CLA-2 OT:RR:CTF:TCM H064919 TNA
William Thomas Gould, CHB
3807 W. Sierra Hwy., #6-4617
Acton, CA 93510
RE: Reconsideration of NY N047162; Classification of a PVU-B50 Photovoltaic junction box
Dear Mr. Gould:
This is in response to your letter of June 8, 2009, on behalf of O&S California, Inc. (“O&S”), requesting reconsideration of New York Ruling Letter (“NY”) N047162, dated January 8, 2009, concerning the classification of a PVU-B50 photovoltaic junction box under the Harmonized Tariff Schedule of the United States (“HTSUS”). A sample was received and examined by this office. In reaching our decision, we have also taken into consideration arguments presented during a conference with my staff on February 15, 2011, as well as a supplemental submission dated February 15, 2011.
In NY N047162, the National Commodity Specialist Division (“NCSD”) of U.S. Customs and Border Protection (“CBP”) reviewed a sample of the subject merchandise and described it as follows:
The merchandise concerned is referred to as a photovoltaic junction box. It consists of two insulated electrical cables with electrical connectors at one end and a plastic junction box on the opposite end. The junction box incorporates an electrical bus bar/terminal and diodes.
In use, this item would be mounted to the back of a solar panel by fitting the terminals from this unit to that of the solar panel. This unit is designed to conduct the electric current produced by the solar panel or cells into batteries. The diodes insure that the current flow is in only one direction, into the batteries. These items are used solely to facilitate the conduction of electricity from the solar panel to the batteries without allowing the current to flow from the battery back to the solar panel.
Thus, the description of the merchandise in NY N047162 makes it clear that the electrical current conducted by the subject merchandise flows to the unit’s batteries. By contrast, your February 15 supplemental submission states that the subject merchandise “does not supply power directly to an external load [but rather] acts as the connection between two solar panels and also acts as the connection between the strings of solar panels within the solar module. Other devices are required to connect the solar panels to an external load.” The February 15 supplemental submission further describes the junction box as being physically incorporated into the solar panel by your customers after the junction box is imported. Your reconsideration request states that the insulated electrical cables are typically over one meter in length when imported (the cables on the provided sample are shorter). You also note that, in addition to the function insulating current flow in one direction from solar panel to battery, the junction box will cause the current to bypass nonfunctioning solar cells to maintain the operation of the entire unit.
NY N047162 classified the photovoltaic junction box in subheading 8544.42.90, HTSUS, as an insulated electric conductor fitted with connectors.
Whether the photovoltaic junction box is classifiable as an insulated electric conductor of heading 8544, HTSUS, or as a diode, or parts of solar panels, of heading 8541, 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:
8541 Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes; mounted piezoelectric crystals; parts thereof:
8541.10.00 Diodes, other than photosensitive or light-emitting diodes:
8544 Insulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors:
Other electrical conductors, for a voltage not exceeding 1,000 V:
8544.42 Fitted with connectors:
Note 2 to Section XVI provides, in pertinent part, that:
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:
(a) 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;
Note 8 to Chapter 85 provides, in pertinent part, that:
For the purposes of headings 8541 and 8542:
(a) “Diodes, transistors and similar semiconductor devices” are semiconductor devices the operation of which depends on variations in resistivity on the application of an electric field…
For the classification of the articles defined in this note, headings 8541 and 8542 shall take precedence over any other heading in the Nomenclature, except in the case of heading 8523, which might cover them by reference to, in particular, their function.
The Harmonized Commodity Description and Coding System Explanatory Notes (EN’s) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the EN’s provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the system. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The EN to heading 8541, HTSUS, states, in pertinent part, that:
(A) DIODES, TRANSISTORS AND SIMILAR SEMICONDUCTOR DEVICES
These are defined in Note 8 (a) to this Chapter.
The operation of the devices of this group is based on the electronic properties of certain “ semiconductor ” materials.
The main characteristics of these materials is that at room temperature their resistivity lies in the range between that of conductors (metals) and that of insulators…
The semiconductor devices of this group generally comprise one or more “junctions”, between ptype and ntype semiconductor materials.
(I) Diodes which are twoterminal devices with a single p n junction; they allow current to pass in one direction (forward) but offer a very high resistance in the other (reverse). They are used for detection, rectification, switching, etc.
