CLA-2 OT:RR:CTF:TCM H056797 RES
Port Director
Chicago Service Port
U.S. Customs and Border Protection
9915 Bryn Mawr
Rosemount, IL 60018
RE: Tariff classification of Roche Diagnostics Operations, Inc. Modular Pre-Analytic System; Application for Further Review of Protest Number 3901-08-101741.
Dear Port Director:
This letter is in reply to your memorandum dated May 19, 2009, regarding the Application for Further Review (“AFR”) of Protest Number 3901-08-101741 filed on behalf of Roche Diagnostics Operations, Inc. (“Roche”). The protest is against the U.S. Customs and Border Protection’s (“CBP”) classification of a Modular Pre-Analytic System (“MPA system”) for use in processing biological fluid samples under the 2007 Harmonized Tariff Schedule of the United States (“HTSUS”). We have also noted Roche’s memorandum of July 15, 2009, wherein Protestant withdrew certain entries from consideration under protest. Further, we have considered arguments Roche made in supplemental submissions dated October 6, 2009, and October 1, 2010, and in a meeting between Roche and members of my staff on September 29, 2010.
FACTS:
The MPA system at issue here is composed of up to twelve machines (also referred to as modules), depending on the configuration, of which each perform an individual function that contributes to the overall function of the MPA system—the preparation of clinical biological samples for analysis by a separate chemistry analyzer machine. These machines include the: Input Buffer Module; Automatic Centrifuge Module; Destopper/decapper Module; Online Aliquoter Module; Barcode Labeler module; Restopper/recapper Module; Flexible Sample Sorter Module; Output Buffer Module; Core Transport Lines; Connector Lines; Turntable Lines; and Sample Buffer Units. After importation, the machines/ modules are mounted on a core base at the end user’s site. The core base is a framework and appears to be comprised of parts of the Connector and Transport Lines and is assembled depending on the individual configuration of the end user’s room layout. The backsides of the modules are placed against the framework and there is a protruding metal plate from the framework that fits underneath the modules. The modules are bolted onto this protruding metal plate to keep the modules firmly in place on the core base. The modules are not imported bolted onto the core base but are imported individually for convenience of shipping and transportation.
The MPA system accepts test tubes of biological fluid samples (“parent samples”), such as human blood, plasma, or urine. These parent samples are transported between the modules by the transport lines. The parent sample tubes, which have a barcode on them for identification purposes, are loaded into the MPA system by the Input Buffer Module (“IBM-P”), then go to the Automatic Centrifuge Module (“ACU”) where the fluid samples in the tubes are processed. Next, the Destopper/decapper Module (“DSP”), receives the tubes, removes the sample tube’s stopper and then returns the uncapped tube to the transport line where it goes to the Online Aliquoter Module (“Aliquoter”). The Aliquoter uses bellows to aspirate and dispense a smaller defined volume of liquid from the parent sample tube into separate tubes. This smaller defined volume of liquid is called an “aliquot”. The Barcode Labeler Module (“BCL”) receives the parent sample and the aliquot samples (also referred to as “child samples”), reads the parent sample barcode, prints barcode labels, and places them on the aliquot samples that identify them with the parent samples. After the BCL, the Restopper/recapper Module (“RSP”) receives the parent and aliquot samples and recaps them as necessary. The samples then go to the Flexible Sample Sorter Module (“FSS”) where it sorts samples that require specific sorting. Finally, the parent and aliquot samples move to the Output Buffer Module (“OBM-P’), which stores the samples, staging them for subsequent analysis or actions assigned by the user.
The Core Transport Lines (“CLT”) is a conveyor belt system that transports the samples in racks to the input position of the aforementioned modules. The Connector Lines (“CL”) are linear segments of transport conveyors in which a conveyor belt system is used. CLs transport racks of samples between the MPA system and a chemistry analysis system and are ordered separately from the MPA systems based on the layout of a laboratory. The Turntable Lines (“TUL”) consist of a transport line and a turntable. The transport line moves racks of samples into or out of the turntable while the turntable rotates and aligns itself to one of the connected output lines. The Sample Buffer Units (“SBU”) connects to a specific chemistry analyzer. The SBU is comprised of a buffer for holding sample racks and a section of the CL. It is used to transport sample racks to a chemistry analyzer and to act as a buffer to temporarily store sample racks if the analyzer is not immediately available to process the samples. The CLT, CL, TUL, and SBU are ordered separately from a complete MPA system based upon an individual laboratory’s layout and configuration needs.
