CLA-2 RR:CTF:TCM 968089 RSD
TARIFF No. 9028.90.0080
Michael E. Murphy, Esq.
Baker & McKenzie
815 Connecticut Avenue, NW
Washington, D.C. 20006-4078
RE: Classification of the Absolute Digital Encoder Register used in water metering systems
Dear Mr. Murphy:
This is in reply to your letter dated December 22, 2005, on behalf of BadgerMeter, Inc., regarding the classification of the Absolute Digital Encoder Register that is used in water metering systems under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter to the National Commodity Specialist Division in New York was forwarded to our office for a response. A water meter system with an Absolute Digital Encoder Register was submitted for our consideration. We have also received two supplemental submissions from you dated March 16, and April 11, 2006.
FACTS:
The product at issue is called the Absolute Digital Encoder Register (“ADE” register). It is used in remote water meter reading systems and is made in Mexico. The device keeps track of the amount of water that has flowed through a given pipe of a water works system by means of a mechanical magnetic counter. The counter uses magnets to compute the volume of water that has been used. The ADE register is equipped with an odometer that has a dial from which the amount of water that has been consumed can be read.
The BadgerMeter water meter system is made up of two main components: the ADE register and a metal housing containing magnetic vanes through which water flows. The ADE register is secured to the top of a BadgerMeter water meter system and is connected via wires to a touch module or a radio frequency transmitter. In addition, the ADE register also has a built-in digital encoder that changes the stored data regarding water usage from a mechanical configuration into a digital format. Because of the encoder feature, a touch module or radio frequency device can be used to read the water meter remotely and electronically. This provides a digital communications link between the water meter and a remote meter reading device.
The ADE register consists of a housing, a magnet, a printed circuit assembly, a 360( test circle with a sweep hand, and a flow finder to detect leaks. As water flows through a metal housing containing the magnetic vanes, it causes a magnet to rotate. The magnet’s movement is transferred through a cover plate to a follower magnet which is contained inside the ADE register. The rotation of the ADE register’s follower magnet causes the flow finder, the 360( test circle sweep hand, and ultimately the odometer to move. The odometer thus reflects the water consumption.
The built-in encoder in the ADE register determines the position of a series of number wheels on the odometer and communicates that reading along with serial number information to an associated reading device in standard ASST format. The encoder uses a printed circuit assembly that consists of a printed circuit board with photodiodes, phototransistors, resistors, capacitors, a microprocessor and an odometer. The odometer consists of 6 number wheels, each of which contains 5 slots or light paths. The 360( test circle sweep hand is a pointer on the face of the ADE register that allows for a finer resolution of water consumption than would be shown on the odometer. Like a second hand on a watch, the 360( test circle sweep must rotate once completely before a number registers on the first number wheel. The flow finder is a small dial on the face of the ADE register that is geared to the magnet. Thus, the flow finder will move any time any amount of water is flowing through the meter, and it is therefore used to detect leaks. It is employed to determine if water is still flowing even when the water main has been shut off.
To obtain a remote meter reading, a touch module or a radio frequency transmitter inputs power and a clock signal to the ADE register. Once powered, the ADE register’s microprocessor sequentially actuates photo diodes that transmit infrared light through the slotted number wheels of the odometer. Depending on the position of the number wheels, certain of the light paths are blocked. The microprocessor determines the position of the number wheels by detecting the number of blocked and open light paths. The light impulses are then used to determine the reading on the odometer.
The ADE register then transmits the data from the number wheels in standard ASCII format to a touch module or a radio frequency transmitter. This data transmission includes the ADE register’s specific serial number as well as the odometer reading. To calculate the water usage on a water meter, the receiver then uses this data. The ADE register does not emit an electronic pulse for each rotation, nor does it visually read the odometer.
The reading device may be a touch read system or other automatic reading device, such as a radio frequency (RF) transmitter. The receiver (for example, a utility company) then utilizes this data to calculate the water usage on the given meter. In the touch-read technology, the encoder register is wired to a small touch pad that may be located some distance away from the actual meter. The meter reader holds a handheld device to the touchpad, and the device interrogates the meter register and saves the reading for later retrieval.
In the case of RF meter reading systems, which are becoming more prevalent, a radio transmitter is wired to the ADE register. The RF signal from the meter transmitter is received and stored by an RF receiver. The receiver may be vehicle mounted which allows the meter reader to collect data by driving past the meter transmitter. Alternatively, it may be part of a fixed network of permanently-mounted data collectors.
According to the Operations Material Manager at BadgerMeter, Inc., there may be a small number of instances in which meter readings are collected manually using the number wheels on the ADE register. However, a water utility would not normally be expected to purchase an ADE register to be used on an ongoing basis in this way, because it costs significantly more than a common “local-read” register, which offers only visual reading capability.
