CLA-2 OT: RR: CTF: TCM H024848 JER
Port Director
Port of Portland
U.S. Customs and Border Protection
8337 NE Alderwood Road
Portland, OR 97220
RE: Classification of components of Wind Turbine Generator upon withdrawal from a Foreign Trade Zone; Internal Advice
Dear Port Director:
This is in response to your memorandum, dated February 4, 2008, in which you requested internal advice, in accordance with U.S. Customs and Border Protection (“CBP”) Regulations, Part 177.11 (19 C.F.R. §177), regarding the classification of certain wind turbine components being imported by Suzlon Wind and Energy Corporation, Inc. (“Suzlon”), under the Harmonized Tariff Schedule of the United States (“HTSUS”). Part 177.11 (19 C.F.R. §177) states that “advice or guidance as to the interpretation or proper application of the Customs and related laws with respect to a specific Customs Service field offices from the Headquarters Office at any time whether the transaction is prospective, current or completed.” Suzlon previously received a prospective ruling regarding the classification of the subject wind turbine component parts when such are not being imported from a Free Trade Zone. New York Ruling Letter (“NY”) N021063, dated January 9, 2008, classified the subject wind turbine components in separate HTSUS headings as follows: the nacelle assembly was classified in heading 8502, HTSUS; the hub, nose cone and blades were classified in heading 8412, HTSUS; and the tower was classified in heading 7308, HTSUS. Suzlon is currently entering the components in accordance with NY 021063.
The Port is seeking internal advice pertaining to the proper classification of the subject wind turbine components upon their withdrawal from a Foreign Trade Zone and formal entry into the U.S. Territory.
FACTS:
The subject merchandise is described as components of a wind turbine generator which include: a nacelle assembly, a hub, blades and a nose cone. The nacelle assembly is a structure that houses a generator, gearbox, rotor shaft, main frame and bed plate among other components. It is primarily responsible for converting wind energy into electrical energy. The hub is the component that fits onto the end of the nacelle assembly. It is made of cast iron and shaped into spheres. The primary function of the hub is to hold the blades in place. The nose cone is installed to the hub and provides access to the hub. The nose cone protects the hub from the elements and improves aerodynamics by speeding up air flow as it approaches the blades. The blades are made of a fiberglass epoxy and measure 43.35 meters in length. They fit into the hub and move in response to wind energy. The wind turbine generator is mounted to a tower and stands 77.5 meters in height. The sections are bolted together and the wind turbine generator is secured to the top.
According to counsel for the importer, the components are separately purchased by Suzlon and are invoiced separately. However, the subject merchandise will be admitted to the Foreign Trade Zone (“FTZ”) upon arrival from a single vessel. The wind turbine generator and the components thereof will be separately entered for consumption as Non-Privileged Foreign Status merchandise. Counsel states that because of the size and weight of the individual parts that some cannot share truck space with other parts. Counsel also states that due to applicable state and federal transportation regulations, truck carriers are limited to certain roads and delivery routes because of load weight. This necessitates separate withdrawal from the FTZ. For example, the blades must be transported separately, one blade at a time and can take several days to reach the same destination as the hub and nose cones. Further, counsel states that the components are often intended for different customers. Prior to entry, the wind turbine and its related parts do not undergo further assembly, disassembly, manufacturing or production while in the FTZ.
ISSUE:
At issue is the proper classification of the component parts of the subject wind turbine generator when withdrawn from an FTZ and entered for consumption separately on separate days into U.S. Territory. Specifically, whether entries which due to their size or nature necessitate split shipments or shipments in an unassembled or disassembled condition and separate conveyances, should be treated as a single entry.
LAW AND ANALYSIS:
FTZs are established under the authority of the Foreign Trade Zones Act of 1934, as amended, 19 U.S.C. 81a-81u. Section 81c provides for the admission of merchandise into a FTZ and its treatment and shipment to U.S. Customs Territory. Section 81c(a) explains that:
[f]oreign and domestic merchandise of every description, except such as is prohibited by law, may, without being subject to the customs laws of the United States, except as otherwise provided in this chapter, be brought into a zone and may be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or otherwise manipulated, or be manufactured except as otherwise provided in this chapter, and be exported . . .
For tariff classification purposes, goods are admitted not entered, into an FTZ. Only after such goods are withdrawn from the FTZ and enter U.S. Customs Territory, are they deemed entered for purposes of tariff classification. Classification of articles entered from an FTZ is, in part, dependent upon whether the articles have Privileged Foreign Status (“PF”) or Non-Privileged Foreign Status (“NPF”). As previously stated, the subject merchandise is entered under NPF status. Under Section 146.65(a)(2) of the CBP Regulations (19 CFR 146.65(a)(2)), NPF status merchandise is subject to tariff classification in accordance with its character, condition and quantity as constructively transferred to customs territory at the time of entry or when an entry summary is filed with CBP.
NPF status is a residual provision which applies to foreign merchandise which does not have the status of privileged foreign merchandise or zone-restricted merchandise or is deemed as waste. See 19 C.F.R. §146.42 (a). Insofar as, the subject merchandise has NPF status, it is not subject to classification upon admission into the FTZ. Moreover, under 19 C.F.R. §146.32, goods may only be admitted into an FTZ upon submission of Customs Form 214 (“Application for Foreign Trade Zone Admission and/or Status Designation”). Classification of such goods are governed by their status at the time that application is submitted. The instant merchandise holds NPF status therefore they may be classified separately upon admission to the FTZ despite arriving on the same vessel.
