CLA-2 RR:CR:GC 962476 AML
Port Director
U.S. Customs Service
511 NW Broadway
Portland, Oregon 97209
RE: Protest 2904-98-100045; Intercoolers and aftercoolers for compressors
Dear Port Director:
The following is our decision regarding protest 2904-98-100045, concerning your classification of intercoolers and aftercoolers for air compressors pursuant to the Harmonized Tariff Schedule of the United States (HTSUS). Descriptive literature was provided for our consideration.
FACTS:
The articles are discrete components of the two stage Kobelco KNW series air compressor. The intercooler and aftercooler use cooled water to lower the temperature of compressed air as it is being generated by the unit. The production of heat is a recognized byproduct of air compression. Air compressors, which are designed to compact large volumes of air into smaller volumes, produce heat incidentally to the function of compressing air. The compressors are not entered whole; rather, the parts, including the intercoolers and aftercoolers, are entered in separate shipments.
The articles were entered between April and November, 1997, and the entries were liquidated between May and July, 1998, with classification in subheading 8419.50.50, HTSUS, as other heat exchange units. This protest was filed on July 17, 1998.
ISSUE:
Whether the intercoolers and aftercoolers for compressors are classifiable under subheading 8414.90.40, HTSUS, as other parts of compressors; or subheading 8419.50.50, HTSUS, as other heat exchange units?
LAW AND ANALYSIS:
Initially, we note that the protest was timely filed (i.e., within 90 days after but not before the notice of liquidation; see 19 U.S.C. 1514(c)(3)(A)) and the matter protested is protestable (see 19 U.S.C. 1514(a)(2) and (5)). However, in the case of entry # 781...5381, the entry was filed on May 13, 1997, initially liquidated on March 27, 1998, and reliquidated (with a rate increase) on July 17, 1998, more than 90 days after the date of notice of the initial liquidation. The law and regulations governing reliquidation of liquidations under 19 U.S.C. 1500 (19 U.S.C. 1501; 19 CFR 173.3(a)) require such reliquidations to be within 90 days from the date on which notice of the original liquidation is given. (We note that although the protest and the reliquidation were on the same date, the protest is timely (and not premature) as to the reliquidation because the statute requires the filing of the protest within 90 days after but not before the notice of liquidation.)
An untimely reliquidation by Customs under 19 U.S.C. 1501 is not void, but rather merely voidable (see Philip Morris v. United States, 13 CIT 556, 716 F. Supp. 1479 (1989) (affirmed in part and reversed in part in an unpublished decision of the Court of Appeals for the Federal Circuit, 8 Fed. Cir. (T) 187, 907 Fed. 2d 158 (1990)), and cases cited therein, including Omni U.S.A., Inc. v. United States, 6 Fed. Cir. (T) 99, 840 F. 2d 912 (1988), cert. den., 488 U.S. 817 (1988), rehearing den., 488 U.S. 961 (1988); see also HQ 222875, dated May 15, 1991). “Neither the legality nor the correctness of a reliquidation by Customs may be disturbed unless a timely protest is filed according to the procedures in 19 U.S.C. 1514 ... and failure to do so within the stated period leaves the reliquidation final” (Philip Morris, supra, 13 CIT at 558). In the case under consideration, the protestant timely protested the July 17, 1998, reliquidation of entry
# 718...5381 (see above) and, therefore, the reliquidation is voided and the protest is granted in regard to this entry.
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.
The HTSUS subheadings under consideration are as follows:
8414 Air or vacuum pumps, air or other gas
compressors and fans; ventilating or recycling
hoods incorporating a fan, whether or not
fitted with filters; parts thereof :
8414.90 Parts:
Of compressors:
8414.90.40 Other.
* * * * * * * * * * * * *
8419 Machinery, plant or laboratory equipment,
whether or not electrically heated, for the
treatment of materials by a process involving a
change of temperature such as heating, cooking,
roasting, distilling, rectifying, sterilizing,
pasteurizing, steaming, drying, evaporating,
vaporizing, condensing or cooling, other than
machinery or plant of a kind used for domestic
purposes; instantaneous or storage water
heaters, nonelectric; parts thereof:
Instantaneous or storage water heaters,
nonelectric:
8419.50 Heat exchange units:
8419.50.50 Other.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise. Customs believes the ENs should always be consulted. See T.D. 89 80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The protestant alleges that the articles should be classified as parts of compressors. The articles are entered in shipments separately from the remaining parts of the compressors, all of which are presumably assembled into finished air compressors following liquidation. In XTC Products, Inc. v. United States, 771 F. Supp. 401, 405 (1991), the U.S. Court of International Trade stated that “[i]t is well established that an imported article is to be classified according to its condition as imported . . . .” See also, United States v. Citroen, 223 U.S. 407 (1911). Upon entry, the intercoolers and aftercoolers are devices which cool air by passing it through water filled tubes. Although they are designed and intended to be used exclusively with the Kobelco air compressor, they must be classified based on their condition as imported, rather than according to their intended future use.
Section XVI, Note 2, HTSUS, provides, in pertinent part, that:
(a) Parts which are goods included in any of the headings of chapters 84 and 85 . . . are in all cases to be classified in their respective headings;
(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading . . . are to be classified with the machines of that kind or
in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as
appropriate. ...
Note 2 of Section XVI was interpreted and applied in the context of electronic computer motors by the Court of International Trade in Nidec Corporation v. United States, 861 F. Supp. 136, aff’d, 68 F. 3d 1333 (1995). The Court, after observing that “parts of the machines are to be classified according to [Note 2(a) and 2(b) of Section 16]” stated that:
[t]he Explanatory Notes hereon state (at page 1131) that “parts which are suitable for use solely or principally with particular machines or apparatus . . . are classified in the same heading as those machines or apparatus”. This statement, however, does “not apply to parts which in themselves constitute an article covered by a heading of this section . . .; these are in all cases classified in their own appropriate heading even if specifically designed to work as part of a specific machine.” (861 F. Supp. at 141-142; footnote omitted; emphasis in original).
The combined effect of Note 2 to Section XVI and the Nidec decision is if the intercoolers and aftercoolers are included in a heading of Chapters 84 and 85 other than heading 8414, they cannot be considered to be compressor parts of heading 8414, HTSUS. The articles must be treated in a manner similar to the electric motor in Nidec (which was specifically manufactured for use in the computer) - the articles must be classified as they exist upon entry, in consideration of their construction, function and use, rather than their intended purpose.
The ENs to heading 8419, pp. 1271-1276, provide, in pertinent part, that:
* * *
With these exceptions, the heading covers machinery and plant designed to submit materials (solid, liquid or gaseous) to a heating or cooling process in order to cause a simple change of temperature, or to cause a transformation of the materials resulting principally from the temperature change (e.g., heating, cooking, roasting, distilling, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vaporising, condensing or cooling processes). But the heading excludes machinery and plant in which the heating or cooling, even if essential, is merely a secondary function designed to facilitate the main mechanical function of the machine or plant, e.g., machines for coating biscuits, etc., with chocolate, and conches (heading 84.38), washing machines (heading 84.50 or 84.51), machines for spreading and tamping bituminous road surfacing materials (heading 84.79) [emphasis in original].
Consideration of several of the exemplars of heading 8419, HTSUS, reveals that the intercoolers and aftercoolers are, in their condition as imported, contemplated within the heading. Both articles constitute “machinery designed to submit materials (solid, liquid or gaseous) to a heating or cooling process in order to cause a simple change of temperature.” An instantaneous water heater has the single, intended design and function of changing the temperature of the water it heats; likewise, a drinking fountain has the single intended design and function of chilling and producing the water it chills. The same characteristic is shared by all of the exemplars within the heading: the machines have the sole intended purpose of changing the character of an element or article. The intercoolers and aftercoolers cool the air being compressed. Pursuant to Note 2 of Section XVI, the Nidec decision, and the above-cited ENs, the intercoolers and aftercoolers, in their condition as imported, are classifiable in heading 8419, HTSUS, and may not be classified as parts of compressors in heading 8414, HTSUS.
HOLDING:
The intercoolers and aftercoolers for air compressors are classified under subheading 8419.50.50, HTSUS, as other heat exchange units.
The protest is GRANTED in part (as to entry # 718...5381 which was reliquidated more than 90 days after initial liquidation; reliquidation pursuant to this protest ruling should be as liquidated in the initial liquidation) and DENIED in part (as to the remaining entries). In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division