CLA-2 OT:RR:CTF:TCM H008631 JER
Port Director
Port of Champlain
U.S. Customs and Border Protection
237 West Service Rd.
Champlain, NY 12919
RE: Application for Further Review of Protest No. 0712-07-100022; Process Control System
Dear Port Director:
This is our decision regarding the Application for Further Review of Protest No. 0712-07-100022, timely filed on behalf of Invensys Systems Canada, Inc. (“Invensys”) on January 23, 2007, concerning the classification of a Process Control System under the Harmonized Tariff Schedule of the United States (“HTSUS”). For the reasons discussed below, we find the classifications provided by the Port to be correct. In reaching our decision, additional consideration has been given to the supplemental submission provided by Invensys on December 14, 2009.
FACTS:
The subject merchandise is a Process Control System designed to control the production, distribution and transmission of electricity in an electrical power plant. Protestant’s submission states that the instant “merchandise was sold to Florida Power and Light and was designed to control the production and transmission of electricity over a wide area.” The system is further described as intelligent automation for power substations which monitors and controls the flow of electricity through a high voltage substation, switching power loads as needed, which sustains a continuous flow of electricity and averts blackouts. According to the information provided, the system measures numerous variables at the same time in order to make a determination of what action needs to be taken by the operating devices.
The system is capable of switching loads to and from various feeders for line maintenance and providing continuous power. The submission also states that “the system provides for auto-reclose, synchronizing checks, control interlocking, switching automation sequences…[and] include automatic voltage regulation by way of a transformer control, power factor corrections via capacitor banks and reactor controls, load and shed restoration.”
According to the supplemental submission, a detailed description of each component is summarized as follows: Field Control Processors execute algorithms, act as communication control devices which read and write data to and from field devices and the system network. Analog Input components read analog signals from generation plant process instrumentation. Thermocouple Analog Input components read analog signals from generation plant process Thermocouple temperature measurement devices. Digital Input/Output components read digital signals from generation plant process triggering sources. Serial Communication components communicate with generation plant instrumentation. Workstations provide graphic displays showing Filed Control Processor information and display alarms and historic trends. Server ADPs support operation of application software processes.
The supplemental submission further explains that “[t]his equipment is used in a generation plant process application, prior to the electrical grid boundary.” The system does not include electrical transmission or distribution components and does not produce, distribute or transmit electricity throughout the power substation. It is process control equipment and apparatus, used to control parts of a power plant.
The Process Control System was entered under subheading 9032.89.60, HTSUS, as process control instruments and apparatus, complete systems. You reclassified the merchandise under subheading 8537.10.90, HTSUS, which provides, in relevant part, for “Boards, panels, consoles…and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or distribution of electricity, including those incorporating instruments or apparatus of chapter 90…Other: Programmable controllers.”
ISSUE:
Whether the subject merchandise is classifiable as an automatic process control instrument or apparatus in heading 9032, HTSUS, or as a Programmable controller, incorporating an apparatus of Ch. 90 for the control and distribution of electricity in heading 8537, HTSUS.
LAW AND ANALYSIS:
Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on classification. The protest was timely filed, within 180 days of liquidation. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).
Further Review of Protest No. 0712-07-100022 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24 (a) because the decision against which the protest was filed involves or is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to substantially similar merchandise. Specifically, Protestant cites New York Ruling Letter (“NY”) 865530 dated August 20, 1991 and Headquarters Ruling Letter (“HQ”) 960259 dated November 12, 1997.
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 2006 HTSUS provisions under consideration are as follows:
8537 Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517:
8537.10 For a voltage not exceeding 1,000 V:
8537.10.90 Other…
Other:
8537.10.9060 Programmable controllers
9032 Automatic regulating or controlling instruments and apparatus; parts and accessories thereof:
Other instruments and apparatus:
9032.89 Other:
9032.89.60 Other.....
Process control instruments and apparatus:
9032.89.6030 Complete systems.....
* * *
Note 7 to Chapter 90, HTSUS, provides, relevant part, that:
Heading 9032 applies only to:
* * *
(b) Automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on an electrical phenomenon varying according to the factor to be controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilized against disturbances, by constantly or periodically measuring its actual value.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. 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 54 Fed. Reg. 35127 (August 23, 1989).
Note 7(b) to Ch. 90, pertains, in relevant part, to automatic regulators of electrical quantities. EN 90.32(II) explains, in relevant part:
The automatic regulators of this heading are intended for use in complete automatic control systems which are designed to bring a quantity, electrical or non-electrical to, and maintain is at, a desired value, stabilised against any disturbances, by constantly or periodically measuring its actual value. They consist essentially of the following devices:
(A) A measuring device ... which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal.
(B) An electrical control device which compares the measured value with the desired value and gives a signal (generally in the form of a modulated current).
(C) A starting, stopping or operating device (generally, contacts, switches or circuit breakers, reversing switches or, sometimes, relay switches) which supplies current to an actuator in accordance with the signal received from the control device.
An automatic regulator within the meaning of Note 7(b) to this Chapter consists of the devices described in (A), (B) and (C) above, whether assembled together as a single entity or in accordance with Note 3 to this Chapter, a functional unit.
EN 90.32 provides, in pertinent part that:
This heading also excludes:
* * *
(b) “Programmable controllers” of heading 85.37.
EN 85.37 provides, in pertinent part, that:
The heading also covers:
(1) Numerical control panels with built in automatic data processing machine, which are generally used to control machine tools.
(2) Programmed switchboards to control apparatus; these permit variations in the choice of operations to be followed. They are normally used in domestic electrical appliances, such as washing machines and dish washers.
