CLA-2 OT:RR:CTF:TCM H022658 JER
Port Director
Port of Pembina
U.S. Customs and Border Protection
112 W. Stutsman
Pembina, ND 58271
RE: Internal Advice 07/032; Classification of a dry gas seal control panel
Dear Port Director:
This is in response to your memorandum, dated December 12, 2007, forwarding a request for internal advice made by counsel, on behalf of Flowserve Corporation and Flowserve Canada Corporation (collectively “Flowserve”), in accordance with U.S. Customs and Border Protection (CBP) Regulations, Part 177 (19 C.F.R. §177). The request pertains to the classification of a certain dry gas seal control panel under the Harmonized Tariff Schedule of the United States (HTSUS). The importer queries whether the subject dry gas seal control panel is classified as an instrument or apparatus for automatically controlling the flow, level, pressure or other variable of liquids or gases in heading 9032, HTSUS, or as valve under heading 8481, HTSUS, as claimed by you. In reaching our decision, we have taken into account additional information submitted by the importer to this office on November 14, 2008.
FACTS:
The subject merchandise is described as being composed of a number of components which include pressure regulators, pressure transmitters, differential gauge, filters, orifices, flanges, an electrical junction box and approximately 85 Swagelok™ valves of various configurations. The components are fitted together and are mounted onto a structural frame and are interconnected by piping. The panel “operate[s] on differential pressures which are sensed at different points and locations
within [the panel].” The electrical junction box facilitates panel performance through transmitters which results in the distribution of electrical power to the electronic components. The various valves include 16 valve manifolds, 10 check valves, 3 needle valves and 56 ball valves. These valves release gas through their aperture as directed by the transmitters and gauges and serve to regulate the pressure and flow of gas.
According to the Flowserve submission dated November 14, 2008, the subject dry gas seal control panel has four distinct functions: pressure and flow regulation; filtration (which according to the submission, the filtering component, is an optional component); pressure gauging; data collection, analyzes and signal transmission. The process of these collective functions is summarized as follows: (1) high pressure gas passes through a check valve that prevents backflow contamination into the gas stream. (2) high pressure gas passes through a ball valve and then through a series of filters, (3) filters remove any contamination that would damage the dry gas seal and (4) the filtered gas then passes through a pressure regulator. A control computer is connected to a positioner which controls the pressure regulator. The gas flow is then split into the dry gas seals. Later, the filtered gas passes through another pressure regulator then through a pressure indicator transmitter. This transmitter sends a signal back to the control computer, which directs the operation of the valves should the flow fall below a minimum set value. At the Barrier Supply stage, the filtered gas proceeds through the pressure control valve which modulates the pressure to the set point indicated by the application.
ISSUE:
Whether the subject dry gas seal control panel is classified as a valve of heading 8481, HTSUS or as a filtering machine under heading 8421, HTSUS, or as automatic regulating apparatus of heading 9032, HTSUS.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). 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 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
8421 Centrifuges, including centrifugal dryers, filtering or purifying machinery and apparatus, for liquids or gases: parts thereof:
8481 Taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves; parts thereof:
8481.80 Other appliances:
8481.80.90 Other
9032 Automatic regulating or controlling instruments and apparatus; parts and accessories thereof:
9032.20.00 Manostats…..
Note 7 to Chapter 90, HTSUS, provides in pertinent part, that:
Heading 9032 applies only to:
(a) Instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlling temperature, whether or not their operation depends on an electrical phenomenon which varies according to the factor to be automatically controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilized against disturbances, by constantly or periodically measuring its actual value [.]
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System. While not 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.
The ENs to heading 8481 provide that:
Combinations consisting of a tap, valve, etc. and a thermostat, manostat or any other measuring, checking or automatically controlling instrument or apparatus of heading 90.26 or 90.32 remain in this heading if the instrument or apparatus is mounted or is designed to be mounted directly on the tap, valve, etc., and provided the combined apparatus has the essential character of an article of this heading. If not satisfying these conditions, they are classified in heading 90.26 (e.g., liquid type pressure gauge fitted with a drain cock) or in heading 90.32.
The heading includes inter alia:
(1) Pressure reducing valves for reducing the pressure of gases and maintaining that reduced pressure at a fairly constant level by means of a plug or stopper which is generally controlled by a pressure device (diaphragm, bellows, capsule, etc.) damped by an adjustable tension spring. These appliances directly regulate the pressure of gases passing through them; they are mounted, for example, on compressed gas cylinders, on pressure containers, or on feed pipe systems of the appliances which they serve.
The heading also includes pressure reducing valves (sometimes called pressure regulators, pressure reducers or pressure regulator reducers), also mounted at the outlets of pressure containers, of boilers, on connecting feed pipe systems or near the appliances which they serve, to perform the same function on compressed air, steam, water, hydrocarbons or other fluids.
If combined with a pressure gauge, pressure reducing valves fall either in this heading or in heading 90.26 depending on whether or not the combined apparatus retains the essential character of a tap, valve, etc. (see the fourth paragraph of this Explanatory Note).
The ENs to heading 9032, HTSUS, provide that:
This group includes:
(A) Pressure controllers or regulators, also called manostats. These consist essentially of a pressure sensitive device, a controlling device which compares (e.g., by means of an adjustable spring) the pressure to be controlled with the prescribed pressure, and an electric contact or a small valve operating a servo circuit.
This apparatus may be used, for instance, to control a motor pump or compressor which supplies a pressure tank, or to operate pneumatic valve positioners, or with a valve to regulate the flow, pressure, etc., of liquids or gases.
These pressure regulators differ from the pressure reducing valves of heading 84.81 (sometimes also called "pressure regulators ").
The ENs to heading 9032, HTSUS, further provides as follows:
Automatic control apparatus for liquids or gases and apparatus for automatically controlling temperature form part of complete automatic control systems and consist essentially of the following devices:
(A) A device for measuring the variable to be controlled (pressure or level in a tank, temperature in a room, etc.); in some cases, a simple device which is sensitive to changes in the variable (metal or bi metal rod, chamber or bellows containing an expanding liquid, float, etc.) may be used instead of a measuring device.
(B) A control device which compares the measured value with the desired value and actuates the device described in (C) below accordingly.
(C) A starting, stopping or operating device.
Counsel argues that the subject merchandise is not an article of heading 8481, HTSUS, because the dry gas seal control panel does not meet the two-prong description set forth in the ENs to heading 8481, HTSUS. Specifically, counsel asserts that the control mechanisms are not mounted directly on the valve(s) and that the article does not have the essential character of a valve of heading 8481, HTSUS.
Counsel for Flowserve asserts that the subject dry gas seal control panels are classifiable in heading 9032, HTSUS, as an automatic regulating or controlling instrument, because the principal function of the control panel is to automatically regulate the pressure and flow of natural gas. Counsel further asserts that the various valves in the article “serve merely to distribute the appropriate amount of natural gas to the compressor” [and therefore] “the valves play a minimal role in the automatic regulation and control of natural gas.” As such, counsel explains that the subject dry gas control panel accomplishes its principal function by (1) monitoring and analyzing data regarding current pressure conditions; (2) computing the amount of pressure necessary to meet the desired pressure conditions; and (3) transmitting relevant data through an electrical junction box to a receiving transmitter so that optimal gas pressure and flow is maintained.” We agree.
While several pressure gauges, regulators and transmitters are in fact mounted directly on to a valve or a connecting pipe, the subject merchandise lacks the essential character of a valve. Instead, the principal function of the subject merchandise is carried out by three essential devices which include: a device for measuring, a control device by and a starting, stopping or operating device. Specifically, the differential pressure indicator measures the variable. The pressure gauges and control apparatus monitor and analyze data regarding current pressure conditions. These (two) components compute the amount of pressure necessary to meet the desired pressure
conditions, thereby comparing the measured value with the desired value. The pressure transmitters transmit data through an electrical signal to a receiving transmitter so that optimal gas pressure and flow is maintained. Once the filtered gas passes through the regulators and gauges, the transmitter sends an electrical signal to the control device which in turn transmits a warning signal to return the flow rate back to the set value. The operating devices, the controller and transmitter, direct the valves to return the flow rate back to the set point. Because, the essential character of the subject dry gas control panel is imparted by the monitoring and measuring devices, control devices and stopping, starting or operating devices, we find that the subject is described by the terms of heading 9032, HTSUS, and Note 7(a) to Chapter 90.
HOLDING:
By application of GRI 1 and Note 7(a) to Chapter 90, HTSUS, we find that the Mass Flow Controller is correctly classified in heading 9032, HTSUS, and specifically provided for in subheading 9032.20.00, HTSUS, which provides for: “Automatic regulating or controlling instruments and apparatus…: Other instruments and apparatus: Other: Other: Other: Flow and liquid level control instruments.” The 2009 column one, general rate of duty is 1.7% ad valorem.
You are to mail this decision to the internal advice inquirer no later than 60 days from the date of this letter. On that date, Regulations and Rulings of the Office of International Trade, will take steps to make the decision available to CBP personnel,
and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division