The instant AFR involves three entries. The merchandise in the first entry was an MPA system that was entered on August 5, 2007, under heading 8479.50, HTSUS, as “[m]achines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:” and was liquidated on June 27, 2008, under the same heading. The merchandise in the second entry was an MPA system that was entered on February 21, 2008, under heading 9027.90, HTSUS, as “[i]nstruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus) . . . parts and accessories thereof: [m]icrotomes; parts and accessories” and was liquidated on July 18, 2008, under subheading 8479.90, HTSUS. The merchandise in the third entry was an MPA system and a TUL that were entered on March 8, 2008, under heading 8479.90, HTSUS, and heading 8479.50, HTSUS, respectively. These articles were liquidated on July 18, 2008, under the same headings.
Roche asserts that the proper classification for a MPA system that consists of a configuration of the aforementioned modules and machines is under heading 8422, HTSUS, as “. . . machinery for filling, closing, sealing or labeling bottles, cans, boxes, bags or other containers . . . .”
ISSUE:
Whether the subject MPA systems are classified under heading 8422, HTSUS, as machinery for filling, closing, sealing or labeling bottles, cans, boxes, bags or other containers or under heading 8479, HTSUS, as machines and mechanical appliances having individual functions, not specified or included elsewhere in Chapter 84?
LAW AND ANALYSIS:
Initially, CBP notes that the protest was timely filed on November 25, 2008, which is within 180 days after the earliest liquidation date of the three entries above which was June 27, 2008. See 19 U.S.C. § 1514(c)(3) (2006). Additionally, CBP’s classification of the merchandise is a protestable matter under 19 U.S.C. § 1514(a)(2).
Further Review of Protest No. 3901-08-101741 is properly accorded to protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Court of International Trade.
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 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 2 through 6 may be applied in order.
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
The following HTSUS provisions are under consideration:
8422 Dishwashing machines; machinery for cleaning or drying bottles or other containers; machinery for filling, closing, sealing or labeling bottles, cans, boxes, bags or other containers; machinery for capsuling bottles, jars, tubes and similar containers; other packing or wrapping machinery (including heat-shrink wrapping machinery); machinery for aerating beverages; parts thereof:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
The article at issue in the instant AFR is called an MPA system that is comprised of up to twelve different machines, each of which contributes a different function to the MPA system’s overall function of preparing a clinical biological fluid sample for analysis in a chemistry analyzer. Note 3 to Section XVI provides that:
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 ENs to Section XVI, which provides that:
(VI) Multi-Function Machines and Composite Machines
* * * * *
Composite machines consisting of two or more machines or appliances of different kinds, fitted together to form a whole, consecutively or simultaneously performing separate functions which are generally complementary and are described in different headings of Section XVI, are also classified according to the principal function of the composite machine.
* * * * *
For the purposes of the above provisions, machines of different kinds are taken to be fitted together to form a whole when incorporated one in the other or mounted one on the other, or mounted on a common base or frame or in a common housing.
Assemblies of machines should not be taken to be fitted together to form a whole unless the machines are designed to be permanently attached either to each other or to a common base, frame, housing, etc. This excludes assemblies which are of a temporary nature or are not normally built as a composite machine.
* * * * *
The machines that make up the MPA system are bolted, post importation, onto a common framework called a core base. The mounting of the individual machines onto such a common frame indicates they are fitted together to form a whole for purposes of being a composite machine pursuant to Note 3 of Section XVI. Thus, according to Note 3, to determine under which heading to properly classify a MPA system we must determine what the principal function of the article is and then ascertain whether any of the components perform this principal function. The classification of the MPA system is then based on the classification of the machine that performs the principal function. If no component or machine of a composite machine is determined to perform the principal function, then the article is classified based on the application of GRI 3(c).
As discussed supra, the principal function of the MPA system is to accept clinical parent samples of biological fluids in test tubes and then output smaller volume-sized samples (“child samples”) that are then sent to a chemistry analyzer for analysis. Roche asserts that the module that performs the principal function of the MPA system is the Online Aliquoter Module (“Aliquoter”), which
aspirates and dispenses a small fixed volume of the parent clinical sample of fluid into a smaller volume that is usable by a chemistry analyzer. CBP agrees with this assertion. Therefore, the classification of a MPA system is based upon the classification of the Aliquoter.
