CLA-2 OT:RR:CTF:TCM H252640 CkG
TARIFF NO: 8708.94.10; 9817.00.50; 9032.89.60
Area Port Director
U.S. Customs and Border Protection
Port of Chicago
5600 Pearl Street
Rosemont, IL 60018
ATTN: Jeffrey Kiekenbush, Senior Import Specialist
Loise Laport, Supervisory Import Specialist
Re: Request for Internal Advice; classification of Agricultural Electric Steering Kit and Auto Section Control Unit
Dear Port Director,
This is in regard to a request for Internal Advice, dated April 08, 2014, filed on behalf of Topcon Positioning systems, Inc., regarding the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of an Agricultural Electric Steering Kit (AES-25), and an Auto Section Control Electronic Control Unit (ASC-10). Topcon requests classification of the AES-25 in heading 8473, HTSUS, as an accessory to an ADP machine, or in the alternative, heading 8526, HTSUS, as a radio navigation aid apparatus. In an additional communication dated February 21, 2017, counsel for Topcon further claims that the AES-25 is eligible for duty exemption under subheading 9817.00.50, HTSUS. With respect to the ASC-10, Topcon requests classification in heading 9032, HTSUS, as an automatic regulating or controlling apparatus.
The AES-25 is an automated steering wheel assembly intended for use with agricultural machines and vehicles such as tractors, harvesters and sprayers, in conjunction with Topcon’s GPS receivers and Topcon’s GX-45 and X30 control consoles. The AES-25 consists of the following components: a steering wheel, an electric motor (to rotate the steering wheel), a motor control module with network equipment, a junction box assembly, a junction box mounting bracket, a Controller Area Network (CAN) extension cable, and a CAN network terminator. The AES-25 is used to rotate the steering shaft of the agricultural equipment, replacing the existing steering wheel of the vehicle for automated control and navigation. The Topcon control consoles are pre-programmed with an agricultural survey of the specific terrain the vehicle is meant to cover; in conjunction with the GPS receivers, they determine the position of the vehicle in relation to the desired position and instruct the steering system to turn as needed. The AES-25 can be used with interchangeably with specific models of agricultural machines or vehicles for which Topcon provides a spline adaptor. The AES-25 further lacks certain safety features such as fails safe systems and additional sensors or auto-lane change associated with automatic steering units for on-road vehicles. The AES can be used hands-free.
The ASC-10 is also designed to be used in conjunction with Topcon’s GX-45 and X30 consoles, to control sprayers attached to agricultural equipment. The ASC-10 consists of an electronic control unit, a CAN adaptor and CAN connectors.
The ASC’s sensors measure inputs such as the flow and level of a liquid such as fertilizer or pesticide to be sprayed on a given set of crops. The microcontroller compares measured values of said liquid to the desired value, and sends a signal to the actuator and relays to start or stop the operation of the sprayer accordingly.
Both the X30 and GX-45 control consoles feature pre-programmed icon-based color touchscreen displays, allowing the user to view the position of the vehicle and control the equipment connected to the consoles, such as sprayers or the automated steering kits. The control consoles also feature a USB port for transfer of data collected by the console. The consoles contain proprietary blocks that prevent users from changing their pre-loaded programming.
Whether the AES-25 is classified in heading 8473, HTSUS, as an accessory to an ADP machine, in heading 8526, HTSUS, as a radio navigational air apparatus, as an appliance having individual function in heading 8479, in heading 8708 as a part of a vehicle or machine of 8701, HTSUS, or in headings 8433 or 8436, HTSUS, as a part of machines of those headings.
Whether the AES-25 is eligible for duty exemption under subheading 9817.00.50, HTSUS.
Whether the ASC-10 is classified in heading 8537, HTSUS, as a device for the control or distribution of electricity, or in heading 9032, HTSUS, as an automatic regulating or controlling apparatus
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of
Interpretation (GRI). GRI 1 provides that classification 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:
8433: Harvesting or threshing machinery, including straw or fodder balers; grass or hay
mowers; machines for cleaning, sorting or grading eggs, fruit or other agricultural produce, other than machinery of heading 84.37
8436: Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery,
including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders.