ISSUE:
Whether the ADE registers used with the BadgerMeter water meter systems are classified as water meters in heading 9028, HTSUS or as electric transducers under heading 8543, HTSUS.
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRI’s). 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 GRIs may then be applied.
The HTSUS provisions under consideration are as follows:
8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:
Other machines and apparatus:
Other:
Electric synchros and transducers; flight data recorders; defrosters and demisters with electric resistors for aircraft.
* * *
9028 Gas, liquid or electricity supply or production meters, including calibrating meters thereof; parts and accessories thereof:
9028.20.00 Liquid meters
9028.90.00 Parts and accessories.
* * *
First we note that heading 8543 is in Section XVI, HTSUS. Note 1(m) to Section XVI excludes articles of Chapter 90 from being classified in Section XVI of the HTSUS. Therefore, if the ADE registers at issue here are articles of heading 9028, HTSUS, or of any other heading of Chapter 90 they cannot be classified in heading 8543, HTSUS, or elsewhere in Chapter 85.
In addition, Chapter 90, note 2, HTSUS, 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.
The Harmonized Commodity Description and Coding System Explanatory Notes (EN’s) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the EN’s provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the Harmonized System. Customs and Border Protection (CBP) believes the EN’s should always be consulted. See T.D. 89 80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
EN 85.43 states in relevant part:
This heading covers all electrical appliances and apparatus not falling in any other heading of this Chapter, nor covered more specifically by a heading of any other Chapter of the Nomenclature, nor excluded by the operation of a Legal Note to Section XVI or to this Chapter. The principal electrical goods covered more specifically by other Chapters are electrical
machinery of Chapter 84 and certain instruments and apparatus of Chapter 90.
The electrical appliances and apparatus of this heading must have individual functions. The introductory provisions of Explanatory Note to heading 84.79 concerning machines and mechanical appliances having individual functions apply, mutatis mutandis, to the appliances and apparatus of this heading.
Most of the appliances of this heading consist of an assembly of electrical goods or parts (valves, transformers, capacitors, chokes, resistors, etc.) operating wholly electrically. However, the heading also includes electrical goods incorporating mechanical features provided that such features are subsidiary to the electrical function of the machine or appliance.
EN 90.28 states in relevant part:
These meters are generally fitted with a device driven at a speed proportional to the rate of fluid flow or to the electrical quantity being measured. They are often fitted in a bypass or shunt off the main or connected to measuring transformers, so that only part of the flow passes through them, but are calibrated so as to indicate the total quantity passing through the service pipes or though the main.
Gas, liquid or electricity supply or production meters fall in this heading whether or not fitted with a clockwork recording device, or with a simple mechanical or electrical device for bringing controlling, signalling, etc., appliances into action.
GAS OR LIQUID SUPPLY OR PRODUCTION METERS
These meters are used to measure in volumetric units the amount of fluid passing through a pipe. Flowmeters, which measure rate of flow are excluded (heading 90.26).
This heading includes household supply meters, plant production or supply meters, and standard meters (for checking the accuracy of ordinary meters). In addition to simple meters, the heading also includes special meters such as maximum, prepayment, price-calculating, etc., meters.
Supply or production meters consist essentially of the measuring device (turbine, piston, diaphragm, etc.), the mechanism for regulating the admission of fluid (generally slide valves), the transmission (endless screw, camshaft, gears or other systems), and a recorder or an indicator (pointer or drum type) or both.
* * *
PARTS AND ACCESSORIES
Subject to the provisions of Notes 1 and 2 to this Chapter
(see the General Explanatory Note), separately presented
parts and accessories of meters of this heading remain
classified here.
The whole BadgerMeter water meter consists of the ADE register and a metal housing containing magnetic vanes which rotate when they come in contact with water. Since the BadgerMeter water meter is designed to measure the volume of water passing through a water system, it would be classified in heading 9028, HTSUS, as a liquid supply meter. However, in the instant situation, we are not being asked to classify the whole water meter, but a component of it, the ADE register.
The ADE register contains an encoder, a mechanism that converts the information that is being stored on the mechanical magnetic counter into a digital format. The encoder allows the information stored on the mechanical magnetic counter to be transmitted to another remote device from which it can be read. HQ 964599, dated December 22, 2000, concerned the classification of optical encoders. In considering the classification of the optical encoders, we examined the term transducer and determined that it encompassed devices that convert variations in one energy form into corresponding variations of another, usually in electrical form. For the encoders in that ruling, the light pulses created by the turning wheel were detected and counted with special software to yield rotation or distance data. We also noted that, "[i]t is apparent that the referenced software that does the ‘counting’ is in the computer that the encoder’s output is connected to, not in the encoder itself." Thus, those encoders were classified as transducers which convert shaft rotations into an output of electrical pulses. Notwithstanding the fact that the optical encoders might function as parts of larger instrumentation systems, we found that they were goods which were included in heading 8543, in accordance with Section XVI, Note 2(a) and Chapter 90, Note 2(a).
