings including searchlights and spotlights and parts thereof, not elsewhere specified or included; illuminated signs, illuminated nameplates and the like, having a permanently fixed light source, and parts thereof not elsewhere specified or included.” We find that the high output flood light components are described by heading 9405, HTSUS, as lamps. As such, the portable light towers are not specifically provided for in any one heading.
GRI 2(b) states in relevant part that “[t]he classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.” GRI 3(a) states that, “[w]hen, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.”
Pursuant to GRI 3(b) “[w]hen, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.”
EN (IX) to GRI 3(b) states that “composite goods” means goods made up of different components wherein the components are attached to each other to form a practically inseparable whole and goods with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts. The portable light towers are made up of different components – diesel powered electric generators and high output flood lights. The diesel powered electric generators and their mounted light towers form an inseparable whole given that they are attached to each other. Moreover, they are mutually complementary in that the generators provide power to the lights and the lights illuminate open spaces and jobsites. Finally, they are not normally offered for sale in separate parts. As such, the portable light towers are composite goods that must be classified using GRI 3(b).
The EN (VIII) to GRI 3(b) provides that when performing an essential character analysis the factors that should be considered are the bulk, quantity, weight or value, or the role of a constituent material in relation to the use of the goods. There have been several court decisions on “essential character” for purposes of classification under GRI 3(b). See Conair Corp. v. United States, 29 C.I.T. 888 (2005); Structural Industries v. United States, 360 F. Supp. 2d 1330, 1337-1338 (Ct. Int’l Trade 2005); and Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1295-1356 (Ct. Intl’l Trade 2006), aff’d 491 F.3d 1334 (Fed. Cir. 2007). “[E]ssential character is that which is indispensable to the structure, core or condition of the article, i.e., what it is.” Home Depot USA, Inc., 427 F. Supp. 2d at 1293 (quoting A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378, 383 (1971)). In particular, in Home Depot USA, Inc., the court stated “[a]n essential character inquiry requires a fact intensive analysis.” Id. at 1284. Therefore, a case-by-case determination on essential character is warranted in this situation.
Applying the essential character analysis to the merchandise at issue, we find that the electric generators constitute the bulk of the subject merchandise and provide the source of energy to the flood lights. Given that the purpose of the subject merchandise is to provide light to open spaces and jobsites using the energy provided by the generators, and to provide energy to other machinery using the convenience outlets that are located on the generators, we find that the generators are indispensable to the article as a whole. Without the generators, the portable lamps are inoperable. We find that the diesel powered electric generators are the components that provide the essential character.
Accordingly, the subject merchandise is classified in heading 8502, HTSUS. Considering the power output of the diesel powered generators, which ranges from 6 kW to 8 kW, the merchandise is specifically classified under subheading 8502.11.00, HTSUS, as “Electric generating sets and rotary converters: Generating sets with compression-ignition internal combustion piston engines (diesel or semi-diesel engines): Of an output not exceeding 75 kVA.”
HOLDING:
Under the authority of GRIs 1, 3(b), and 6 the portable light towers are classified in heading 8502, HTSUS, specifically in subheading 8502.11.00, HTSUS, which provides for “Electric generating sets and rotary converters: Generating sets with compression-ignition internal combustion piston engines (diesel or semi-diesel engines): Of an output not exceeding 75 kVA.” The 2016 column one, general rate of duty is 2.5 percent 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.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
NY N026470, dated May 2, 2008, is REVOKED.
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