CLA-2 CO:R:C:M 957130 DWS
Mr. William H. Steere
United Technologies Carrier
Carrier Parkway
P.O. Box 4800
Syracuse, NY 13221
RE: Air Conditioning Units; Evaporator; Condenser; Compressor;
Section XVI, Note 4; Functional Unit; GRI 2(a); NAFTA; General
notes 12(b)(i) and (ii)(A), and 12(t)/84.33(A)
Dear Mr. Steere:
This is in response to your letter of May 11, 1994, to the
Area Director of Customs, New York Seaport, concerning the
applicability of the North American Free Trade Agreement (NAFTA)
and classification of air conditioning units under the Harmonized
Tariff Schedule of the United States (HTSUS). Your letter has
been referred to this office for a response. We regret the delay
in responding to your request.
FACTS:
The merchandise consists of air conditioning units, imported
from Canada, designed for use in buses. Each unit is comprised of
a condenser fan coil unit, an evaporator fan coil unit,
connecting tubing, and a compressor.
You have asked that we consider the classification of the
compressor imported alone, as well as the following component
combinations: the evaporator and the condenser shipped together;
and the evaporator, the condenser, and the compressor shipped
together, with the compressor contained within a separate crate.
You have also requested a NAFTA ruling on the latter component
combination if the compressor is non-originating.
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The subheadings under consideration are as follows:
8414.30.80: [c]ompressors of a kind used in refrigerating
equipment (including air conditioning): [o]ther.
The general, column one rate of duty for goods classifiable under
this provision is 3.4 percent ad valorem.
8415.82.00: [a]ir conditioning machines, comprising a
motor-driven fan and elements for changing the temperature and humidity, including those
machines in which the humidity cannot be
separately regulated; parts thereof: [o]ther,
except parts: [o]ther, incorporating a
refrigerating unit.
The general, column one rate of duty for goods classifiable under
this provision is 2.2 percent ad valorem.
8415.83.00: [a]ir conditioning machines, . . . : [o}ther,
except parts: [n]ot incorporating a
refrigerating unit.
The general, column one rate of duty for goods classifiable
under this provision is 2.2 percent ad valorem.
ISSUES:
Whether the evaporator and condenser are classifiable under
subheading 8415.83.00, HTSUS, as an air conditioning machine, not
incorporating a refrigerating unit.
Whether the evaporator, condenser, and compressor are an
unassembled air conditioning machine, classifiable under
subheading 8415.82.00, HTSUS, as an air conditioning machine,
incorporating a refrigerating unit.
Whether the compressor is classifiable under subheading
8414.30.80, HTSUS, as a compressor of a kind used in
refrigerating equipment.
Whether the component combination with the compressor is
eligible for preferential treatment under the NAFTA.
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LAW AND ANALYSIS:
CLASSIFICATION
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.
We will first deal with the classification of the evaporator
and condenser shipped together.
Section XVI, note 4, HTSUS, states that:
[w]here 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.
Under section XVI, note 4, HTSUS, because the evaporator and
condenser are individual components intended to contribute
together to the function of air conditioning covered by heading
8415, HTSUS, they constitute a functional unit which is
specifically classifiable under subheading 8415.83.00, HTSUS.
Similarly, with regard to the evaporator, condenser, and
compressor, when assembled, under section XVI, note 4, HTSUS,
they constitute a functional unit specifically classifiable under
subheading 8415.82.00, HTSUS. However, because the compressor is
shipped together with the other two components but in its own
crate, we must determine whether the three components constitute
an unassembled functional unit.
GRI 2(a) states that:
[a]ny 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. It shall also include a reference to
that article complete or finished (or falling to be
classified as complete or finished by virtue of this rule),
entered unassembled or disassembled.
With the presence of the three components, this component
combination imparts the essential character of an assembled air
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conditioning machine. Therefore, it is classifiable as a
functional unit under subheading 8415.82.00, HTSUS.
With regard to the classification of the compressor, it is
specifically classifiable under subheading 8414.30.80, HTSUS.
NAFTA ELIGIBILITY
To be eligible for tariff preferences under the NAFTA, goods
must be "originating goods" within the rules of origin in general
note 12(b), HTSUS. General notes 12(b)(i) and (ii)(A), HTSUS,
state:
[f]or the purposes of this note, goods imported into the
customs territory of the United States are eligible for the
tariff treatment and quantitative limitations set forth in
the tariff schedule as "goods originating in the territory
of a NAFTA party" only if --
(i) they are goods wholly obtained or produced entirely in
the territory of Canada, Mexico and/or the United
States; or
(ii) they have been transformed in the territory of Canada,
Mexico and/or the United States so that --
(A) except as provided in subdivision (f) of this note,
each of the non-originating materials used in the
production of such goods undergoes a change in
tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth
therein . . .
You state that the component combination will contain a non-originating compressor. Therefore, because the combination
contains a compressor from a country other than Mexico, Canada,
and/or the U.S., general note 12(b)(i), HTSUS, does not apply.
Consequently, we must resort to general note 12(b)(ii)(A), HTSUS.
Because the component combination is specifically provided
for under subheading 8415.82.00, HTSUS, a transformation is
evident when a change in tariff classification occurs which is
authorized by general note 12(t)/84.33(A), HTSUS, which states:
[a] change to subheadings 8415.81 through 8415.83 from any
subheading outside that group, except from tariff item
8415.90.40 or from assemblies incorporating more than one
of the following: compressor, condenser, evaporator, connecting tubing.
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Therefore, the non-originating compressor must come from a
subheading other than 8415.81 through 8415.83, HTSUS, or from
subheading 8415.90.40, HTSUS. As previously stated, the
compressor is classifiable under subheading 8414.30.80, HTSUS.
Consequently, a change in tariff classification does occur,
and the component combination, containing the compressor, is
eligible for preferential treatment under the NAFTA.
HOLDING:
The evaporator and condenser are classifiable under
subheading 8415.83.00, HTSUS, as an air conditioning machine, not
incorporating a refrigerating unit.
The evaporator, condenser, and compressor are an unassembled
air conditioning machine, classifiable under subheading
8415.82.00, HTSUS, as an air conditioning machine, incorporating
a refrigerating unit.
The compressor is classifiable under subheading 8414.30.80,
HTSUS, as a compressor of a kind used in refrigerating equipment.
The component combination containing the compressor is eligible
for preferential treatment under the NAFTA.
Sincerely,
John Durant, Director
Commercial Rulings Division