CLA-2-84:OT:RR:NC:N1:103
Aaron Marx
Crowell & Moring, LLP
1001 Pennsylvania Ave. NW
Washington, DC 20004
RE: The tariff classification of a modularized crystallizer from China
Dear Mr. Marx:
In your letter dated October 29, 2021, you requested a tariff classification ruling on behalf of your client, Livent USA Corp.
The item under consideration is a Modularized Crystallizer for a Lithium Hydroxide Plant. The Modularized Crystallizer consists of a crystallizer with heater and condenser, filters, agitators, pumps, vacuum system, steam and condensate handling tanks, instrumentation, and piping. The components are assembled into two systems that perform separate functions. The first system uses a series of filters, pumps, agitators, and tanks, to provide filtering to the lithium hydroxide solution. The second system consists of components that are interconnected and contribute together to refine lithium hydroxide by crystallization. Both systems will include structural elements (stairs, railings, etc.). Within the crystallization system, lithium hydroxide solution is continually fed into a forced circulation crystallizer that includes an external heat exchanger, which uses steam to boil off water within the solution. This increases the lithium hydroxide concentration beyond the saturation limit and causes the excess lithium hydroxide to crystallize. The resulting crystal slurry is fed to a centrifuge before being sent to a stainless-steel tank where the crystals are dissolved into a lithium hydroxide solution. You state the centrifuge is not imported with the Modularized Crystallizer but will be produced in Europe and installed in the United States.
Classification of goods under the Harmonized Tariff Schedule of the United States (“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 and any relative section or chapter notes. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRIs taken in order. You suggest that the Modularized Crystallizer is classified in heading 8419, HTSUS, by operation of GRI 1, HTSUS, Note 3 to Section XVI because the entire unit will be assembled onto a common concrete base. The Explanatory Notes define "fitted together to form a whole" as incorporating one machine within the other, mounting one on the other, or mounting both machines on a common base or frame or in a common housing. In addition, General Explanatory Note (VI) to Section XVI states that “Floors, concrete bases, walls, partitions, ceilings, etc., even if specially fitted out to accommodate machines or appliances, should not be regarded as a common base joining such machines or appliances to form a whole.” Thus, the Modularized Crystallizer assembled on a concrete base would not be considered a composite machine within Section XVI, Note 3, HTSUS.
Section XVI, Note 4, HTSUS, addresses functional units. The note states:
Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function.
The Explanatory Notes state that a functional unit covers only those “machines and combination of machines essential to the performance of the function specific to the functional unit as a whole.” Because the unit includes both a crystallization system and a filtration system, the components must be separately classified.
The crystallization system is imported incomplete without the centrifuge. GRI 2(a) states that “any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article.” In our view, the crystallizer imported without the centrifuge has the essential character of a complete crystallizer system.
The Explanatory Notes to GRI 2(a) (V) states:
The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport.
Due to the size of the Modularized Crystallizer, you state that the unit will be “imported unassembled, in a modular form” to be assembled subsequent to importation into the United States. The components will be divided into 11 separate modules that will be imported on a single conveyance.
The applicable subheading for the filtration system will be 8421.29.0065, HTSUS, which provides for “Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases; parts thereof: Filtering or purifying machinery and apparatus for liquids: Other: Other: Other: Other.” The general rate of duty will be free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8421.29.0065, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8421.29.0065, HTSUS, listed above.
The applicable subheading for the crystallization system will be 8419.89.9585, 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: Other machinery, plant or equipment: Other: Other: Other: Other: For other materials.” The rate of duty will be 4.2 percent ad valorem.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8419.89.9585, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.02, in addition to subheading 8419.89.9585, HTSUS, listed above.
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, including information on exclusions and their effective dates, 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 are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Paul Huang at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division