CLA-2-85:OT:RR:NC:N1:103
Michael Zheng
SunGrid Solutions
135 George St., Unit 204 Cambridge, ON N1S 5C3 Canada
RE: The tariff classification of a battery energy storage system from China
Dear Mr. Zheng:
In your letter dated September 25, 2023, you requested a tariff classification ruling.
The item under consideration is referred to as a Battery Energy Storage System. The system will be imported under four model numbers: SBE 125, SBE 250, SBE 500, and SBE 1000, and housed in either a 10-foot or 20-foot container. The main components in each container will include rechargeable lithium iron phosphate battery modules, circuit breakers, sensors, electrical protection devices, communications equipment, a battery management system, a power conversion system, and more. The system both stores and releases electricity when needed, and can be used in multiple applications, such as reducing the strain on an electrical grid by injecting or absorbing power. The four models will have a DC voltage range of 740 to 1475 VDC, a nominal energy range of 500 to 1000 kWh, and a 480 VAC output voltage. Depending on the application, additional equipment including controllers may be required, which are not part of this request.
General Rule of Interpretation 1, Harmonized Tariff Schedule of the United States ("HTSUS"), states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes. Note 3 to Section XVI, HTSUS, states that “unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.”
The Battery Energy Storage System is a composite machine consisting of various “machines” fitted together to form a whole mounted in a common housing. It is marketed as an energy solution that can be used in multiple configurations as part of a larger electrical system. It can accumulate electricity generated during peak energy production periods or from solar and wind renewable sources, and then release that energy during times of peak usage to supplement the grid. The system can be programmed to take advantage of time-of-use electricity pricing. For example, charging when electricity prices are low and discharging when prices are high. Alternatively, it can be used as a backup power source to critical facilities like hospitals, emergency services, or water treatment plants. While each container incorporates electrical devices in addition to battery modules, it is our view that the principal function of the Battery Energy Storage System is to store and supply electricity.
Thus, the applicable subheading for the Battery Energy Storage System, model numbers SBE 125, SBE 250, SBE 500, and SBE 1000, will be 8507.60.0020, HTSUS, which provides for “Electric storage batteries, including separators therefor, whether or not rectangular (including square); parts thereof: Lithium-ion batteries: Other.” The rate of duty will be 3.4 percent ad valorem.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8507.60.0020, HTSUS, unless specifically excluded, are subject to an additional 7.5 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.15, in addition to subheading 8507.60.0020, 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, 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 at https://hts.usitc.gov/current.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection 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, please contact National Import Specialist Paul Huang at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division