CLA-2 OT: RR: CTF: TCM H278889 APP
Port Director
U.S. Customs and Border Protection
2350 N. Sam Houston Pkwy E, Suite 1000
Houston, TX 77032-3131
Attn: Dekeisha Thomas, Senior Import Specialist
RE: Protest and Application for Further Review No. 5309-16-100045; Tariff classification of certain special steam drums designed for use with heat exhange units
Dear Port Director:
This is in response to the Application for Further Review (“AFR”) of Protest Number 5309-16-100045, timely filed on February 10, 2016, on behalf of Chevron Phillips Chemical Company, LP (“Chevron” or “protestant”). The Protest and corresponding AFR concern the classification of certain steam drums that are specifically designed for and imported for use with heat exchange units under the Harmonized Tariff Schedule of the United States (“HTSUS”).
On November 20, 2014, the importer of record, Chevron, entered the steam drums under subheading 8419.90.30, HTSUS, which provides for “Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment of heading 8514), for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, nonelectric; parts thereof: Parts: Of heat exchange units.” On September 11, 2015, U.S. Customs and Border Protection (“CBP”) liquidated the merchandise, classifying it under subheading 8402.11.00, HTSUS, which provides for “Steam or other vapor generating boilers (other than central heating hot water boilers capable also of producing low pressure steam); super-heated water boilers; parts thereof: Steam or other vapor generating boilers: Watertube boilers with a steam production exceeding 45 t per hour.”
On March 1, 2017, we met with counsel and Chevron’s Global Trade Compliance Manager. We have taken into consideration the discussion and arguments presented during that meeting in reaching our decision set forth below.
FACTS:
The merchandise covered by this AFR in its imported condition, consists of eight steam drums (models numbers D-101, D-102, D-103, D-104, D-105, D-106, D-107 and D-108) and of loose/spare parts of steam drums (gaskets, stud bolts, nuts, hex screws, and washers), which form the complete steam drums. The merchandise is imported from the supplier Borsig Process Heat Exchanger GMBH in Germany and is solely for use with heat exchange units (quench coolers), which were built to specification to be used with gas cracking furnaces.
Once hydrocarbon gas is cracked into ethylene in the cracking furnace, it must be cooled down rapidly in order to prevent secondary reactions from occurring. This step occurs in the heat exchange unit, where tubes of water pass by tubes of ethylene gas coming from the cracking furnace. The pressure of both the water and the ethylene gas is calibrated to ensure ethylene gas is sufficiently cooled. While this process cools the ethylene gas to the desired temperature, it also converts the water running through the heat exchanger into steam. This steam is fed into the steam drum for the purposes of converting it back into water and re-introducing it to the heat exchanger. The amount of the filtered and demineralized high purity water in the steam drum is maintained by a control valve. Once the water is fed into the steam drum, the saturation temperature of water at the pressure the steam drum is running controls the temperature of the water in the drum. The temperature in the steam drum is maintained solely by the pressure.
ISSUE:
Whether the subject special steam drums are classified under heading 8402, as watertube boilers, imported unassembled or disassembled, or under heading 8419, as parts of a heat exchange unit.
LAW AND ANALYSIS:
CBP first notes that the matter is protestable under 19 U.S.C. § 1514(a)(2), as a matter on classification. The AFR was timely filed, within 180 days of liquidation for the entry made on November 20, 2014. See Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103 (2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further review of Protest Number 5309-16-100045 is properly accorded to protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed involves questions of law or fact, which have not been ruled upon by the Commissioner of Customs or his designee or by the courts.
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (“GRIs”). GRI 1 requires that classification be determined first according to the terms of the heading of tariff schedule and any relative section or chapter notes, and unless otherwise required, according to the remaining GRIs taken in their appropriate order.
GRI 6 states, in pertinent part that:
[T]he classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purpose of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.
The 2014 HTSUS provisions under consideration are as follows:
8402 Steam or other vapor generating boilers (other than central heating hot water boilers capable also of producing low pressure steam); super-heated water boilers; parts thereof:
Steam or other vapor generating boilers:
8402.11.00 Watertube boilers with a steam production exceeding 45 t per hour
8402.90.00 Parts
8419 Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment of heading 8514), for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, nonelectric; parts thereof:
8419.90 Parts:
8419.90.30 Of heat exchange units . . . .
Chapter 84 is in Section XVI of the HTSUS. Notes 2(a) and (b) to Section XVI, HTSUS state that:
2. Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:
Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;
Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517 . . . .
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 Harmonized System and are generally indicative of the proper interpretation of these headings. See T.D. -80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 84.02 covers:
(A) STEAM OR OTHER VAPOUR GENERATING BOILERS
This group includes apparatus for generating steam or other vapour (e.g., mercury vapour) to operate prime movers (e.g., steam turbines) or other machines using steam power (e.g., steam hammers and pumps) or to supply steam to apparatus for heating, cooking, sterilising, etc., including steam generating boilers for central heating.
It includes separately presented boilers (e.g., locomotive boilers) even though they may clearly be specially constructed to form an integral part of a particular machine, apparatus or vehicle.
Steam boilers may be heated by means of a solid, liquid or gaseous fuel, or by electricity.
The desire to obtain a more efficient heating effect, or quicker vaporisation from fuel-burning boilers has led to the production of boilers differing in structure . . . .
