CLA-2 RR:TC:MM 960691 JAS
Ms. Mary Hashim
Asea Brown Boveri, (A.B.B. Inc.)
1600 Montee Ste Julie
Varennes, PQ J3X 1S4
RE: HQ 957025 Revoked; Power Shunt Reactor, Electrical Apparatus
Used With Transformers on Long Distance Transmission Lines; Liquid Dielectric Transformer, Subheading 8504.23.00, Inductor; Apparatus for Offsetting the Capacitive Effect of Electrical Current in Power Transmission Lines; Composite Machine, Principal Function, Section XVI, Note 3
Dear Ms. Hashim:
On June 23, 1994, Asea Brown Boveri, (A.B.B. Inc.) filed
administrative protest 0712-94-100698 with Customs officials in
Champlain, New York, contesting the classification under the
Harmonized Tariff Schedule of the United States (HTSUS) of
certain power shunt reactors.
HQ 957025, issued to the Assistant District Director of
Customs, Champlain, New York, on December 30, 1994, granted this
protest under subheading 8504.23.00, HTSUS, a provision for
liquid dielectric transformers having a power handling capacity
exceeding 10,000 kVA, but denied the protest with respect to a
claim for duty-free status under subheading 9905.85.15, HTSUS,
which prescribes a free rate for originating goods under the
North American Free Trade Agreement (NAFTA). We have
reconsidered HQ 957025, and now believe that it is incorrect.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C.
1625(c)(1)), as amended by section 623 of Title VI (Customs
Modernization) of the North American Free Trade Agreement
Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993),
notice of the proposed revocation of HQ 957025 was published on
August 6, 1997, in the Customs Bulletin, Volume 31, Number 32.
- 2 -
FACTS:
The merchandise in protest 0712-94-100698, a power shunt
reactor or shunt reactor, essentially consists of a reactor, also
called an inductor, within which are four bushing current
transformers which step down or reduce the current. Other
auxiliary devices include a hot oil thermometer, gauges, valves
and relays. The shunt reactor was described in HQ 957025 as
being used in conjunction with transformers on long distance
transmission lines that carry high voltage electrical power.
They are installed "in shunt" or parallel to high voltage
electrical transmission lines. The function of shunt reactors is
to create an effect which absorbs or offsets the capacitive
effect along the power transmission line. This eliminates
unacceptable deviations from the required voltage of the network.
This is the only way that large blocks of power at high KV can be
transmitted, relatively unimpeded, over long distances.
The provisions under consideration are as follows:
8504 Electrical transformers, static converters
(for example, rectifiers) and inductors; power supplies for automatic data processing machines or units thereof of heading 8471; parts thereof:
Liquid dielectric transformers:
8504.23.00 Having a power handling capacity exceeding 10,000 kVA...2.1 percent ad valorem/Free under subheading 9905.85.15
as an originating good under NAFTA
* * * *
8504.50.00 Other inductors...3 percent ad valorem/0.3 percent as an originating good under NAFTA
ISSUE:
Whether power shunt reactors are inductors of heading 8504.
- 3 -
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff
Schedule of the United States (HTSUS) in accordance with the
General Rules of Interpretation (GRIs). GRI 1 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
require otherwise, according to GRIs 2 through 6.
Section XVI, Note 3, HTSUS, which governs the classification
of goods in heading 8504, among others, states that unless the
context otherwise requires, composite machines consisting of two
or more machines fitted together to form a whole and other
machines adapted 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 decision in HQ 957025 classifying power shunt reactors
in subheading 8504.23.00, HTSUS, as liquid dielectric
transformers, was based in part on Customs belief that power
shunt reactors are considered by the electric power industry to
be transformers. This is not the case. The power shunt reactors
in issue, each consisting of an inductor and multiple bushing
current transformers, qualify under Section XVI, Note 3, HTSUS,
as composite machines that are to be classified as if consisting
of that component or as being that machine which performs the
principal function. The available evidence indicates that the
electric power industry recognizes shunt reactors with bushing
current transformers to be inductors, and that by function and
design, the transformers are auxiliary or accessory devices to
the reactors' primary function of inductance. This warrants the
conclusion that power shunt reactors are classifiable as
inductors.
HOLDING:
Under the authority of GRI 1, power shunt reactors are
provided for in heading 8504. They are classifiable in
subheading 8504.50.00, HTSUS.
HQ 957025 reflects a final determination with respect to a
particular protest. As such, Customs recognizes that it cannot
be modified or revoked with respect to the disposition of the
entries in that protest. However, for the reasons stated above,
the legal principles set forth in HQ 957025 are hereby revoked - 4 -
and no longer represent the position of the Customs Service with
respect to the classification of power shunt reactors.
In accordance with 19 U.S.C. 1625(c)(1), this ruling will
become effective 60 days after its publication in the Customs
Bulletin. Publication of rulings or decisions pursuant to 19
U.S.C. 1625(c)(1) does not constitute a change of practice or
position in accordance with section 177.10(c)(1), Customs
Regulations (19 CFR 177.10(c)(1)).
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division