CLA-2 RR:CTF:TCM 967823 KSH
8438.90.9015, 9403.20.0030
Port Director
Bureau of Customs and Border Protection
610 S. Canal Street
Chicago, IL 60607-4523
RE: Application for Further Review 3901-05-100241; pilot wafer plant
Dear Port Director:
This is in reply to your correspondence forwarding Application for Further Review (AFR) of protest no. 3901-05-100241, filed by Hodes, Keating & Pilon, on behalf of BoDeans Baking Company.
The protest is against Customs and Border Protection’s (CBP) classification and liquidation of one entry of a pilot wafer plant under subheading 8417.20.0000 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for “Industrial or laboratory furnaces and ovens, including incinerators, non-electric, and parts thereof: bakery ovens, including biscuit ovens” with a duty rate of 3.5 percent ad valorem. Protestant entered the merchandise subject to this protest on May 14, 2004, in subheading 8438.10.0010, HTSUSA, which provides for machinery...for the industrial preparation of food or drink: bakery machinery. The merchandise was liquidated on December 3, 2004.
Protestant filed the protest with an AFR on March 1, 2005, challenging the classification, rate and amount of duties chargeable and liquidation of the entry at issue. The importer’s request for AFR was approved.
Protestant has alleged the decision against which the protest is filed involves questions of fact that have not been ruled upon by the Commissioner of Customs or his designee or by the Customs Courts. No rulings have been located regarding similar merchandise. Thus, further review is warranted pursuant to 19 CFR §§174.24(a) and 174.25.
FACTS:
The merchandise at issue is used for the experimental production of ice cream sandwiches and wafers. It is imported in a single shipment. The pilot wafer plant includes a horizontal Z-arm kneading machine, a sheeting machine, rotary cutting machine, dough net conveyor return system, convection baking oven, packing table and device, conveyors and gauge rollers to move the product from station to station. The cooling conveyor moves the product through a cooling process to cool by ambient air, without the use of mechanical intervention, to the packing table. The packing table is a metal floor standing rack which is utilized by a packer to grab the product and pack it by hand. The pilot wafer plant is controlled by an electric control panel. The control panel controls the entire production line from a single point. The panel houses a PLC and all necessary electrical drives. The voltage does not exceed 1,000V. The pilot wafer plant also has an air driven back-up motor that appears to be a spare motor.
ISSUE:
Whether the pilot wafer plant is classifiable as a functional unit under heading 8419, HTSUSA or 8438, HTSUSA, or as a composite machine separately classifiable by its components.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall 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 GRI may then be applied.
The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRI. The ENs, although neither dispositive or legally binding, facilitate classification by providing a commentary on the scope of each heading of the HTSUS, and are generally indicative of the
proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
Protestant presents two main arguments that the pilot wafer plant should be classified in heading 8419 or in heading 8438, HTSUSA; (1) the components of the pilot wafer plant should be classified as an “entirety”; and (2) the pilot wafer plant is not an oven designed or intended for industrial production.
Protestant argues that the pilot wafer plant is classifiable as an “entirety” because the components are shipped together and are intended to be used together. Historically under the previous tariff schedule, the “doctrine of entireties” was employed when a line of machines was imported in a single shipment. However, “ the doctrine of entireties” is no longer applicable under the HTSUSA. Section XVI, Notes 3 and 4, HTSUSA, are applicable, and govern the classification of composite and functional units, respectively. Thus, it must be determined whether the pilot wafer plant is a composite machine or functional unit.
Section XVI, Note 3, HTSUSA, provides:
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.
The pilot wafer plant consists of components which are classifiable within different headings and are different machines. However, they do not form a composite machine because they are not "fitted together to form a whole." The Explanatory Notes define "fitted together to form a whole" as incorporating one machine within the other, mounting one on the other, or mounting both machines on a common base or frame or in a common housing. The machines are not incorporated into one another, mounted onto the other or mounted on a common base or in a common housing. Therefore, the pilot wafer plant is not a composite machine within Section XVI, Note 3, HTSUSA. The second relevant section note, Section XVI, Note 4, HTSUSA, addresses functional units. The note states: Where a machine...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.
The Explanatory Notes express that a "functional unit" covers only those "machines and combination of machines essential to the performance of the function specific to the functional unit as a whole..."
Protestant argues that the pilot wafer plant is not classifiable as an oven because it consists of an entire ice cream wafer sandwich production line that performs such functions as mixing dough and cutting or baking the sandwiches. Pursuant to GRI 2(a), protestant contends that the unassembled wafer plant is classified in the same heading as the assembled pilot wafer plant. Protestant argues that the machines “all contribute to the overriding function of producing ice cream sandwich wafers.” Consequently, protestant advances the position that the pilot wafer plant should be classified in heading 8419, HTSUSA, as other machinery, plant or equipment for cooking or heating food, as the principal function of the pilot wafer plant is to produce finished baked sandwiches. Alternatively, protestant claims that the pilot wafer plant is classifiable in heading 8438, HTSUSA, as bakery machinery used for the manufacture of food or drink.
The purpose of the pilot wafer plant is producing ice cream sandwich wafers. The function of the machine is baking and food preparation. Producing ice cream wafers is not a function recognized in Chapter 84 or 85, HTSUSA. As such, the components must be separately classified. We note that although the entire importation fails the functional unit test, two or more units of the pilot wafer plant might constitute a functional unit if the requirements of Section XVI, Note 4, HTSUSA, are met. See HQ 963029, dated July 7, 2000.