The main types of diodes are signal diodes, power rectifier diodes, voltage regulator diodes, voltage reference diodes…
(III) Similar semiconductor devices. The “ similar ” devices referred to here are semiconductor devices whose operation depends on variations in resistivity on the application of an electric field…
For photosensitive devices the operation of which depends on light rays (photodiodes, etc.), see group (B).
(B) PHOTOSENSITIVE SEMICONDUCTOR DEVICES
This group comprises photosensitive semiconductor devices in which the action of visible rays, infrared rays or ultraviolet rays causes variations in resistivity or generates an electromotive force, by the internal photoelectric effect…
The main types of photosensitive semiconductor devices are:..
(2) Photovoltaic cells, which convert light directly into electrical energy without the need for an external source of current. Photovoltaic cells based on selenium are used mainly in luxmeters and exposure meters. Those based on silicon have a higher output and are used, in particular, in control and regulating equipment, for detecting light impulses, in communication systems using fibre optics, etc.
Special categories of photovoltaic cells are :
(i) Solar cells, silicon photovoltaic cells which convert sunlight directly into electric energy. They are usually used in groups as sources of electric power, e.g., in rockets or satellites employed in space research, for mountain rescue transmitters.
The heading also covers solar cells, whether or not assembled in modules or made up into panels. However the heading does not cover panels or modules equipped with elements, however simple, (for example, diodes to control the direction of the current), which supply the power directly to, for example, a motor, an electrolyser (heading 85.01).
The EN to heading 8544, HTSUS, states, in pertinent part, that:
Provided they are insulated, this heading covers electric wire, cable and other conductors (e.g., braids, strip, bars) used as conductors in electrical machinery, apparatus or installations. Subject to this condition, the heading includes wiring for interior work or for exterior use (e.g., underground, submarine or aerial wires or cables). These goods vary from very fine insulated wire to thick cables of more complex types…
The goods of this heading are made up of the following elements :
(A) A conductor this may be single strand or multiple, and may be wholly of one metal or of different metals.
(B) One or more coverings of insulating material the aim of these coverings is to prevent leakage of electric current from the conductor, and to protect it against damage. The insulating materials mostly used are rubber, paper, plastics, asbestos, mica, micanite, glass fibre yarns, textile yarns (whether or not waxed or impregnated), varnish, enamel, pitch, oil, etc. In certain cases the insulation is obtained by anodising or by a similar process (e.g., the production of a surface coating of metallic oxides or salts)…
Wire, cable, etc., remain classified in this heading if cut to length or fitted with connectors (e.g., plugs, sockets, lugs, jacks, sleeves or terminals) at one or both ends. The heading also includes wire, etc., of the types described above made up in sets (e.g., multiple cables for connecting motor vehicle sparking plugs to the distributor).
You assert that the primary purpose of the subject merchandise is to function as a bypass diode, not as an insulated electric conductor as classified by NY N047162. You explain that in its capacity as a bypass diode, the photovoltaic junction box will cause the current generated by working solar panels to bypass non-operating cells and to flow directly to the batteries in the solar power system. A typical solar power system is composed of multiple solar panels. If one solar panel in the system is in the shade it will not generate solar power. Without the diodes in the photovoltaic junction box bypassing the shaded solar panel, the solar power system would operate less efficiently. You maintain that the photovoltaic junction box is a module or assembly containing diodes, and that all of the other components contribute to its function as a diode. As such, you argue that the photovoltaic junction box is properly classified as a diode in heading 8541, HTSUS.
In support of classification in heading 8541, HTSUS, you cite Legal Note 8 to Chapter 85, which defines diodes. You assert that this legal note clearly indicates that heading 8541, HTSUS, takes precedence over heading 8544, HTSUS. We agree that Note 8 states a preference for heading 8541, HTSUS, over heading 8544, HTSUS, but Note 8 to Chapter 85, HTSUS, also makes clear that the order of priority it establishes only applies if the subject merchandise is classifiable under heading 8541, HTSUS.
Note 8 to Chapter 85, HTSUS, defines a diode as a semiconductor device whose operation depends on variations in resistivity on the application of an electric field. By contrast, the subject merchandise was described by NY N047162 as being specifically designed to conduct electricity produced by the solar panels or cells into the batteries, avoiding the reverse current electricity. NY N047162 further stated that the merchandise’s diodes promoted the current’s flow in only one direction across the junction box. This description was based on the information submitted by O&S at the time of its ruling request. Furthermore, examination of the sample submitted with this reconsideration request shows that the subject merchandise, rather than simply being a diode, contains cables that allow the solar panels’ energy to flow through several panels on its way to the batteries, a function that would occur without the diodes being present in the subject merchandise.
In your reconsideration request, you argue that the subject merchandise is a module or assembly containing diodes and that each component of the merchandise contributes to its function as a diode, allowing current to pass in one direction and resist the opposite direction. This directly contradicts the description of the merchandise you provided in your original submission. Furthermore, upon examination of the record as a whole, including an examination of the sample and the way it functions, we find your new description of the subject merchandise unpersuasive. As a whole, the function of the junction box is not to control the direction of the current, but to connect the panels such that the current can flow on its way to the battery.
In support of your position that the photovoltaic junction box properly falls within heading 8541, HTSUS, you refer to the guidance on the classification of modules and assemblies containing diodes provided in the CBP Informed Compliance Publication (“ICP”) “What Every Member of the Trade Community
Should Know About: Diodes, Transistors and Similar Semiconductor Devices.” You claim that various Headquarters rulings and court decisions that are described in the ICP classify modules similar to the photovoltaic junction box as articles under heading 8541, HTSUS.
In particular, you focus on the ICP’s discussion of ABB Power Transmission v. United States, 896 F.Supp. 1279, 19 CIT 1044 (1995) (“ABB”). There, the court considered the classification of thyristor modules, the main function of which was to block current when they were turned off and to conduct current when they were turned on. Each thyristor module consisted of six thyristor elements connected in a series, heatsinks, voltage divider circuits and electronic “firing” circuitry. The components were mounted on a frame of epoxy resin and aluminum. The parties disagreed as to whether the other components made the module significantly different from a thyristor such that the modules could not be classified as thyristors within heading 8541, HTSUS. Although the Court agreed with the government that the modules contained significant components in addition to thyristors, it found that the function the modules performed fell within the definition of a thyristor as a similar semiconductor device. As a result, the court classified the modules as thyristors in heading 8541, HTSUS.
Applying ABB Power Transmission’s functionality test to the present case, we find that the main function of the photovoltaic junction box is to conduct electricity between the solar cells on its way to the batteries. The diodes do not assist in this function. Rather, they stop the electric current from flowing back towards the solar cells. This function creates a one-way, and therefore efficient, flow of electric current. Without the diodes, the electric current would still flow to the battery through the cables, but in a much less efficient manner. Therefore, the subject merchandise cannot be described as diodes of heading 8541, HTSUS, because the function of the merchandise as a whole is not the function of a diode.
Furthermore, CBP has consistently ruled that assemblies that include additional components can still be classified in heading 8544, HTSUS, as long as the additional components are used only to facilitate the flow of electricity. See, e.g., HQ 952493, dated September 15, 1992, HQ 951223, dated July 17, 1992, and HQ 958653, dated April 15, 1996, and HQ 955026, dated September 27, 1993. In each of these rulings, wiring harness assemblies in various configurations containing a variety of components such as diodes, conductors, connectors, fuses, and relays, were classified under heading 8544, HTSUS, because all of the components facilitated the conduction of electricity. As a result, Note 8 to Chapter 85, HTSUS, and ABB Power Transmission are inapplicable to the merchandise at hand because the terms of heading 8541, HTSUS, do not describe the subject merchandise. Therefore, the subject merchandise is classified in heading 8544, HTSUS.
This classification is also consistent with the ENs, which state that wire, cable, etc., remains classified in heading 8544, HTSUS, if it is cut to length or fitted with connectors at one or both ends, or if it is made up in sets. See EN 85.44. As a result, the subject photovoltaic junction box is classified in heading 8544, HTSUS, and specifically in subheading 8544.42.90, HTSUS, which provides for “Insulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors: other electrical conductors, for a voltage not exceeding 1,000 V: fitted with connectors: other.”
Lastly, in the Febuary 15th teleconference and supplemental submission, you argued that the subject junction box should be classified in subheading 8541.90.00, HTSUS, which provides for: “parts of photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels…” In support of this argument, you cite to HQ H084604, dated May 3, 2010, which classified a solar module in subheading 8541.40.60, HTSUS, thereby revoking NY N047162, dated January 9, 2009, which had classified the merchandise under subheading 8501.31.8000, HTSUS. You argue that HQ H084604 represents a change in CBP’s position with respect to the classification of such merchandise and stands for the proposition that the presence of a diode or other “element” in a solar panel does not preclude classification under heading 8541, HTSUS, unless that diode or “element” supplies power directly to an external load. You argue that the subject merchandise does not supply power directly to an external load. To the contrary, you assert that it acts as the connection between two solar panels, it acts as the connection between the strings of solar cells within the solar module, and that other devices are required to connect the solar panels to an external load. You also state that once the junction box is assembled into the panel it becomes an integral part of the panel and cannot be removed without destroying both the junction box and solar panel. You further assert that the subject junction box cannot be used for any other purpose or function other than as a part of a solar panel. As a result, you argue that the subject merchandise is classified in subheading 8541.90.00, HTSUS, which provides for “parts of photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels…”
In response, we note that the term “parts and accessories” is not defined in the tariff; however, in a line of judicial cases the courts have defined those terms and CBP has applied those definitions. Bauerhin Technologies Limited v. United States, 19 CIT 1441, 914 F.Supp. 554 (1995), aff’d 110 F.3d 774 (Fed. Cir. 1997); United States v. Antonio Pompeo, 43 C.C.P.A. 9, C.D. 1669 (1955); United States v. Willoughby Camera Stores, Inc., 21 C.C.P.A. 322 (1933). Customs generally will consider an article to be a part if: it is combined with other articles to be used; or it is
an integral, constituent or component part, without which the article to which it is joined could not function; or it aids in the safe and efficient operation of the main article; or it is identifiable by shape or other characteristics as an article solely or principally used as a part. See, e.g., HQ H080595, dated August 5, 2010; HQ 966441, dated June 12, 2003; HQ H113137, dated September 15, 2010; HQ H044558, dated February 9, 2009; HQ H044559, dated February 9, 2009; HQ H005091, dated January 24, 2007.
Applying these definitions of a “part” to the present case, we find that the subject photovoltaic junction box cannot be considered a part of a solar panel. We acknowledge that these junction boxes can be one component of the entire system of solar panels. However, the installation of one solar panel typically only includes the panel, an inverter, batteries and interconnection wiring. See, e.g., http://science.howstuff works.com/environmental/energy/solar-cell7.htm; http://en.wikipedia.org/wiki/Solar _panel. Thus, we believe that, contrary to O&S’s argument, solar panels can function without the instant junction boxes. As a result, we find that the subject merchandise is not an integral, constituent or component part, without which the solar panel could not function. Furthermore, even if we found the subject photovoltaic junction box to be a part of a solar panel, it would be precluded from classification in heading 8541, HTSUS, by virtue of Legal Note 2 to Section XVI, HTSUS, which requires that parts that themselves are classified as articles in another heading of Chapter 84 or 85, HTSUS, are to be classified in those headings. As a result, because we find that the subject merchandise is described by the terms of heading 8544, HTSUS, that it is classified there.
Lastly, we note that HQ H084604, upon which O&S based its parts argument, does not support the classification of the subject merchandise in subheading 8541.90.00, HTSUS, as a part of a solar panel. In HQ H084604, the solar module at issue consisted of photovoltaic cells and a junction box that was attached to the rear of the module and housed terminals to connect the strings of cells together, cables and connectors for external wiring, and three bypass diodes that protected the cells from overheating when shaded. There, the merchandise was classified in subheading 8541.40.60, HTSUS, as “other diodes.” In the present case, by contrast, the subject merchandise cannot be described as a diode, as explained above. As a result, it remains classified in heading 8544, HTSUS.
By application of GRI 1, the PVU-B50 photovoltaic junction box is provided for in heading 8544, HTSUS. It is specifically provided for in subheading 8544.42.90, HTSUS, which provides for “Insulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors …: Other electric conductors, for a voltage not exceeding 1,000 V: Fitted with connectors: Other: Other.” The general, column one duty rate is 2.6% 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 N058471, dated May 11, 2009, is AFFIRMED.
Myles B. Harmon, Director
Commercial and Trade Facilitation Division