HQ 088013
NOVEMBER 21 1991
CLA-2:CO:R:C:M 088013 JAS
TARIFF NO: 8502.30.0000, HTSUSA
Philip Yale Simons, Esq.
Freeman, Wasserman & Schneider
90 John Street
New York, N.Y. 10038
RE: Generating Set
Dear Mr. Simon:
In your letter of December 1, 1989, as supplemented, on
behalf of Asea Brown Boveri, Inc., North Brunswick, N.J., you
inquired as to the tariff classification of steam turbines and
generators to be transferred to the Customs territory from a
foreign trade zone.
At a meeting held in our office on July 10, 1990, it was
agreed that additional information would be required relative
to the issues we discussed. You provided this information in
the form of two letters, both dated July 26, 1990. Our ruling
follows.
FACTS:
This ruling request covers two types of turbine-generator
combinations, designated ATPS and VAX. In either case, the
turbines will be disassembled prior to exportation for ease in
shipment but all components will be shipped together. These
turbines and generators are said to be designed and
manufactured as matched pairs (i.e., matched bearings, KvA,
circuits, etc.). Each generator and unassembled turbine will
be be entered into the zone separately, then withdrawn for
consumption at the same time with final assembly performed
on-site. Certain oil tanks and hydraulic pumps may also be
imported into the zone, or they may be sourced domestically.
This auxiliary equipment is not further described and is not a
part of this ruling request.
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The ATPS will consist of one steam turbine, one
alternating current (AC) generator and an oil lubrication
system, all mounted on a raised fabricated steel frame, which
we presume will be sourced domestically. The turbine rotor is
designed to rotate at speeds of between 5,500 and 11,000 rpm
and the generator rotor is designed to operate at exactly 3,600
rpm. A gear reduction box connects the two rotors. A quill
shaft connects the high pressure turbine to one side of the box
while another solid shaft connects the other side of the box to
the generator. A single lubrication system and electrical
control panel service the combined units.
The VAX consists of one AC generator and a high and low
pressure steam turbine, all to be installed on a series of
reinforced concrete pillars designed to withstand vertical
stresses at specific points. Attached to these pillars are
pedestal-like steel feet called sole plates, which are bolted
to a concrete floor. The concrete pillars and sole plates will
be sourced domestically. The high pressure turbine's rotor is
designed to rotate at 6,045 rpm while the generator's rotor is
designed to rotate at 3,600 rpm. The rotors are connected by a
gear reduction unit. A specially designed quill shaft connects
the turbine rotor to one side of the reduction unit while
another solid shaft connects the other side of the reduction
unit to the generator. The low pressure turbine's rotor is
designed to rotate at the same rate as the generator. The
rotors or shafts are connected by means of a flexible shaft
which you indicate allows for the thermal expansion of the low
pressure turbine rotor. A common lubrication system supplies
cooled and filtered oil to the thrust and journal bearings of
both units and to the reduction gear as well.
In both the ATPS and VAX, you state the connecting shafts
are specially designed and manufactured for these particular
generating set models and cannot be used with other sets. You
state further that the oil lubrication system consisting of
tank, pumps, filters and pipes, provide complex structural and
physical integration.
It is your position that upon withdrawal from the zone for
consumption, the turbine and generator components of each model
are classifiable under the provision for other electric
generating sets, in subheading 8502.30.0000, Harmonized Tariff
Schedule of the United States Annotated (HTSUSA).
In addition to the classification issue, you ask whether
each turbine and generator entered separately into a foreign
trade zone may be aggregated in the zone and withdrawn for
consumption in a single entry.
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ISSUE:
Whether the turbine-generator combinations, or either of
them, are generating sets for tariff purposes; whether the
components in each combination may be withdrawn from the zone
in a single entry.
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUSA in accordance
with the General Rules of Interpretation (GRIs). GRI 1,
HTSUSA, 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 and, provided the
headings or notes do not otherwise require, according to GRIs 2
through 6. GRI 2 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. GRI 2 also applies to
incomplete or unfinished articles presented unassembled
provided they are to be treated as complete or finished
articles by virtue of the first part of the rule.
The Explanatory Notes (ENs) constitute the Customs
Cooperation Council's official interpretation of the Harmonized
System. While not legally binding, they provide a commentary
on the scope of each heading of the Harmonized System, and are
thus useful in ascertaining classification under the System.
Customs believes they should always be consulted. See T.D. 89-
80.
Relevant ENs indicate that for purposes of heading 8502
the expression "generating sets" applies to the combination of
an electric generator and any prime mover other than an
electric motor and that generating sets consisting of the
generator and its prime mover, which are mounted (or designed
to be mounted) together as one unit or on a common base (see
the General Explanatory Note to Section XVI), are classified
[in heading 85.02] provided they are presented together.
Turbines and generators of the ATPS and VAX types are
machines whose rotors or shafts are connected by means of a
gear reduction unit or box. The connection between the units
is a precision mechanical fit designed to insure that both
shafts rotate at identical speeds. The design of these units
is such that in addition to shaft rotation, their vibrational
behavior, bearing loads, etc., must be matched. Moreover, at
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least in the VAX type, the generator is used as a motor to
start the turbine. The ATPS is mounted on a rectangular steel
frame or base that rests on a concrete floor.
It has been suggested that the cited General Explanatory
Note may support the proposition that there must be substantial
physical integration of the turbine and generator for these
units to constitute a set for tariff purposes, and that a mere
coupling of the shafts is insufficient in this regard. In our
opinion, the note is inconclusive in imposing this requirement
on the turbine and generator types in issue here and, in any
event, there is substantially more integration of these units
than a mere coupling of the shafts. This note, therefore,
should not be interpreted in such a way as to contravene the
otherwise clear scope of heading 8502.
Because the units in issue here are commonly bought and
sold together, are commercially regarded as generating sets,
and possess design features that indicate they will be
permanently attached to one another, we conclude that they are
designed to be mounted together as one unit for purposes of
heading 8502.
HOLDING:
When transferred from the foreign trade zone to the
Customs territory, turbines and generators of the ATPS and VAX
types are provided for in heading 8502, under the authority of
GRI 1, HTSUSA. They are classifiable as other generating sets,
in subheading 8502.30.0000, HTSUSA. The rate of duty is 3
percent ad valorem.
Under section 81c, Tariff Act of 1930, as amended (19
U.S.C. 81c), it is permissible to make separate zone entries
for the purpose of aggregating the components for withdrawal.
Sincerely,
John Durant, Director
Commercial Rulings Division