8473: Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8470 to 8472:
8479: Machines and mechanical appliances having individual functions, not specified or
included elsewhere in this Chapter.
8526: Radar apparatus, radio navigational aid apparatus and radio remote control apparatus:
8537: Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more
apparatus of heading 85.35 or 85.36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, other than switching apparatus of heading 85.17.
8708: Parts and accessories of the motor vehicles of headings 87.01 to 87.05.
9032: Automatic regulating or controlling instruments and apparatus; parts and accessories
9817.00.50 00: Machinery, equipment and implements to be used for agricultural or horticultural
9817.00.60 00: Parts to be used in articles provided for in headings 8432, 8433, 8434 and 8436,
whether or not such parts are principally used as parts of such articles and
whether or not covered by a specific provision within the meaning of additional
U.S. rule of interpretation 1(c).
* * * *
Note 3 to Section XVII provides as follows:
3. References in Chapters 86 to 88 to “parts” or “accessories” do not apply to parts
or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part or accessory.
Note 1 to Section XVI provides, in pertinent part, as follows:
This section does not cover:
(m) Articles of chapter 90
U.S. Note 2 to Section XXII, Chapter 98, Subchapter XVII, provides, in pertinent part, as follows:
The provisions of headings 9817.00.50 and 9817.00.60 do not apply to:
(t) articles provided for in subheadings 8419.81.50, 8419.81.90, 8427.10, 8427.20,
8427.90 and 8431.20, headings 8432, 8433 and 8434, subheadings 8435.10 and 8435.90, heading 8436, subheadings 8438.80, 8468.10, 8472.90.40 and 8479.89, subheadings 8482.10.10 through 8482.99.65 (other than subheading 8482.91) and subheadings 8483.10.50 and 8487.10;
(u) articles provided for in chapter 85 (except subheading 8519.81.20, heading 8523,
subheadings 8532.90 and 8539.90, heading 8542, subheadings 8543.10 through 8543.30, subheadings 8543.70.60, 8543.70.80, 8543.70.85, 8543.70.92, 8543.70.96, 8543.90, 8544.70, 8546.90, 8547.20 and 8548.90);
(v) articles provided for in chapter 86;
(w) articles provided for in chapter 87 (except bicycles and other cycles, not motorized,
and parts thereof), but interchangeable agricultural and horticultural implements are classifiable in subheading 9817.00.50 even if mounted at the time of importation on a tractor provided for in chapter 87;
* * * *
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 Explanatory Note to heading 8479 provides, in pertinent part, as follows:
84.79 Machines and mechanical appliances having individual functions, not specified
or included elsewhere in this Chapter.
This heading is restricted to machinery having individual functions, which :
(b) Is not covered more specifically by a heading in any other Chapter of the
For this purpose the following are to be regarded as having “individual functions”:
Mechanical devices, with or without motors or other driving force, whose function
can be performed distinctly from and independently of any other machine or appliance.
Mechanical devices which cannot perform their function unless they are mounted on
another machine or appliance, or are incorporated in a more complex entity, provided that this function :
is distinct from that which is performed by the machine or appliance whereon they are to be mounted, or by the entity wherein they are to be incorporated, and
does not play an integral and inseparable part in the operation of such
machine, appliance or entity
The Explanatory Note to heading 8526 provides, in pertinent part, as follows:
85.26 Radar apparatus, radio navigational aid apparatus and radio remote control apparatus.
This heading includes :
Radio navigational aid equipment (e.g., radio beacons and radio buoys, with fixed or
rotating aerials; receivers, including radio compasses equipped with multiple aerials or with a directional frame aerial). It also includes global positioning system (GPS) receivers.
Ship or aircraft navigational radar equipment (whether for mounting on the ship,
aircraft, etc., or on land), including port radar equipment, and identification equipment placed on buoys, beacons, etc.
Blind approach landing or traffic control apparatus for airports. These are very
complex. Certain types combine normal radio, radar and television devices showing at the control point the position and height of aircraft in the neighbourhood, and transmitting to the aircraft both the necessary instructions for landing and the radar picture of other aircraft in the vicinity.
