CLA-2 RR:CR:GC 961387
Mr. Edward F. Juliano, Jr.
360 Massachusetts Avenue, Suite 105
Acton, MA 01720
RE: Electric Meter Module; NY B84956; HQ 089989; Chapter 90,
note 2;
NAFTA; General Notes 12(b) and 12(t)/90.66; 9029.10.80
Dear Mr. Juliano:
This is in response to your letters of January 8, 12, 20,
and 27, 1998, to the National Commodity Specialist Division of
Customs, New York, and those of March 2, 17, and 18, 1998, to
this office, on behalf of Jabil Circuit, Inc., and CellNet
Systems, Inc., concerning the applicability of the North America
Free Trade Agreement (NAFTA) to and the classification of
electric meter modules under the Harmonized Tariff Schedule of
the United States (HTSUS).
FACTS:
The merchandise consists of electric meter modules which
will be incorporated into electric meters once imported into the
U.S. The modules measure consumers' electric power usage and
allow electric utility companies to remotely read their meters.
Each module reads an electric meter by counting the rotations of
the meter disk via an optically interrupted system. The module
then, periodically, transmits the collected information to the
utility's controller unit using a short-range radio frequency via
a spread spectrum modulation technique. The modules consist of
printed circuit board assemblies (PCBAs) incorporating a variety
of electronic components, including resistors, capacitors,
diodes, integrated circuits, inductors, switches, fuses, and
screws.
The electric meter modules will be manufactured in Mexico.
The manufacturing process of each module will include the
following: placement of electronic and electrical components on
the bare printed circuit board (PCB) using automatic insertion
equipment; manual insertion of certain electronic and electrical
components; soldering of components to a PCB by wave soldering
machine; separation of individual PCBAs from a multiboard unit;
testing; assembly of a finished PCBA into plastic housing with
screws; application of product and FCC labels; and packing for
shipment.
You claim that the plastic housing and metal radio frequency
shields for each module are products of the U.S. However, you
state that the origin of all the other components for each module
is unknown at this time; therefore, you request that we treat
these components as non-originating for NAFTA purposes.
ISSUE:
Whether the electric meter modules are classifiable under
subheading 9028.90.00, HTSUS, as parts or accessories of gas,
liquid, or electricity supply or production meters, or under
subheading 9029.10.80, HTSUS, as other counters.
Whether the electric meter modules are eligible for
preferential treatment under the NAFTA.
LAW AND ANALYSIS:
CLASSIFICATION
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's). GRI
1 provides that classification is determined according to the
terms of the headings and any relative section or chapter notes.
The HTSUS provisions under consideration are as follows:
9028 Gas, liquid or electricity supply or production meters,
including calibrating meters
thereof; parts and accessories thereof:
9028.90.00 Parts and accessories.
* * * * * * * * *
9029 Revolution counters, production counters, taximeters,
odometers, pedometers
and the like; speedometers and tachometers, other than those
of heading
9014 or 9015; stroboscopes; parts and accessories thereof;
9029.10 Revolution counters, production counters, taximeters,
odometers, pedometers and the like:
9029.10.80 Other.
* * * * * * * * *
In NY B84956, dated May 30, 1997, Customs held a similar
electronic module assembly to be classifiable under subheading
9028.90.00, HTSUS. In the ruling, the description of the module
was set forth as follows:
[t]he Electronic Module Assembly (EMA) is an electronic device designed
to be attached to most standard North American electric watt-hour meters.
Once attached to the meter it provides
utility companies with the ability to remotely read electric meters.
This is accomplished through
the EMA's ability to record, store, and transmit power consumption data
over the electrical power
distribution lines by optically sensing the electric meter's disk
rotation. By counting the number of
revolutions made by the disk, the EMA determines the amount of electric
energy consumed and
stores this data in a non-volatile memory for later down loading (sic)
to a central point by the utility
company.
Based upon the information you have provided, the subject
electric meter modules operate in a similar fashion to the EMA in
NY B84956, except that the subject modules transmit the collected
information using a radio frequency, and the EMA transmits the
collected information through electrical power distribution
lines. Therefore, as with the EMA in NY B84956, because the
electric meter modules will be incorporated into electric meters
of heading 9028, HTSUS, once imported into the U.S., we find they
meet the term "parts and accessories" of heading 9028, HTSUS, and
are described under subheading 9028.90.00, HTSUS.
