CLA-2 OT:RR:CTF:EMAIN H322878 EKR
Mr. Troy Crago
Atico International USA
501 South Andrews Avenue
Fort Lauderdale, Florida 33301
RE: Revocation of NY B88990, NY R00569, and NY N283857; Tariff classification of hot and cold water dispensers.
Dear Mr. Crago:
This ruling is in reference to New York Ruling Letter (NY) R00569, dated August 6, 2004, regarding the classification of a hot and cold water dispenser under the Harmonized Tariff Schedule of the United States (HTSUS). In NY R00569, U.S. Customs and Border Protection (CBP) classified the subject article in heading 8418, HTSUS, which provides for “Refrigerators, freezers and other refrigerating or freezing equipment, electric or other; heat pumps, other than the air conditioning machines of heading 8415; parts thereof.” Upon reconsideration, CBP has determined that NY R00569 is in error. We have also reviewed NY B88990, dated September 22, 1997, and NY N283857, dated March 22, 2017, which classify substantially similar hot and cold water dispensers in heading 8418, HTSUS. As with NY R00569, we have determined that the tariff classification of the subject merchandise in these rulings is incorrect.
Notice of the proposed action was published in the Customs Bulletin, Vol. 56, No. 23, on June 15, 2022. Five comments were received in response to that notice. Three commenters expressed general support for the revocation. Another commenter noted that classifying the subject water dispensers in heading 8516, HTSUS, rather than in heading 8418, HTSUS, could have consequences for the application of Section 301 duties. While we acknowledge that this action may indeed affect the applicability of Section 301 duties, we are required to apply the tariff as written, without regard to the presence or absence of Section 301 duties. The final comment is addressed below.
FACTS:
In NY R00569, the subject merchandise is described as a thermoelectric desktop water dispenser, featuring a stainless-steel hot water tank, and a separate thermoelectric chamber for cold water. The unit is further described as having hot and cold switches, a removable drip tray, and a light-emitting diode (LED) indicator light. The water dispenser is compatible with a three or five gallon water bottle, which fits into the top of the unit.
In NY B88990, CBP described the “Dual Quick Water Dispenser” as a drinking water dispenser, providing cold water or hot water for coffee, tea or soup. The unit is further described as having a compression type refrigeration system and a band heater for hot water.
In NY N283857, the merchandise is described as water coolers, dispensing hot and cold water. Two models are designed to connect directly to a water supply, while four additional models rely on a water bottle. Cold water is produced by a reciprocating compressor, with coils mounted on the back of the unit to receive refrigerant circulated by the compressor.
ISSUE:
Whether water dispensers that both chill and heat water are properly classified in heading 8418, HTSUS, which provides for “Refrigerators, freezers and other refrigerating or freezing equipment, electric or other; heat pumps, other than the air conditioning machines of heading 8415; parts thereof” or in heading 8516, HTSUS, which provides for “Electric instantaneous or storage water heaters and immersion heaters; electric space heating apparatus and soil heating apparatus; electrothermic hairdressing apparatus (for example, hair dryers, hair curlers, curling tong heaters) and hand dryers; electric flatirons; other electrothermic appliances of a kind used for domestic purposes; electric heating resistors, other than those of heading 8545; parts thereof.”
LAW AND ANALYSIS:
Classification under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods will 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 2 through 6 will then be applied in order. GRI 2(b) states that “the classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.”
GRI 3(a) provides that “the heading which provides the most specific description shall be preferred to headings providing a more general description.” GRI 3(b) states, in pertinent part, that composite goods that cannot be classified by reference to GRI 3(a), are to be classified as if they consisted of the component that gives them their essential character. GRI 3(c) provides that when goods cannot be classified by reference to GRI 3(a) or 3(b), they are to be classified in the heading that occurs last in numerical order among the competing headings that equally merit consideration.