(4) Radar height measuring apparatus (radio altimeters).
(5) Meteorological radar for tracking storm clouds or meteorological balloons.
(6) Blind bombing equipment.
(7) Radar devices for proximity fuses of shells or bombs.
(8) Air raid warning radar apparatus.
(9) Range and direction finding radar apparatus for naval or antiaircraft guns.
(10) Radar transponders; these receive radar pulses and transmit pulses often carrying
superimposed intelligence in response to those it receives. Transponders are used on aircraft to enable them to be identified by radar operators, and in instrument balloons for the determination of range and direction and the transmission of meteorological information.
(11) Radio apparatus for the remote control of ships, pilotless aircraft, rockets, missiles,
toys, model ships or aircraft, etc.
(12) Radio apparatus for the detonation of mines, or for the remote control of machines.
EN 90.32 provides, in pertinent part, as follows:
In accordance with Note 7 to this Chapter, this heading covers :
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, stabilised against disturbances, by constantly or periodically measuring its actual value; and
Automatic regulators of electrical quantities, and instruments or apparatus for
automatically controlling nonelectrical quantities, the operation of which depends on an electrical phenomenon varying according to the factor to be controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilised against disturbances, by constantly or periodically measuring its actual value.
The automatic regulators of this heading are intended for use in complete automatic control systems which are designed to bring a quantity, electrical or nonelectrical, to, and maintain it at, a desired value, stabilised against any disturbances, by constantly or periodically measuring its actual value. They consist essentially of the following devices :
(A) A measuring device (sensing device, converter, resistance probe, thermocouple, etc.) which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal.
(B) An electrical control device which compares the measured value with the desired value and gives a signal (generally in the form of a modulated current).
(C) A starting, stopping or operating device (generally contacts, switches or circuit breakers, reversing switches or, sometimes, relay switches) which supplies current to an actuator in accordance with the signal received from the control device.
An automatic regulator within the meaning of Note 7 (b) to this Chapter consists of the devices described in (A), (B) and (C) above, whether assembled together as a single entity or in accordance with Note 3 to this Chapter, a functional unit.
Automatic regulators are connected to an electrical, pneumatic or hydraulic actuator, which brings the controlled variable back to the desired value. This actuator may be the clamps which adjust the gap between the electrodes of an arc furnace, the motorised valve which controls the intake of water or steam in a boiler, a furnace, a pulping machine, etc.
Electronic regulators function on a strictly electrical principle, and not electromechanically. Their characteristic features are semiconductors (transistors) or integrated circuits.
These regulators are used not only for electrical quantities, such as voltage, amperage, frequency and power, but also for other quantities such as revolutions per minute, torque, traction force, level, pressure, flow or temperature.
* * * *
We first address the classification of the Agricultural Electric Steering Kit (AES-25):
Counsel argues that the AES-25, as an accessory to the Topcon GX-45 or X30 control consoles, is properly classified in heading 8473, HTSUS, as an accessory to an automatic data processing machines. Alternatively, counsel contends that the AES-25 should be classified in heading 8526, HTSUS, as a radio navigation aid apparatus.
With respect to the proposed classification of the AES-25 in heading 8473, HTSUS, we first note that as the term “accessory” is defined by the Court of Appeals of the Federal Circuit and the Court of International Trade as well as prior CBP rulings, the AES-25 is not an accessory to the Topcon control consoles.
“Accessory” is not defined in the HTSUS. Thus, we employ the common meaning of the term, as in the Rollerblade decisions, wherein the courts derived from various dictionaries that an accessory must relate directly to the thing accessorized. Rollerblade, Inc. v. U.S. 116 F. Supp. 2d 1247 (CIT 2000) (hereinafter Rollerblade I), aff’d by Rollerblade, Inc. v. U.S., 282 F.3d 1349 (CAFC 2002) (hereineafter Rollerblade II) (holding inline roller skating protective gear is not an accessory because the protective gear does not directly act on or contact the roller skates in any way.). The AES is not an accessory to either the GX-45 or the X30 control consoles, as it does not act upon the console in any way—it merely receives data from the console and acts upon that data.