(3) "Programmable controllers " which are digital apparatus using a programmable memory for the storage of instructions for implementing specific functions such as logic, sequencing, timing, counting and arithmetic, to control, through digital or analog input/output modules, various types of machines
* * *
Invensys argues that the subject Process Control System is classifiable under heading 9032, HTSUS, as a “process control instrument and apparatus, complete system” because the subject merchandise “measures variables and analyze[s] this data in order to issue instructions on actions to be taken.” Invensys also states that “Customs’ determination that a system under [heading] 9032 lacks logic where a system under [heading] 8537 uses logic is misplaced.” Invensys further asserts that “[s]ystems under [heading] 8537 are boards, panels…for electrical control or distribution of electricity including those incorporating instruments and apparatus of Chapter 90.”
First, we consider whether the subject merchandise is described by heading 9032, HTSUS. Based on the information provided, we note that the subject Process Control System measures numerous variables simultaneously in order to make a determination of what action needs to be taken by the operating devices. Likewise, the system is capable of switching loads to and from various feeders for line maintenance and the continuous flow of electricity and monitors and controls the flow of electricity while averting blackouts. However, the subject merchandise does not bring the fluctuation of electricity in measured quantity back to a desired value. Nor does it maintain the fluctuation, distribution or transmission at a predetermined or desired value against disturbances. Such, are requisite functions of Note 7 (b) to Ch.90, HTSUS.
Further, the subject Process Control System consists of several components which perform functions which are beyond those described in heading 9032, HTSUS, and Note 7(b) to Chapter 90, HTSUS. Specifically, programmed functions such as auto-reclose, synchronizing checks, control interlocking and switching automation sequences, are all functions which are not described by the terms of heading 9032, HTSUS or Note 7(b) to Chapter 90, HTSUS.
Similarly, the subject control process system consists of both analog and digital input/output modules which are explicitly described in the EN 85.37, HTSUS, rather than heading 9032, HTSUS. The Digital Output (Part No. P0916TA) is a module that signals actuation devices. Actuation devices electrically operate contacts to open or close an electrical circuit, such as a relay or contactor which is an electrical control function within the meaning of heading 8537, HTSUS. Furthermore, the Power Supply (Part No. P0917LY) “provides low-voltage (24V) power to Field Control Processors (FCP) and Fieldbus Modules (FBM)” which are electrical distribution functions described by the terms of heading 8537, HTSUS. Based on the functions performed by the aforementioned components of the subject merchandise, we find that the subject Invensys System process performs functions which are beyond the scope of heading 9032, HTSUS.
CBP has previously held that control equipment and apparatus which function to control machinery, apparatus or equipment, are classifiable in heading 8537, HTSUS. See, e.g., HQ 085281, dated November 8, 1989 (Wherein CBP classified an optimizer system under heading 8537, HTSUS, in which dimensions of logs and boards are digitally input to a process controller which makes necessary calculations for optimal method to cut logs, and then instructs the saws how to slice the logs); see also, HQ 950120, dated May 13, 1992 (In which a laser vision system in which controller directs servomotors to move welding apparatus was classified in heading 8537, HTSUS); and NY H82946, dated July 25, 2001 (In which CBP classified a process control system which allowed a cement truck driver to make selections on a self-service loading kiosk, which interfaces with a controller, resulting in the automatic loading of cement into the truck, in heading 8537, HTSUS).
In HQ 967519, dated July 11, 2006, CBP classified in heading 8537, HTSUS, an Ethernet-based system, which received information from industrial plant process control instruments about the instruments’ readings of specified conditions, and communicated to those instruments information about how they should adjust the functions they perform to enable the industrial plant to operate and function properly.
The subject Process Control System is no different. The instant merchandise uses an electrical programmable controller to provide intelligent automation for power substations. The system monitors components in an industrial/manufacturing plant through process control instruments to enable the plant to operate and function more efficiently. Moreover, the subject merchandise is a programmable controller which incorporates apparatus of heading 9032 for automatic voltage regulation by way of a transformer control unit. As the submission attests, the subject merchandise “utilizes numerous functional capabilities, checks or measures quantities…and analyzes this information and provides instructions to alter the operation to change the environment, resulting in a change to the material being processed.”
As the ENs to heading 8537, HTSUS, explain, articles of this heading consist of an assembly of apparatus from small switchboards to complex control boards or panels which usually also incorporate meters, transformers and voltage regulators. The ENs to heading 8537, HTSUS, further explain that the heading covers “programmable controllers” which use programmable memory for the storage of instructions for implementing logic, to control various types of machines and which control apparatus according to the user’s instructions. Accordingly, we find that the primary function of the subject merchandise is automatically analyzing and controlling the production and transmission of electricity and thereby changing the various measured factors according to the demands of the programming.
Finally, merchandise which is described by heading 8537, HTSUS, yet incorporates instruments or apparatus described Chapter 90, HTSUS, remains classified in heading 8537, HTSUS, pursuant to the terms of the heading, which provides, in pertinent part, for: “[b]oards, panels…for electrical control or distribution of electricity, including those incorporating instruments or apparatus of chapter 90…” As such, we find that the subject merchandise is classifiable under heading 8537, HTSUS.
HOLDING:
By application of GRI 1 the subject Process Control System is classified in heading 8537, HTSUS. The merchandise is specifically classified in subheading 8537.10.9060, HTSUSA, which provides for: “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or 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 1,000 V: Other: Other: Programmable controllers.” The 2006 column one, general rate of duty was 2.7% ad valorem.
Since the rate of duty under the classification indicated is the same as the liquidated rate, you are instructed to deny the protest in full. In accordance with the Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), 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 60 days from the date of this letter, the Office of International Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP homepage on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division