As the modules meet the term "parts and accessories",
chapter 90, note 2, HTSUS, is applicable. It states that:
[s]ubject to note 1 above, parts and accessories for machines,
apparatus, instruments or articles of this chapter are to be classified
according to the following rules:
(a) Parts and accessories which are goods included in any of the
headings of this chapter or of chapter 84, 85 or 91 (other than
heading 8485, 8548 or 9033) are in all cases to be classified in
their respective headings;
(b) Other parts and accessories, if suitable for use solely or
principally with a particular kind of machine, instrument or
apparatus, or with a number of machines, instruments or apparatus
of the same heading (including a machine, instrument or apparatus
of heading 9010, 9013 or 9031) are to be classified with the
machines, instruments or apparatus of that kind;
(c) All other parts and accessories are to be classified in heading
9033.
It has been suggested that the subject modules are counters
of heading 9029, HTSUS, specifically classifiable under
subheading 9029.10.80, HTSUS. If such is the case, then because
the modules would then be goods included in a heading of chapter
90, HTSUS, chapter 90, note 2(a), HTSUS, would be applicable, and
the modules would be classifiable in heading 9029, HTSUS. The
holding in HQ 089989, dated November 23, 1991, is cited as
precedent for classifying the subject modules in heading 9029,
HTSUS.
In HQ 089989, we held an electromechanical counter assembly,
which was to be incorporated into another counting device, to be
classifiable under subheading 9029.10.80, HTSUS. We stated that
because the assembly was in and of itself a counting device, it
was a good of heading 9029, HTSUS, and not classifiable as a
"part and accessory" in heading 9028, HTSUS.
However, it is our position that the subject electric meter
modules are distinguishable from the electromechanical counter
assembly in HQ 089989. Based upon a review of the factual
information in HQ 089989, the assembly was merely a counter;
unlike the subject modules, it did not possess equipment to
transmit the collected information from the counter to a remote
location. We find that the capability of the modules to transmit
such information is beyond the scope of the goods classifiable in
heading 9029, HTSUS. Therefore, as it is our position that the
subject modules are not in the class or kind of merchandise
classifiable in heading 9029, HTSUS, they are precluded from
classification therein.
Based upon a GRI 1 analysis, as the electric meter modules
are not goods included in the headings of chapters 84, 85, 90, or
91, chapter 90, note 2(a), HTSUS, is inapplicable. However, as
noted, the modules are described in the "parts and accessories"
provision of heading 9028, HTSUS, specifically under subheading
9028.90.00, HTSUS. As it is our understanding that the modules
are solely or principally used with electric meters of heading
9028, HTSUS, based upon chapter 90, note 2(b), HTSUS, they are
classifiable under subheading 9028.90.00, HTSUS.
NAFTA APPLICABILITY
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, which, in part, states that:
[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; *****
Because the electric meter modules contain components from
countries other than Mexico, Canada and/or the U.S., general note
12(b)(i), HTSUS, does not apply. Therefore, we must resort to
general note 12(B)(ii)(A), HTSUS.
General note 12(t)/90.66, HTSUS, states:
[a] change to subheading 9028.90 from any other heading.
Therefore, for the electric meter modules to be originating
for NAFTA purposes, all non-originating components of the modules
must be classifiable in any heading other than heading 9028,
HTSUS.
You have provided a bill of material of the components of
each module listed with the HTSUS provisions in which you claim
the components are classifiable. Based upon an analysis of this
bill of material, it appears that none of the non-originating
components are classifiable in heading 9028, HTSUS.
Consequently, if, as you claim, all the non-originating
components of the subject modules are classifiable in headings
other than 9028, HTSUS, they undergo the required tariff shift to
subheading 9028.90, HTSUS, and the electric meter modules satisfy
the requirement of general note 12(t)/90.66, HTSUS, and qualify
as originating goods for NAFTA purposes.
HOLDING:
The electric meter modules are classifiable under subheading
9028.90.00, HTSUS, as parts or accessories of gas, liquid, or
electricity supply or production meters.
Based upon your claims concerning the classification of the
components of each module, and the information you have provided,
the electric meter modules are eligible for preferential
treatment under the NAFTA.
Sincerely,
John Durant, Director
Commercial Rulings Division