We further note that even if the AES-25 were to be considered an accessory to the control console, neither the GX-45 or X30 control consoles are ADP machines of heading 8471, HTSUS. Pursuant to Note 5(a)(ii) to Chapter 84, an ADP machine must be capable of “Being freely programmed in accordance with the requirements of the user.” A freely programmable ADP machine “is one for which applications can be written, does not impose artificial limitations upon such applications, and will accept new applications that allow the user to manipulate the data as deemed necessary by the user.” See, e.g., Optrex Am., Inc. v. United States, 475 F.3d 1367 (Fed. Cir. 2007). A device which cannot accept new software installed by the end user and which cannot perform arithmetical computations specified by the end user cannot be classified in heading 8471, HTSUS. The Topcon control consoles contain proprietary blocks that prevent users from changing their pre-loaded programming. As the consoles cannot accept new software from the end user, they are not ADP machines pursuant to Note 5(a)(ii). See e.g., HQ H082637, dated January 5, 2010 (“However, the subject merchandise is factory-programmed and its programming can only be changed by NeuroSky’s personnel and not by the end user. Consequently, the merchandise does not meet the requirements of Note 5(A)(ii), which requires that ADP machines be freely programmable”). Hence, the instant AES-25 automatic electrical steering kit cannot be classified in heading 8473.
Topcon requests, in the alternative, that the AES-25 be classified in heading 8526, HTSUS, as a radio navigational aid apparatus. However, the AES-25 does not aid the navigation of the vehicle; it is the control console and GPS which perform the navigation function—the GPS determines the position of the vehicle, and the console then instructs the AES to maneuver the vehicle accordingly. Furthermore, the AES does not contain any kind of radio transmission or receiver apparatus, as required for a radio navigational aid of heading 8526, HTSUS. In other words, heading 8526, HTSUS does not provide for apparatus which carries out the instructions of a radio navigation device, but rather a radio apparatus which aids in navigation. This is consistent with the Explanatory Note to heading 85.26, which describes what is meant by “radio navigational aid equipment: “Radio navigational aid equipment (e.g., radio beacons and radio buoys, with fixed or rotating aerials; receivers, including radio compasses equipped with multiple aerials or with a directional frame aerial). It also includes global positioning system (GPS) receivers.” This clearly refers to radio equipment performing a navigational function, not steering control equipment with no built-in radio or other positioning or navigation equipment.
We next consider the applicability of provisions for parts of vehicles or agricultural machines. The courts have considered the nature of "parts" under the HTSUS and two distinct though not inconsistent tests have resulted. In Bauerhin Technologies Limited Partnership, & John V. Carr & Son, Inc. v. United States, ("Bauerhin") 110 F.3d 774 (Fed. Cir. 1997), the court identified two distinct lines of cases defining the word "part". Consistent with United States v. Willoughby Camera Stores, ("Willoughby Camera") 21 C.C.P.A. 322 (1933), one line of cases holds that a part of an article "is something necessary to the completion of that article without which the article to which it is to be joined, could not function as such article." Id. at 324. The other line of cases evolved from United States v. Pompeo, ("Pompeo") 43 C.C.P.A. 9 (1955), which held that a device may be a part of an article even though its use is optional and the article will function without it, if the device is dedicated for use upon the article, and, once installed, the article will not operate without it. Under either line of cases, an imported item is not a part if it is "a separate and distinct commercial entity". ABB, Inc. v. United States, 28 Ct. Intl Trade 1444, 1452-53 (2004). The definition of "parts" was also discussed in Rollerblade, Inc. v. United States, 282 F. 3d 1349, 1353 (Fed. Cir. 2002), wherein the court defined parts as "an essential element or constituent; integral portion which can be separated, replaced, etc." Id. at 1353.
