CLA-2 RR:CTF:TCM 968123 HkP
Mr. Matt Denninger
Director of Sales & Marketing, Americas
Applied Films
9586 I-25 Frontage Road, Suite 200
Longmont, CO 80504
RE: Physical Vapor Deposition by Evaporation machinery; reconsideration of HQ 966573
Dear Mr. Denninger:
This is in reference to your letter dated January 13, 2006, requesting reconsideration of Headquarters Ruling (“HQ”) 966573, dated February 18, 2004, in which the tariff classification of certain physical vapor deposition (“PVD”) apparatus was determined under the Harmonized Tariff Schedule of the United States (“HTSUS”). HQ 966573 classified the PVD apparatus in subheading 8419.89.95, HTSUS, as other 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 vaporizing, other than machinery or plant of a kind used for domestic purposes. That ruling was itself a reconsideration of NY Ruling Letter (“NY”) H80834, dated May 29, 2001. You now contend that the subject machine is excluded from classification in heading 8419, HTSUS, by operation of Note 2(e) to Chapter 84, HTSUS.
FACTS:
Physical Vapor Deposition is fundamentally a vaporization coating process in which the basic mechanism is an atom by atom transfer of material from the solid phase to the vapor phase and back to the solid phase, gradually building a film on the surface to be coated. There are three basic process categories considered as PVD technologies: ion plating, evaporation and sputtering. All utilize the same fundamental steps to develop a coating: (1) vapor phase generation from coating material stock by evaporation, sputtering, arc vaporization or chemical vapors and gases, (2) the transfer of the vapor phase from source to substrate, and (3) deposition and film growth on the substrate. (See http://p2library.nfesc.navy.mil/P2_Opportunity_Handbook/1_5.html.)
The subject machine develops PVD coatings by evaporation and is described in HQ 966573 and NY H80834 as follows:
The article in question is a high-vacuum web-coating system identified as the Topmet. The merchandise consists of roll-coating evaporation machines for use in the packaging industry. This equipment uses thermal evaporation to deposit thin layers of aluminum onto flexible substrates than can be supplied in roll form. The substrates are typically plastic film or paper, but can also include textiles. The rolls are put in the Topmet and unwound, coated with aluminum, and rewound under specific vacuum levels.
In HQ 966573 and NY H80834, CBP classified the PVD apparatus under subheading 8419.89.95, HTSUS, which provides for: “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 … evaporating, vaporizing, … other than machinery or plant of a kind used for domestic purposes; …: Other machinery, plant or equipment: Other: Other: Other.”
ISSUE:
Whether the TopMet PVD system is excluded from classification in heading 8419, HTSUS, by operation of Legal Note 2(e) to Chapter 84, HTSUS, and should be instead classified in heading 8479, HTSUS.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). 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 2 through 6 may then be applied in order.
The HTSUS provisions under consideration are as follows:
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 …, evaporating, vaporizing, …, other than machinery or plant of a kind used for domestic purposes; …; …:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
Legal Note 2(e) to Chapter 84, HTSUS, provides that:
Subject to the operation of note 3 to Section XVI, a machine or appliance which answers to the description in one or more of the headings 8401 to 8424 and at the same time to a description in one or more of the headings 8425 to 8480 is to be classified under the appropriate heading of the former group and not the latter.
Heading 8419 does not, however, cover:
…
Machinery or plant, designed for mechanical operation, in which a change of temperature, even if necessary, is subsidiary.
Legal Note 3 to Section XVI, HTSUS, provides, in pertinent part, that:
Unless the context otherwise requires, … 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 Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, the ENs provide 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. Explanatory Note 84.19 explains that heading 8419, HTSUS:
covers machinery and plant designed to submit materials … 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., … evaporating, vaporizing, …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 [.]
(Original emphasis.)
You state that “the primary function is to perform thin film deposition on a plastic substrate” and that one of the three primary requirements for your equipment is a PVD process. You argue that “the choice of the PVD process, whether sputter or evaporation, is secondary.” Thus, you believe that the TopMet should be classified in heading 8479, HTSUS “because Chapter 84 Note 2(e) prevents the TopMet from being considered for 8419 and would therefore not be ‘specified elsewhere’.”
We find that while the choice of a sputter or evaporation PVD process is left up to the person engaging in such a process, the subject machine conducts the PVD process by evaporation. The specification sheets for the “High Vacuum Web Coating System TOPMET 1650 F” describe the process utilized by this system as a “high uniformity evaporation system” in which a “thermal evaporator for resistance heated intermetallic composite boats” is employed. We find that because the subject machine performs the PVD process by evaporation, the resulting change of temperature is not subsidiary but is the main mechanical function of the machine, that is, vapor phase generation from coating material stock. Accordingly, the terms of Legal Note 2(e) cannot be met.
Furthermore, we find that Legal Note 2 is inapplicable in this situation because the TopMet system is provided for in heading 8419 and is therefore precluded from classification in heading 8479, HTSUS.
Finally, we note that you cite ruling NY B87702, in which an automatic film applicator was classified in heading 8479.89.9797 (now, 8497.89.9897), HTSUS, which provides for “machines and mechanical appliances having individual functions, not specified elsewhere”, but offer no argument based on this ruling. Based on our reading of NY B87702 we are unable to determine if that ruling is applicable to the subject merchandise because it lacks sufficient information on the workings of the automatic film applicator.
HOLDING:
By application of GRI 1, Applied Films TopMet High Vacuum Web-Coating System is classified in heading 8419, HTSUS, which provides for: “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 … vaporizing, … other than machinery or plant of a kind used for domestic purposes; …:”, and is not excluded from classification in that heading by operation of Legal Note 2(e) to Chapter 84, HTSUS.
EFFECT ON OTHER RULINGS:
HQ 966573, dated February 18, 2004, is affirmed.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division