(B) SUPER-HEATED WATER BOILERS
These are boilers in which the water is submitted to fairly high pressure so that it can be heated to a temperature far in excess of the normal vaporisation point (generally of the order of 180 °C or more).
These boilers are structurally very similar to the boilers described in Part (A) above. The pressure required for their operation is obtained either by accumulating steam in, for example, an evaporator drum, or in some cases, by means of an inert gas (generally nitrogen). The super-heated water produced in the boiler must be kept constantly under pressure. It therefore circulates in closed circuit, starting from and returning to the boiler.
Super-heated water boilers are used to provide heat, generally at a distance, to industrial plant (motor vehicle body paint drying tunnels, for instance), or to large groups of buildings or district heating schemes. In the latter case, heat is provided through heat exchangers in which the super-heated water (primary fluid) transfers calories to a secondary fluid that heats the premises . . . .
PARTS
Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the boilers of this heading are also covered, e.g., boiler bodies and bases, internal assemblies for boilers consisting of tubes, watertube caps, headers, boiler drums, steam domes, non-mechanical fire-boxes, inspection covers and fusible plugs.
Metal tubes or pipes which have been bent or curved but not otherwise worked, presented unassembled, are not identifiable as parts of boilers and are therefore to be classified in Section XV.
EN 84.19 states that heading 84.19 does not include steam generating boilers and super-heated water boilers. EN 84.19 provides the following, in relevant part:
With these exceptions, the heading covers machinery and plant designed to submit materials (solid, liquid or gaseous) to a heating or cooling process in order to cause a simple change of temperature, or to cause a transformation of the materials resulting principally from the temperature change (e.g., heating, cooking, roasting, distilling, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vaporising, condensing or cooling processes). But the heading excludes machinery and plant in which the heating or cooling, even if essential, is merely a secondary function designed to facilitate the main mechanical function of the machine or plant, e.g., machines for coating biscuits, etc., with chocolate, and conches (heading 84.38), washing machines (heading 84.50 or 84.51), machines for spreading and tamping bituminous road surfacing materials (heading
84.79) . . . .
HEATING OR COOLING PLANT AND MACHINERY
… (B) Heat exchange units in which a hot fluid (hot gas, steam or hot liquid) and a cold fluid are made to traverse parallel paths, but usually in opposite directions, separated by thin metal walls in such a manner that the one fluid is cooled and the other heated.
In the instant Protest and AFR, protestant argues that the subject steam drums were properly classified in heading 8419, HTSUS as entered. Protestant asserts that the steam drums are parts of heat exchange units and are not boilers. Protestant states that the steam drums are classifiable in subheading 8419.50, HTSUS, consistent with New York Ruling Letter (“NY”) N263746, dated Apr. 29, 2015, Headquarters Ruling Letter (“HQ”) H243584, dated May 9, 2016, GRI 1, and the terms of heading 8419, HTSUS and EN 84.19.
Based on the fact that the subject merchandise was liquidated under subheading 8402.11, HTSUS, which provides for goods of heading 8402, HTSUS, as opposed to the parts of those goods, we infer that you are of the view that the instant matter is controlled by Note 2(a) to Section XVI, HTSUS, supra. However, based on the descriptions provided, the instant steam drums cannot be regarded as steam or other vapor generating boilers of heading 8402, HTSUS.
Therefore, the instant matter is controlled by Note 2(b) to Section XVI, HTSUS and the instant steam drums are classified as parts of the goods (i.e., boilers of heading 8402, HTSUS or heat exchangers of heading 8419, HTSUS) for which they are suitable for sole or principle use. Although we acknowledge that both types of goods may incorporate steam drums, we note that the instant steam drums were engineered specifically for use with the heat exchange units. Inasmuch as the instant steam drums are specifically designed to accept steam as an input from the aformentioned heat exchangers in order to convert it to water, we note that the subject merchandise performs the opposite function of steam drums used in boilers. Specifically, high pressure steam that is a byproduct of the cooling process taking place in the heat exchanger is released into the steam drums where it is used for energy recovery purposes. The steam drums only serve to cool and are not designed to have direct heat applied to them. The conversion of the steam back to water under pressure ensures that water is constantly passing through the heat exchangers, which is essential to their operation. Unlike the instant steam drums, the drums in NY N223507, dated July 27, 2012, were part of a super-heated water boiler and generated steam from liquid water. The heat exchangers in NY N223507 were connected to a super-heated water boiler and transferred energy from the turbine exhaust gas to heat water internal to the presure parts in order to produce steam.
Based on the foregoing, we find that the subject steam drums are parts of heat exchange units and meet the terms of heading 8419, HTSUS.
HOLDING:
By application of GRIs 1 (Note 2(b) to Section XVI, HTSUS) and 6, the subject steam drums are classified in heading 8419, HTSUS, specifically in subheading 8419.90.30, HTSUS (2014), which provides for “Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment of heading 8514), for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, nonelectric; parts thereof: Parts: Of heat exchange units.” The 2014 column one, general rate of duty is free. You are instructed to GRANT this protest and AFR.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than sixty (60) days from the date of this letter. Any reliquidation of the entry, in accordance with the decision, must be accomplished prior to mailing of the decision.
Sixty days from the date of this letter, the Office of Trade, Regulations and Rulings will make this letter available to CBP personnel, and to the public on the CBP Home Page 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