The following provisions of the HTSUS are under consideration:
8418 Refrigerators, freezers and other refrigerating or freezing equipment, electric or other; heat pumps, other than the air conditioning machines of heading 8415; parts thereof:
* * *
8516 Electric instantaneous or storage water heaters and immersion heaters; electric space heating apparatus and soil heating apparatus; electrothermic hairdressing apparatus (for example, hair dryers, hair curlers, curling tong heaters) and hand dryers; electric flatirons; other electrothermic appliances of a kind used for domestic purposes; electric heating resistors, other than those of heading 8545; parts thereof:
Section XVI, Note 3 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.
All three of the water dispensers under consideration are designed to dispense hot and cold water. In other words, they perform two complementary functions: a refrigeration function designed to chill water, and a heating function designed to heat water. They are composite machines, covered by Note 3 to Section XVI. In assessing whether the devices have a principal function, we note that although the three dispensers are configured differently (e.g., differing uses of tanks and different types of refrigeration or heating technology), the heating and cooling of water is accomplished in parallel. Likewise, there is no indication that either the refrigerating or the heating equipment housed within the subject dispensers is more robust or effective. As such, we conclude that neither the refrigeration function nor the heating function constitutes the “principal” function of the water dispenser.
The Explanatory Notes to Note 3 to Section XVI provide:
(VI) MULTI FUNCTION MACHINES
AND COMPOSITE MACHINES
(Section Note 3)
In general, multi-function machines are classified according to the principal function of the machine.
Multi-function machines are, for example, machine-tools for working metal using interchangeable tools, which enable them to carry out different machining operations (e.g., milling, boring, lapping).
Where it is not possible to determine the principal function, and where, as provided in Note 3 to the Section, the context does not otherwise require, it is necessary to apply General Interpretative Rule 3 (c); such is the case, for example, in respect of multi function machines potentially classifiable in several of the headings 84.25 to 84.30, in several of the headings 84.58 to 84.63 or in several of the headings 84.70 to 84.72.
Turning, then, to GRI 3, it is clear that neither heading provides a more specific description of the merchandise: both headings describe only part of the water dispenser. Neither the refrigeration component, nor the heating component gives the water dispenser its essential character. Thus, the goods cannot be classified pursuant to GRI 3(a) or GRI 3(b). The hot and cold water dispensers are therefore classified pursuant to GRI 3(c), in the heading occurring last in numerical order among those which equally merit consideration, heading 8516, HTSUS, in this instance.
One commenter asserted that the water dispenser should be classified in heading 8479, HTSUS, pursuant to Note 8 to Chapter 84. Note 8 to Chapter 84 provides: “Subject to note 2 to this chapter and note 3 to section XVI, a machine the principal purpose of which is not described in any heading or for which no one purpose is the principal purpose is, unless the context otherwise requires, to be classified in heading 8479.” Note 8 to Chapter 84 applies to headings of Chapter 84, and is “[s]ubject… to note 3 to section XVI.” Because we are considering headings both Chapter 84 and Chapter 85, and because the water dispensers are composite machines of Note 3 to Section XVI, Note 8 to Chapter 84 is not applicable in this instance.
HOLDING:
By application of GRIs 1, 3(c) and 6, the water dispensers at issue in NY R00569, NY B88990, and NY N 283857 are classified in heading 8516, HTSUS, and are specifically provided for under subheading 8516.79.00, HTSUS, which provides for “Electric instantaneous or storage water heaters and immersion heaters; electric space heating apparatus and soil heating apparatus; electrothermic hairdressing apparatus (for example, hair dryers, hair curlers, curling tong heaters) and hand dryers; electric flatirons; other electrothermic appliances of a kind used for domestic purposes; electric heating resistors, other than those of heading 8545; parts thereof: Other electrothermic appliances: Other.” The general, column one rate of duty for merchandise of subheading 8516.79.00, HTSUS, is 2.7% ad valorem.
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 internet at www.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
NY R00569, dated August 6, 2004, NY B88990, dated September 22, 1997, and NY N283857, dated March 22, 2017 are hereby REVOKED in accordance with the above analysis.
In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Yuliya A. Gulis, Acting Director
Commercial and Trade Facilitation Division