CLA-2 OT:RR:CTF:EMAIN H287457 ALS
Mr. Juan J. Porras, Director
Machinery Center of Excellence and Expertise
U.S. Customs and Border Protection
109 Shiloh Drive, Suite 300
Laredo, Texas 78045
ATTN.: Mr. Byron Kaiser, Supervisory Import Specialist
RE: Internal Advice; Tariff Classification of a Branch Selector Unit for Variable Refrigerant Volume Air Conditioner System
Dear Mr. Porras:
This letter is in reply to your request for internal advice that you submitted on behalf of counsel on behalf of Goodman Global Holdings, Inc. (hereinafter also referred to as “GGH”). The Internal Advice request concerns the Harmonized Tariff Schedule of the United States (HTSUS) classification of “five models of a Branch Selector Unit” (also referred to as “BSU”). Our decision is set forth below.
FACTS:
The BSU is a component of specific Daikin variable refrigerant volume (“VRV”) air conditioning systems that provides for simultaneous heating and cooling from one outdoor unit to multiple indoor units. The BSU receives a signal from the system’s controller and accordingly routes the flow of liquid or gas to the appropriate indoor unit(s). The controller is also connected directly and communicates with the indoor units to measure the temperature of the room(s), the refrigerant flow, and other data. The BSU is connected to the outdoor unit via a suction line, a dual pressure line, and a liquid line. It is connected to the indoor units either by wire or wirelessly.
The BSU consists of copper piping, electrical connectors, and a printed circuit board that receives and interprets the signals from the controller. Each BSU model has motorized expansion valves that control the flow of liquid or gas. The BSU is encased in galvanized steel that is lined with foamed polyurethane. Depending on the model, it weighs from 49 to 106 pounds and has dimensions from 11.75 x 14-9/16 x 18-15/16 to 11.75 x 32-5/16 x 18-15/16 inches in height x width x depth. The specific models at issue are the BSQ96TVJ, BS6Q54TVJ, BSVQ36PVJU, BS4Q54TVJ, and BS10Q54TVJ. The BSU is imported separate from the systems in which they are installed.
ISSUE:
Are the five models of Branch Selector Unit, as described above, properly classified under heading 8415, HTSUS, which provides for “Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated; parts thereof”, or under heading 8481, HTSUS, which provides for “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”, or under heading 9032, HTSUS, which provides for “Automatic regulating or controlling instruments and apparatus; parts and accessories thereof”?
LAW AND ANALYSIS:
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation (“GRI”) and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation (“ARI”). GRI 1 provides that the classification of goods shall be “determined according to the terms of the headings 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, GRIs 2 through 6 may be applied in order.
The following headings and subheadings of the HTSUS are under consideration in this case:
8415 Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated; parts thereof:
8415.90 Parts:
8415.90.80 Other...
* * *
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:
9032.89 Other:
9032.89.60 Other...
* * * * *
Note 2 of Section XVI, HTSUS, provides the following:
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;
(b) 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;
(c) All other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548.
Chapter 84 is a part of Section XVI.
Note 7 of Chapter 90, HTSUS, provides the following:
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; and
(b) Automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling non-electrical 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, stabilized against disturbances, by constantly or periodically measuring its actual value.
The Explanatory Notes to the Harmonized Commodity Description and Coding System (Explanatory Notes or ENs), including the Subheading Explanatory Notes, although not dispositive or legally binding, provide a commentary on the scope of each heading and certain subheadings of the HTSUS, and are generally indicative of the proper interpretation of such headings and subheadings. Customs believes the notes should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
GGH contends that the five models of BSU at issue are classifiable under heading 8415, HTSUS, because the BSU is a part of an air conditioning system, it does not have sensors, and receives its operating instructions from the controller. Specifically, GGH refers to Note 2(b) of Section XVI, HTSUS, in stating that the BSUs sole use is with Daikin air conditioning systems. GGH also refers to Note 2(a) to Chapter 90, HTSUS, in stating that the BSUs are goods of chapter 84 and therefore are precluded from classification under chapter 90. GGH further states that “the BSU is not properly classified under the heading of 9032 because the BSU is not an automatic regulating or controlling apparatus.”
The ENs to heading 9032 state the following:
As Automatic control apparatus for liquids or gases and apparatus for automatically controlling temperature from part of complete automatic control systems and consist essentially of the following devices:
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.
A control device which compares the measured value with the desired value and actuates the device described in (c) below accordingly.
A starting, stopping or operating device.
Based on the provided description of BSU, we find that it does not have any measuring functions, it does not automatically regulate or control any functions in the system in which it is installed, and it does not start or stop any operations of the system. The BSU is a passive device in that it receives its operating instructions and initiation from another component within the system. The system itself, the Daikan VRV air conditioning system, is an air conditioning machine of heading 8415. GGH states that the BSU is not capable of monitoring the flow, level, pressure, temperature, or any other variable of the liquids and gases that flow through. Our review of the BSU leads to agree with that statement. Thus, based on the foregoing and in accordance with note 7 of chapter 90, HTSUS, we conclude that the BSU is not classifiable under heading 9032, HTSUS.
With regard to heading 8415, HTSUS, we note again that the BSU is a part of the system in which it is installed. As noted above, the BSU itself is not an air conditioning machine or apparatus. As such, it is merely a part of such a machine. Our review of the BSUs indicate that each model contains motorized expansion valves, which allow for the flow of the liquid or gas as the controller initiates and directs. Acting as a conduit to passively regulate the flow of the liquid or gas upon instruction from the controller is the primary function of the BSU. At this point, we note that valves are specifically provided for eo nomine under heading 8481. The ENs for heading 8481 state that the following:
This heading covers taps, cocks, valves and similar appliances, used on or in pipes, tanks, vats or the like to regulate the flow (for supply, discharge, etc.), of fluids (liquid, viscous or gaseous), or, in certain cases, of solids (e.g., sand). The heading includes such devices designed to regulate the pressure or the flow velocity of a liquid or a gas.
Note 2(a) of Section XVI, HTSUS, states that a part that is a good included in any heading of chapter 84 is to be classified in its respective heading. Given such, we conclude that the BSU, while being a part of an air conditioning machine, is more specifically a valve of heading 8481, HTSUS, in accordance with Note 2(a), and is properly classified under heading 8481, HTSUS. More specifically, it is properly classified under subheading 8481.80.90.
HOLDING:
By application of GRI 1 (Note 2(a) to Section XVI), the Branch Selector Units, models BSQ96TVJ, BS6Q54TVJ, BSVQ36PVJU, BS4Q54TVJ, and BS10Q54TVJ, are properly classified under heading 8481, HTSUS, which provides for “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.” Specifically, by application of GRI 6, they are properly classified under subheading 8481.80.90, HTSUS, provides for “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: Other appliances: Other...” The general column one rate of duty, for merchandise classified in this subheading is 2%.
Pursuant to U.S. Note 20(f) to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8481.80.90, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, an importer must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8481.80.90, HTSUS, noted above, for products of China.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
You are to mail this decision to the internal advice requester no later than 60 days from the date of the decision. At that time, the Office of International Trade, Regulations and Rulings, will 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,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division