The pilot wafer plant has two functions, i.e, food preparation and baking. Those components that prepare the food which include, the Z-arm kneader, 3-roll sheeter with transfer conveyor belt, gauge roller with transfer conveyor belt, 3 sets of gauge rollers with transfer conveyor belts, expansion conveyor belt, monocylindrical rotary cutting machine and dough net conveyor system are classified pursuant to Section XVI, Note 4, as a functional unit in heading 8438. It is specifically provided for in subheading 8438.80.0000, HTSUSA, which provides for “Machinery, not specified or included elsewhere in this chapter, for the industrial preparation or manufacture of food or drink, other than machinery for the extraction or preparation of animal or fixed vegetable fats or oils; parts thereof: Other machinery”.
The convection baking oven and take-off and transfer conveyor are classified as a functional unit under Section XVI, Note 4, HTSUSA. Protestant further maintains that the oven component is not an “industrial oven”, which CBP has interpreted to refer to large-scale production. There is no dispute that the pilot wafer plant is not used for full-scale commercial production. However, the language of heading 8417, HTSUS, reads in part, “industrial or laboratory furnaces and ovens.” (Emphasis added). The heading is not limited to industrial ovens. Inasmuch as the oven is used for research and development, the convection baking oven and take-off and transfer conveyor eo nomine meets the terms of heading 8417, HTSUS, as an oven for laboratory purposes. Moreover, the EN’s to heading 8419, HTSUS, exclude ovens of heading 8417, HTSUS. Accordingly, the convection baking oven and take-off and transfer conveyor is classified in subheading 8417.20.0000, HTSUS, which provides for “Industrial or laboratory furnaces and ovens, including incinerators, non-electric, and parts thereof: bakery ovens, including biscuit ovens”.
The cooling conveyor does not utilize mechanical intervention, thus heading 8419, HTSUSA, is inapplicable. Thus, the cooling conveyor is classified in heading 8428, HTSUSA. It is specifically provided for in subheading 8428.33.0000, HTSUSA, which provides for “Other lifting, handling, loading or unloading machinery ...: Other continuous-action elevators and conveyors, for goods or materials: Other, belt type.”
The packing table consists of a metal frame with a nylon belt. The packing is done manually. It is a composite good whose essential character is imparted by the metal table. The packing table is classified in heading 9403, HTSUSA. It is specifically provided for in subheading 9403.20.0030, HTSUSA, which provides for “Other metal furniture, Other.”
The control panel controls the entire production line from a single point. The panel houses a PLC and all necessary electrical drives. The voltage does not exceed 1,000V. Thus, the control panel is classified in heading 8537, HTSUSA. It is specifically provided for in subheading 8537.10.9060, HTSUSA, which provides for “[b]oards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517: For a voltage not exceeding 1000 V: Other, Other: Programmable controllers.”
The hand packing device is a metal floor standing rack. It is classified in heading 9403, HTSUSA. It is specifically provided for in subheading 9403.20.0030, HTSUSA, which provides for “Other metal furniture, Other.”
The air driven back-up motor appears to be a spare motor. It is classified in heading 8412, HTSUSA. It is specifically provided for in subheading 8412.39.0040, HTSUSA, which provides for “Other engines and motors, and parts thereof: Pneumatic power engines and motors: Other: Unlimited rotary acting.”
HOLDING:
By application of Section XVI, Note 4, the Z-arm kneader, 3-roll sheeter with transfer conveyor belt, gauge roller with transfer conveyor belt, 3 sets of gauge rollers with transfer conveyor belts, expansion conveyor belt, monocylindrical rotary cutting machine and dough net conveyor system are classified in heading 8438. It is specifically provided for in subheading 8438.80.0000, HTSUSA, which provides for “Machinery, not specified or included elsewhere in this chapter, for the industrial preparation or manufacture of food or drink, other than machinery for the extraction or preparation of animal or fixed vegetable fats or oils; parts thereof: Other machinery”. The column one, general rate of duty is Free.
The convection baking oven and take-off and transfer conveyor is classified in heading 8417. It is specifically provided for in subheading 8417, 20.0000, HTSUSA, which provides for “Industrial or laboratory furnaces and ovens, including incinerators, non-electric, and parts thereof: bakery ovens, including biscuit ovens”. The column one, general rate of duty is 3.5% ad valorem.
The cooling conveyor is classified in heading 8428. It is specifically provided for in subheading 8428.33.0000, HTSUSA, which provides for “Other lifting, handling, loading or unloading machinery: Other continuous-action elevators and conveyors, for goods or materials: Other, belt type.” The column one, general rate of duty is Free.
The packing table is classified in heading 9403. It is specifically provided for in subheading 9403.20.0030, HTSUSA, which provides for “Other metal furniture, Other.” The column one, general rate of duty is Free.
The control panel is classified in heading 8537. It is specifically provided for in subheading 8537.10.9060, HTSUSA, which provides for “[b]oards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517: For a voltage not exceeding 1000 V: Other, Other: Programmable controllers.” The column one, general rate of duty is 2.7% ad valorem.
The hand packing device is classified in heading 9403. It is specifically provided for in subheading 9403.20.0030, HTSUSA, which provides for “other metal furniture, other.” The column one, general rate of duty is free.
The air driven back-up motor is classified in heading 8412. It is specifically provided for in subheading 8412.39.0040, HTSUSA, which provides for “Other engines and motors, and parts thereof: Pneumatic power engines and motors: Other: Unlimited rotary acting.” The column one, general rate of duty is Free.
The protest should be DENIED. In accordance with the Protest/Petition Processing Handbook, (CIS HB, June 2002, pp 18 and 21), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. No later than sixty days from the date of this letter, the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP
Home Page on the World WideWeb at www.cbp.gov, by means of the Freedom of Information Act, and by other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division