However, in this case, based on your description of how the encoder in the ADE register works, it appears that our determination in HQ 964599, regarding the encoder component being classified in Heading 8543, HTSUS, as a transducer is not applicable. You state in your submission dated March 16, 2002, that the encoder determines the position of number wheels on an odometer and communicates that reading. This is done by photo diodes that transmit infrared light through light paths up to the slotted number wheels of the odometer. The microprocessor determines the position of the number wheels by detecting the number of blocked and open light paths. Based on this description, the encoder that is incorporated into the ADE register is an optical encoder, but it is not a transducer that would be classified in heading 8543. There is no conversion of energy. It simply reads and transmits high radio frequency waves in the infrared light spectrum. Since heading 8543 is a general basket provision, to classify an article in heading 8543, other possible headings have to be eliminated from classification. Since the encoders are not transducers, they are not described in heading 8543, HTSUS, and the ADE register would be classifiable in 8543 only if no other heading described the good.
Heading 9028, HTSUS, includes parts of liquid supply meters, and the ADE register is only one component of the BadgerMeter water meter system. Hence, we must determine whether the ADE register which is comprised of the encoder function and the odometer function can be described as a part of a liquid supply meter. In Bauerhin Technologies Limited v. United States, 19 CIT 1441, 914 F.Supp. 554 (1995), aff’d 110 F.3d 774 (Fed. Cir. 1997), the court pointed out that there are two distinct lines of cases defining the word "part" in the tariff. Starting with U.S. v. Willoughby Camera Stores, Inc., 21 CCPA 322, 324, (1933) T.D. 46075 (1933), cert. denied, 292 U.S. 640 (1934), this line of cases holds that a part of an article "is something necessary to the completion of that article without which the article to which it is to be joined, could not function as such article."
The definition of "parts" was also discussed in Rollerblade, Inc. v. United States, 116 F. Supp. 2d 1247 (CIT 2000), aff’d, 282 F.3d 1349 (CAFC 2002). In that case, the United States Court of Appeals for the Federal Circuit, defined parts as "an essential element or constituent; integral portion which can be separated, replaced, etc." Id. at 1353 (citing Webster’s New World Dictionary 984 (3d College Ed. 1988)). The court also noted that a "part" must also bear a direct relationship to the primary article.
In applying this analysis, CBP generally will consider an article to be a part if: it is combined with other articles to be used; or it is an integral, constituent or component part, without which the article to which it is joined could not function; or it aids in the safe and efficient operation of the main article; or it is identifiable by shape or other characteristics as an article solely or principally used as a part. See HQ 967688, dated December 15, 2005.
In this instance, the ADE register is clearly a constituent or component part of the article to which it is joined, the water meter system. Since it measures and indicates the volume of water consumption, the water meter could not function without the ADE register being attached to it. In other words, the ADE register is essential for the operation of the water meter. Moreover, it is specifically fitted and designed for use solely with a metal housing containing magnetic vanes through which water flows, and it has no purpose other than being used with the water meter. Therefore, the ADE register satisfies the definition of the term “part”.
In accordance with GRI 1, and Note 2(b), Chapter 90, the ADE register is specifically provided for in heading 9028 as a part of a liquid supply meter. According to the EN for heading 9028, HTSUS, liquid supply meters such as those classified in heading 9028, HTSUS, are used to measure in volumetric units the amount of fluid passing through a pipe. The ADE register keeps track of the movement of the magnetic vanes from water flow in the metal cylinder to which it is mounted so that it can measure the accumulated water consumption in a water system. Thus, in effect, it is part of a system that is designed to measure the flow of water that passes through a pipe in a water system. Consequently, we find that the ADE register is classified in subheading 9028.90.00, HTSUS, as a part of a liquid supply meter. As the ADE register is classifiable in heading 9028, HTSUS, it is not classifiable in heading 8543, HTSUS. See Note 1(m) to Section XVI, which excludes articles of Chapter 90 from being classified in Section XVI of the HTSUS.
HOLDING:
Pursuant to GRI 1, the ADE register for the BadgerMeter water meter system is classified in heading 9028, HTSUS. It is specifically provided for in subheading 9028.90.0080, HTSUS, as: “Gas, liquid or electricity supply or production meters, including calibrating meters thereof; parts and accessories thereof: Parts and accessories: Other.” The 2006 column one general rate of duty is 3.2 percent ad valorum. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUSA and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch