CLA-2 OT:RR:CTF:EMAIN: H307904 EKR
Mr. Kevin Ekstrand
Noatum Logistics
11501 Outlook Street, Suite 500
Overland Park, KS 66211
RE: Tariff classification of cow cooling soaker
Dear Mr. Ekstrand:
This is in response to your correspondence of November 21, 2019, in which you requested a ruling under the Harmonized Tariff Schedule of the United States (HTSUS) on the classification of a cow cooling soaker identified as the “Avsonic,” to be imported from China. Your ruling request was forwarded by the National Commodity Specialist Division (NCSD) to this office for response. A sample was submitted to NCSD for examination.
FACTS:
Per your ruling request, the Avsonic is a battery-operated device used to control the dispersal of water over livestock as a cooling mechanism in hot weather. The Avsonic is intended to reduce wasted water by starting the flow of water to the spray nozzle when an animal is present within one meter of the device, and stopping the flow of water when no animal is present. In the absence of a device such as the Avsonic, the water dispersal system provides a continuous spray of water through the spray nozzle, regardless of the presence of livestock. When in use, the Avsonic is mounted to an existing water supply line, between the water supply pipe and the third-party spray nozzle, using a gasket and steel worm clamps.
The Avsonic operates as follows. A pressure sensor determines when there is sufficient pressure in the water supply line to operate the device. When the pressure sensor detects water pressure over 5 pounds per square inch (psi), it signals a printed circuit board (PCB), which, in turn, activates the lithium-manganese battery. The battery powers the ultrasonic sensor. When the ultrasonic sensor detects livestock within one meter of the Avsonic, the PCB opens a solenoid valve featuring a diaphragm operated by a 7.5-volt coil, allowing water to flow from the water supply line to the third-party spray nozzle. A manual bypass valve allows the user to bypass the entire assembly, allowing water to pass from the water supply line to the spray nozzle unregulated by the Avsonic system.
Avran suggests that the Avsonic is properly classified in subheading 8424.82.0090, HTSUS, which provides for “[m]echanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders… parts thereof; Other appliances: Agricultural or horticultural: Other.” Avran also argues that classification in 9817.00.50, HTSUS, as machinery, equipment, and implements to be used for agricultural or horticultural purposes is appropriate for the Avsonic device.
ISSUE:
Whether the Avsonic is properly classified in heading 8424, HTSUS, as a mechanical appliance for projecting, dispersing, or spraying liquids or in heading 8481, HTSUS, as a valve, and whether the Avsonic is eligible for classification in 9817.00.50, HTSUS, as machinery, equipment, and implements to be used for agricultural or horticultural purposes.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods 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 may then be applied in the appropriate order. The HTSUS headings under consideration are the following:
8424 Mechanical appliances (whether or not hand operated) for projecting, dispersing or spraying liquids or powders; fire extinguishers, whether or not charged; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines; parts thereof:
* * *
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:
* * *
9817.00.50 Machinery, equipment and implements to be used for agricultural or horticultural purposes.
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 EN to heading 8481, HTSUS, provides, in pertinent part:
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.
The appliances regulate the flow by opening or closing an aperture (e.g., gate, disc, ball, plug, needle or diaphragm). They may be operated by hand (by means of a key, wheel, press button, etc.), or by a motor, solenoid, clock movement, etc., or by an automatic device such as a spring, counterweight, float lever, thermostatic element or pressure capsule.
* * * * *
Combinations consisting of a tap, valve, etc. and a thermostat, manostat or any other measuring, checking or automatically controlling instrument or apparatus of heading 90.26 or 90.32 remain in this heading if the instrument or apparatus is mounted or is designed to be mounted directly on the tap, valve, etc., and provided the combined apparatus has the essential character of an article of this heading. If not satisfying these conditions, they are classified in heading 90.26 (e.g., liquid-type pressure gauge fitted with a drain cock) or in heading 90.32.
In the case of remote-control systems, only the tap, valve, etc., is classified in this heading.
Section XXII, Subchapter XVII, U.S. Note 2 provides, inter alia, that 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;
* * * * *
As an initial matter, we note that classification in heading 8424, HTSUS, as suggested by Avran, would be incorrect. The device does not, itself, project, disperse or spray water; rather, the device controls the flow of water to a third party nozzle, which sprays the water over nearby livestock. In considering the functions encompassed by heading 8424, HTSUS, namely projecting, dispersing, or spraying liquids, both CBP and the Court of International Trade have distinguished between devices that “disperse” a liquid and devices that “dispense” a liquid. (See Rubbermaid Commer. Prods., LLC v. United States, 32 F. Supp. 3d 1331 (Ct. Int’l Trade 2014) citing Headquarters Ruling (“HQ”) H103965 (January 6, 2012)). In HQ H103965, we stated that “the definition of disperse is to spread or distribute widely from a fixed or constant source, to scatter, to distribute more or less evenly throughout a medium. The definition of dispense is to deal out in portions.” The device under consideration, imported without a spray nozzle, does not “spread or distribute widely” or “scatter” the water, and is excluded from heading 8424, HTSUS, as a result.
Rather, the Avsonic is provided for, eo nomine, in heading 8481, HTSUS. The Avsonic controls the flow of water from the water line to the third-party spray nozzle. This is achieved by the opening and closing of the solenoid valve. The solenoid valve is opened and closed based on instructions received from the PCB, which, in turn, processes information received from the pressure sensor and the ultrasonic sensor. The device is powered by the battery, and protected from wear by the housing. Each component in the device supports the principal function of opening and closing the solenoid valve.
We are guided by EN 84.81, which directs that:
Combinations consisting of a tap, valve, etc. and a thermostat, manostat or any other measuring, checking or automatically controlling instrument or apparatus of heading 90.26 or 90.32 remain in this heading if the instrument or apparatus is mounted or is designed to be mounted directly on the tap, valve, etc., and provided the combined apparatus has the essential character of an article of this heading. If not satisfying these conditions, they are classified in heading 90.26 (e.g., liquid-type pressure gauge fitted with a drain cock) or in heading 90.32.”
Thus, valves that are actuated by other components of the device remain classified as valves, so long as the actuating components are directly attached to the valve itself, and that the “combined apparatus” retains the essential character of a valve. The solenoid valve of the Avsonic is actuated electronically by the PCB based on input from the sensors. The actuating components are housed with the solenoid valve, and directly connected to the solenoid valve, and the device, as a whole, has the essential character of a valve. Such devices are distinguished in the EN from “remote-control systems” where the actuating component is separate from the valve, and the valve and actuating components are to be classified separately.
CBP has applied the two-part analysis suggested by EN 84.81 in several rulings. For example, in Headquarters Ruling (“HQ”) H224997, dated August 30, 2019, CBP considered the classification of two types of fuel control unit (FCU), used to control the flow of fuel to a turboprop in response to manipulation of the throttle by a pilot. Both devices consisted of a throttle valve, a centrifugal governor, and a bellows assembly. The valves in the device regulated fuel flow by opening and closing in response to the pilot’s manipulation of a throttle and changes in engine variables. The first FCU was a hydro-mechanical FCU, and the second FCU was primarily electronic with a back-up hydro-mechanical mode. The latter FCU was designed to receive electrical inputs form the Electronic Engine Control Unit, which the FCU used to control the opening and closing of the valves in the FCU. Noting that heading 8481, HTSUS, specifically provides for devices designed to regulate the pressure or the flow velocity of a liquid or a gas, CBP determined that the subject devices performed the function of a valve and were therefore provided for in heading 8481, HTSUS. See also HQ 958548, dated February 9, 1996.
In this instance, the Avsonic constitutes a valve or similar appliance of heading 8481, HTSUS, and the actuating components are housed together with, and directly connected to, the solenoid valve. As a result, it is properly classified in heading 8481, HTSUS, specifically, subheading 8481.80.90, HTSUS, which provides for “[t]aps, 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.”
You submit that the subject merchandise is also eligible for classification under subheading 9817.00.50, HTSUS. 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 Title 19 of the Code of Federal 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 it is treated according to its primary classification. See id.
With respect to the first requirement, as discussed above, the subject merchandise is prima facie classified in subheading 8481.80.90, HTSUS, and, as such, is not precluded from classification in subheading 9817.00.50, HTSUS, by Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2(t).
The second criterion requires that the subject merchandise satisfy the terms of subheading 9817.00.50, HTSUS, in accordance with GRI 1. Therefore, the subject article must be “machinery,” “equipment,” or “implements” with a sufficient nexus to an “agricultural” or “horticultural” activity. See Informed Compliance Publication, What Every Member of the Trade Community Should Know About: The Agricultural Actual Use Provisions, CBP Publication # 0494-0316, September 2015, https://www.cbp.gov/sites/default/files/assets/documents/2016-Mar/Agricultural%20Actual%20Use%20Provisions%202015%20ICP%20Final.pdf. As the HTSUS does not define the terms “machinery,” “agriculture” or “horticulture,” we refer to lexicographic 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). 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.
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.
The “Avsonic” meets the dictionary definition of “machine” in that it is a mechanical device for performing a task, i.e., controlling the flow of water from a water line to a spray nozzle. The application of this function, to minimize wasted water in the cooling of livestock such as cattle, also establishes a sufficient nexus between the “Avsonic” and an agricultural or horticultural purpose (i.e., raising livestock). Therefore, the subject article satisfies the second requirement of the three-part test for eligibility for duty exemption under subheading 9817.00.50, HTSUS.
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: (1) such use is intended at the time of importation; (2) the article is so used, and; (3) 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. Therefore, provided the importer provides proof of actual use to the satisfaction of the Port Director, the subject “Avsonic” meets the third and final criterion for duty exemption under subheading 9817.00.50, HTSUS.
HOLDING:
By application of GRI 1, the subject “Avsonic” device is properly classified in heading 8481, HTSUS, specifically, subheading 8481.80.90, HTSUS, which provides for “[t]aps, 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 2020 column one, general rate of duty for merchandise of this subheading is 2% ad valorem.
Pursuant to U.S. Note 20 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, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8481.80.90, HTSUS, listed above.
However, the subject article is also eligible for duty exemption under subheading 9817.00.50, HTSUS, if proof is furnished to the Port Director of the actual use of the “Avsonic” for agriculture purposes pursuant to the requirements of 19 CFR §§10.131-10.139. Pursuant to U.S. Note 20(e) to Subchapter III, Chapter 99, HTSUS, articles eligible for duty-free treatment under a provision of Chapter 98 of the HTSUS are exempt from the additional duties imposed by heading 9903.88.03.
Duty rates are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided online at www.usitc.gov.
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.
The text of the most recent HTSUS and the accompany duty rates are provided at www.usitc.gov. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Gregory Connor, Branch Chief
Electronics, Manufacturing, Automotive and International Nomenclature Branch