You ask whether the subject merchandise which is withdrawn, entered and transported separately from the FTZ, should be classified in its entirety as a single unassembled or disassembled entity pursuant to 19 U.S.C. 1484 (j)(1).
19 U.S.C. 1484 (j)(1), provides in pertinent part that:
(j) Treatment of multiple entries of merchandise as single transaction
In the case of merchandise that is purchased and invoiced as a single entity but - -
(1) is shipped in an unassembled or disassembled condition in separate shipments due to the size or nature of the merchandise, or
(2) is shipped in separate shipments due to the inability of the carrier to include all of the merchandise in a single shipment …
… the Customs Service may, upon application by the importer in advance, treat such separate shipments fort entry purposes as a single transaction.
Section 1484 does not apply to the instant case because (1) the subject merchandise is both invoiced and purchased separately and (2) under the above provision, providing a single entry for separate conveyances is at the importer’s election.
A single entry for unassembled or disassembled entities imported on multiple conveyances is provided for in 19 C.F.R. § 141.58, which states the following:
Sec. 141.58 Single entry for separately arriving portions of
unassembled or disassembled entities.
(a) At election of importer of record. At the election of the
importer of record, an unassembled or disassembled entity arriving on multiple conveyances as contemplated under section 484(j)(1), Tariff Act of 1930 (19 U.S.C. 1484(j)(1)), may be processed as a single entry, as prescribed under the procedures set forth in this section.
(b) Unassembled or disassembled entities covered. An unassembled or disassembled entity for purposes of this section is an entity which: (1) Cannot, due to its size or nature, be shipped on a single conveyance, and is thus imported in an unassembled or disassembled condition [.]
As Section 141.58 (19 C.F.R. §141.58) explains, treating dissembled or unassembled arriving on multiple conveyances is at the election of the importer. Accordingly, there is nothing in the regulations or in the statutes which require an importer to file a single entry for unassembled or dissembled merchandise arriving on multiple shipments or which make mandatory the treatment of separate shipments as a single transaction. More importantly, however, the instant merchandise is not an unassembled or disassembled good insofar as the imported components are often sold separately and will be shipped on separate conveyances.
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:
8412 Other engines and motors, and parts thereof:
8412.90 Parts:
8412.90.90 Other
8412.90.9080 Other
8502 Electric generating sets and rotary converters:
Generating sets with compression-ignition internal combustion piston engines (diesel or semi-diesel engines):
Other Generating sets:
8502.31.00 Wind powered….
Section XVI Note 2 provides as follows:
2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 84.84, 85.44, 85.45, 85.46 or 85.47) are to be classified according to the following rules:
Parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 84.09, 84.31, 84.48, 84.66, 84.73, 84.87, 85.03, 85.22, 85.29, 85.38 and 85.48) are in all cases to be classified in their respective headings; [Emphasis added].
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 (including a machine of heading 84.79 or 85.43) are to be classified with the machines of that kind or in heading 84.09, 84.31, 84.48, 84.66, 84.73, 85.03, 85.22, 85.29 or 85.38 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 85.17 and 85.25 to 85.28 are to be classified in heading 85.17.
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System. 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).
The ENs to heading 8502, HTSUS, explain the classification of (wind) generating sets. Specifically, EN 85.02 provides:
(I) ELECTRIC GENERATING SETS
The expression "generating sets" applies to the combination of an electric generator and any prime mover other than an electric motor (e.g., hydraulic turbines, steam turbines, wind engines, reciprocating steam engines, internal combustion engines). Generating sets consisting of the generator and its prime mover which are mounted (or designed to be mounted) together as one unit or on a common base (see the General Explanatory Note to Section XVI), are classified here provided they are presented together (even if packed separately for convenience of transport).
PARTS
Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the machines of this heading are classified in heading 85.03.
In the instant case, the nacelle assembly, which consists in part of a generator, gearbox, rotor shaft, main frame and bed plate, meets the terms of heading 8502, HTSUS, as a generating set as described in the ENs to heading 8502, HTSUS. The hub, nose cone and blades are principally used with and are integral components of the wind turbine generator without which the wind turbine generator could not function. Moreover, they are not more specifically provided for elsewhere. In accordance with Note 2 (b) to Section XVI, HTSUS, the hub, nose cone and blades are classified in heading 8412, HTSUS, as parts suitable for use solely or principally for wind engines. This position is consistent with NY N021063 as well as rulings NY N007816, dated March 28, 2007, NY M80880, dated April 17, 2006, and Headquarters Ruling Letter (“HQ”) H023502, dated July 8, 2008, in which CBP classified blades for wind turbines as parts, under heading 8412, HTSUS.
HOLDING:
By application of GRI 1 and Note 2 (b) to Section XVI, the hub, the nose cone and the blades are classified in heading 8412, HTSUS. They are specifically provided for under subheading 8412.90.9080, which provides for: “Other engines and motors and parts thereof: Parts: Other: Other.” The column one, general rate of duty is Free.
By application of GRI 1, the nacelle assembly is classified in heading 8502, HTSUS. It is specifically provided for under subheading 8502.31.00, HTSUS, which provides for: “Electric generating sets and rotary converters: Other Generating sets: Wind powered.” The column one, general rate of duty is 2.5% ad valorem.
You should advise the importer of this decision. This decision should be mailed by your office to the importer no later than 60 days from the date of this letter. On that date, Regulations and Rulings of the Office of International Trade, will take steps to make the decision available to CBP personnel, and to the public on the CBP Home Page 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