The AES-25 replaces the entire steering assembly of a vehicle. Once the AES-25 steering kit is installed, the vehicle cannot be operated without it. The AES is therefore an integral part of the vehicles or machines with which it is used. Furthermore, it is not a separate and distinct commercial entity because it is sold only for use with the Topcon Control Consoles and with agricultural vehicles and machinery. Specifically, the AES-25 is installed on tractors, whether or not equipped with attachments such as harvesting or spraying equipment. Harvesting machinery itself is classified in heading 8433, HTSUS, and other agricultural machinery such as sprayers are classified in 8436; however, when it is attached to a tractor in its condition as imported such machinery is classified in heading 8701, HTSUS, as a tractor. Thus, the AES-25 is a part of a vehicle of heading 8701, and as such, is classified in heading 8708, HTSUS.
In the event CBP disagrees with the claimed classification of heading 8473 or 8526, HTSUS, Topcon requests in the alternative that the AES-25 be subject to the duty exemption provided by subheading 9817.00.50, which provides for “machinery, equipment and implements to be used for agricultural or horticultural purposes.”
CBP has consistently held that an article must meet the following three-part test in order to qualify for the duty exemption in subheading 9817.00.50, HTSUS:
The articles must not be among the long list of exclusions to subheading 9817.00.50 or 9817.00.60 under Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2;
The terms of subheading 9817.00.50 or 9817.00.60 must be met in accordance with GRI 1; and
The merchandise must meet the actual use conditions required in accordance with sections 10.131-10.139 of the Customs Regulations (19 CFR §§10.131-10.139).
See, e.g., HQ H186956, dated June 27, 2014. If a good fails any part of the test, then it is treated according to its primary classification. See id.
With respect to the first requirement, U.S. Note 2 provides that:
The provisions of headings 9817.00.50 and 9817.00.60 do not apply to . . . articles provided for in chapter 87 (except bicycles and other cycles, not motorized, and parts thereof), but interchangeable agricultural and horticultural implements are classifiable in subheading 9817.00.50 even if mounted at the time of importation on a tractor provided for in chapter 87.
See U.S. Note 2(w).
Therefore, goods of chapter 87 are ineligible for a duty exemption under subheading 9817.00.50, HTSUS, unless the goods are “interchangeable agricultural or horticultural implements.” Counsel argues that the AES-25 is interchangeable because it can be used with different control panels and GPS receivers, and the spline adaptor in each kit makes it interchangeable with different types of agricultural vehicles and machines. Counsel further argues that the AES-25 is an agricultural implement because it is a “device used in the performance of a task” (i.e., an implement) that is dedicated to an agricultural or horticultural purpose. Thus, according to counsel, the exclusion in U.S. Note 2(w) does not apply here.
We agree. The AES-25 falls within the plain meaning of the terms “interchangeable agricultural or horticultural implements.” Because the terms “interchangeable,” “agricultural,” and “horticultural,” are not defined in the HTSUS, we turn to dictionaries and other reliable sources to determine the common meaning of these terms. See C.J. Tower & Sons of Buffalo, Inc. v. United States, 673 F.2d 1268, 1271 (C.C.P.A. 1982).
Webster's New Riverside Collegiate Dictionary (1977) defines the relevant terms as:
Interchangeable: Capable of being interchanged; esp: permitting mutual substitution.
Agriculture: The science or art of cultivating the soil, producing crops, and raising livestock and in various degrees the preparation of products for man’s use and their disposal.
Horticulture: The science or art of growing fruits, vegetables, flowers, or ornamental plants.
Implement: 1. An article servicing to equip. 2. A tool or utensil forming part of equipment for work. 3. One that serves as an instrument or tool.
Here, the AES-25 is interchangeable because it is “capable of being interchanged” with different control panels and GPS receivers, and the spline adaptor in each kit makes it “capable of being interchanged” with different types of agricultural vehicles and machines. It is also an implement because it is a “tool or utensil” that forms part of the “equipment for work,” namely, the equipment of a farm vehicle such as a tractor, harvester, sprayer, etc., and the work of automatically steering that vehicle along a set path. Because that task is related to the “art or science of cultivating the soil” and “growing fruits and vegetables,” the AES-25 is an “interchangeable agricultural or horticultural implement” for purposes of U.S. Note 2(w). The AES-25 therefore is not excluded under U.S. Note 2(w), and the first requirement of the three-part test for eligibility for a duty exemption under subheading 9817.00.50, HTSUS, is satisfied.
The second part of the test requires that the terms of subheading 9817.00.50 be met in accordance with GRI 1. GRI 1 provides that classification shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In order to satisfy the second part of the test, the merchandise must thus be “machinery,” “equipment,” or “implements,” and a sufficient nexus with an agricultural or horticultural activity must be identified. See Informed Compliance Publication, What Every Member of the Trade Community Should Know About: The Agricultural Actual Use Provisions, CBP, September 2015.
The HTSUS does not define the terms be “machinery,” “equipment,” or “implements,” “agriculture,” and “horticulture.” We therefore turn to dictionaries and other reliable sources to determine the common meaning of these terms. See id.; C.J. Tower & Sons of Buffalo, Inc. v. United States, 673 F.2d 1268, 1271 (C.C.P.A. 1982). As noted in the Informed Compliance Publication, The Merriam-Webster’s Collegiate Dictionary, Tenth Edition (1999) provides the following definition of the relevant terms:
Machine: 1. f: A mechanically, electrically or electronically operated device for performing a task.
Equipment: 1. a: the set of articles or physical resources serving to equip a person or thing: as (1) the implements used in an operation or activity.
Implement: 1. An article serving to equip. 2. a device used in performance of a task.
Agriculture: The science, art, and practice of cultivating the soil, producing crops, and raising livestock.
Horticulture: The science and art of growing fruits, vegetables, flowers, or ornamental plants.
Here, the AES-25 is an “implement” because it is a “device used in the performance of a task” – namely the task of automatically steering a farm vehicle such as a tractor, harvester, sprayer, etc. along a set path. By the same token, the AES-25 is also a “machine” because it is an electronically operated “device for performing a task” and “equipment” because it is an “implement[ ] used in an operation or activity.” The AES-25 is thus a “machine or equipment” for purposes of the second part of the test.
In order to meet the requirements of the second part of the test, however, a sufficient nexus must also be demonstrated between the machine, equipment, or implement and an agricultural or horticultural purpose. See, e.g., HQ H186956, dated June 27, 2014. A sufficient nexus is a “direct and immediate relation between the imported merchandise and its direct use in agricultural or horticultural pursuits.” HQ H186956, dated June 27, 2014. For purposes of this test, an article with a sufficient nexus to an agricultural or horticultural pursuit is “exclusively used in close proximity to livestock or crops, in a manner that demonstrates an immediate relationship between the imported article and the agricultural endeavor.” Id.
For example, in HQ 952796, dated January 29, 1993, CBP determined that a sufficient nexus existed between certain plastic sheeting and an agricultural purpose. The plastic sheeting was for use by hog farmers as wear pads (material used in farrowing stall so that a sow will not dig a hole in the ground and possibly injure herself), saver pads (material slid under feed bins to recover feed from being lost to the expanded metal floor below), and creep mats (material upon which hogs sleep), as well as liners for livestock trailers and other uses for raising livestock. CBP found that, for purposes of eligibility for a duty exemption under subheading 9802.00.50, HTSUS, these pieces of equipment or implements had a direct and immediate relation to the agricultural pursuit of caring for and maintaining livestock. Similarly, in HQ 961431, dated December 1, 1994, CBP held that certain internal-combustion piston engines had a sufficient nexus with an agricultural or horticultural purpose when they were delivered to a production facility for installation in agricultural tractors or other agricultural machinery.
In contrast, in HQ H186956, CBP held that an insufficient nexus existed between a machine for manufacturing wire fencing and an agricultural or horticultural pursuit. Although the importer claimed that the machine was used to produce fences that were used solely as farm field enclosures, CBP noted that the machine itself was capable of manufacturing wire fencing for general use. Furthermore, the machine was not used in close proximity to livestock or crops. CBP therefore held that a nexus did not exist between the “simple process of manufacturing rolls of wire fencing materials and the specific activities of agricultural or horticultural pursuits.” Id. The merchandise therefore did not satisfy the second requirement of the three-part test and was ineligible for a duty exemption under subheading 9802.00.50, HTSUS.
Here, counsel states that the AES-25 is used for the “identifiable precision agricultural applications . . . . Specifically, it is used for agricultural activities such as seeding, planting, spraying, spreading, and harvesting.” Counsel also notes that the AES-25 increases crop yields and efficiency by allowing one tractor to do the work of two or three tractors with continuous, round-the-clock operation. Based on this description, it is clear that the AES-25 will be used for the agricultural purposes described above and “exclusively . . . in close proximity to livestock or crops.” See HQ H186956. The AES-25 also does not appear to be suitable for any non-agricultural or horticultural uses. The second requirement of the three-part test for eligibility for a duty exemption under subheading 9817.00.50, HTSUS, is therefore satisfied.
Finally, the third part of the test requires the merchandise to meet the actual-use provisions in 19 CFR §§10.131-10.139. Under these provisions, when the tariff classification of an article is controlled by its actual use in the United States, three conditions must be met in order to qualify for free entry or a lower rate of duty:
Such use is intended at the time of importation;
The article is so used; and
Proof of use is furnished within 3 years after the date the article is entered or withdrawn from warehouse.
See 19 C.F.R. § 10.133.
Provided that the importer provides proof of actual use to the satisfaction of the Port Director, the AES-25 is eligible for a duty exemption under subheading 9817.00.50, HTSUS.
With respect to the classification of the Auto Section Control Electric Control Unit (ASC-10), Topcon claims classification of the ASC-10 in heading 9032, HTSUS, which provides for “Automatic regulating or controlling instruments and apparatus; parts and accessories thereof”. CBP’s suggested classification was heading 8537, HTSUS, which provides for “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517.”
Note 1(m) to Section XVI excludes articles of Chapter 90 from classification in Section XVI, which includes Chapter 85. Thus, we must first consider whether the ACS-10 is an article of Chapter 90 before considering classification in heading 8537, HTSUS.
Note 7 to Chapter 90 and the EN to heading 90.32 provide further guidance on the scope of heading 9032. Note 7 provides, in pertinent part, that heading 9032 only covers Instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids and 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. EN 90.32 elaborates that articles of this heading essentially consist of 3 devices: a device for measuring the variable to be controlled; a control device which compares the measured value with the desired value and actuates a starting, stopping or operating device; and a starting, stopping or operating device.
The ASC-10 is used for automatically controlling the flow and level of liquid dispensed from sprayers. It contains sensors which measure inputs such as flow and liquid level, a microcontroller module which compares measured values to the desired value, and an actuator and relays driven by the microcontroller to start or stop the operation of the sprayer accordingly. Thus, the ACS-10 meets the conditions of Note 7 to Chapter 90 and the EN to heading 9032, HTSUS. Because it is an article of Chapter 90, the ASC-10 cannot be classified in heading 8537, HTSUS, pursuant to Note 1(m) to Section XVI.
By application of GRI 1, the AES-25 is classified in heading 8708, HTSUS, specifically subheading 8708.94.10, HTSUS, which provides for “Parts and accessories of the motor vehicles of headings 8701 to 8705: Steering wheels, steering columns and steering boxes; parts thereof: Steering wheels, steering columns and steering boxes: For tractors suitable for agricultural use.” The 2017 column one, general rate of duty is Free.
The AES-25 is also eligible for duty exemption under subheading 9817.00.50 if proof is furnished to the Port Director of the actual use of the AES-25 for agriculture purposes pursuant to the requirements of 19 CFR §§10.131-10.139.
By application of GRI 1, the ASC-10 is classified in heading 9032, HTSUS, specifically subheading 9032.89.60, HTSUS, which provides for “Automatic regulating or controlling instruments and apparatus; parts and accessories thereof: Other instruments and apparatus: Other: Other.” The column one, general rate of duty is 1.7% ad valorem.
Duty rates are provided for the internal advice applicant’s convenience and are
subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided online at www.usitc.gov.
You are directed to mail this decision to the internal advice applicant, no later than 60 days from the date of this letter. On that date the Office of Regulations and Rulings will make the public version of the decision available to CBP personnel, and to the public online at www.CBP.gov, by means of the Freedom of Information Act, and other public methods of distribution.
Myles B. Harmon, Director,
Commercial and Trade Facilitation Division