Roche argues that the Aliquoter is classified specifically under subheading 8422.30, HTSUS, as “. . . machinery for filling, closing, sealing or labeling bottles, cans, boxes, bags or other containers; machinery for capsuling bottles, jars, tubes and similar containers; machinery for aerating beverages,” because the Aliquoter is filling a container, in this case a small test tube, with a small fixed volume of biological fluid. The EN for heading 8422 describes the machines of this heading:
This heading covers . . . machines of different types designed . . . for filling or closing such containers (including machines for aerating beverages) and, generally, for packing (including heat-shrink wrapping) goods for sale, transport or storage. These include:
* * * * *
(2) Machines for filling containers (e.g., casks, barrels, cans, bottles, jars, tubes, ampoules, boxes, packets or bags), frequently equipped with subsidiary automatic volume or weight control and with devices for closing the containers.
* * * * *
(4) Wrapping or cartoning machines, including those with provision for forming, printing, tying, stapling, taping, glueing, closing or otherwise finishing the packing. . . .
* * * * *
Machines which in addition to packing, wrapping, etc., also perform other operations remain classified in the heading provided the additional operations are incidental to the packing, etc. Thus machines which pack or wrap goods into the forms or presentations, in which they are normally distributed and sold in commerce, are classified in this heading, whether or not the machines also contain devices for weighing or measuring. Similarly the heading includes machines incorporating devices which, as a secondary function, cut, mould or press previously prepared products into purely presentational forms without affecting their essential character (e.g., machines for moulding butter or margarine into blocks, etc., and wrapping them). The heading does not, however, cover machines whose primary function is not to pack, wrap, etc., but to manufacture raw or semi-finished materials into finished products (e.g., combined cigarette making and packaging machines).
* * * * *
The EN to heading 8479 states that:
This heading is restricted to machinery having individual functions, which:
Is not excluded from this Chapter by the operation of any Section or Chapter Note.
And
Is not covered more specifically by a heading in any other Chapter of the nomenclature.
And
Cannot be classified in any other particular heading of this Chapter since:
No other heading covers it by reference to its method of functioning, description or type.
And
No other heading covers it by reference to its use or to the industry in which it is employed.
Or
It could fall equally well into two (or more) other such headings (general purpose machines)
The function that the Aliquoter performs is not simply filling a container. By definition, an “aliquot” is a portion, part, or sample of a chemical, medicine, etc. See Webster’s New World College Dictionary 36 (4th ed. 2007). The Aliquoter’s overall function is to create fractional fluid samples of a discrete amount of biological fluid that is derived from a larger parent sample. This is accomplished in two steps: (1) aspiration of a pre-determined fixed fluid volume from a parent sample and (2) dispensation of that fluid into a separate test tube, vial, assay tray, well plate, etc. In essence, the Aliquoter’s function is the transfer of precise volumes of fluid. Roche’s argument that the Aliquoter simply performs the function of filling a container does not accurately capture the true function of the Aliquoter (or other machines, such as pipetting systems that function exactly like the Aliquoter).
However, even assuming, arguendo, that the Aliquoter, by dispensing a fluid into a smaller test tube (or vial), is technically filling that test tube with a fluid, this does not qualify as the “filling of a container” function that would fall under heading 8422. The function of the Aliquoter in a MPA system is not in the same context in which the function “filling a container” occurs for heading 8422 purposes. To discern what this context is, we look to the terms that EN 84.22 uses. There are references to “goods” in the EN 84.22 opening paragraph which states “. . . packing (including heat-shrink wrapping) goods for sale, transport or storage” and in the last paragraph which states “[t]hus machines which pack or wrap goods into the forms or presentations, in which they are normally distributed and sold in commerce, are classified in this heading . . . .”
“Goods” is not defined in the HTSUS. A tariff term that is not defined in the HTSUS or in the ENs is construed in accordance with its common and commercial meaning. Nippon Kogasku (USA), Inc. v. United States, 69 CCPA 89, 673 F.2d 380 (1982). Common and commercial meaning may be determined by consulting dictionaries, lexicons, scientific authorities and other reliable sources. C.J. Tower & Sons v. United States, 69 CCPA 128, 673 F.2d 1268 (1982). The common definition of “goods” is that of merchandise or wares, which are things bought and sold in commerce. See Webster’s New World College Dictionary 36 (4th ed. 2007). Thus, EN 84.22 suggests that the function of “filling a container” context in heading 8422, HTSUS, is limited to machines that are actually involved in the packaging and packing process of merchandise that has a nexus with commerce—i.e., merchandise or things that are bought, sold, shipped, and/or distributed in commerce.
For example, in other rulings where merchandise was classified under heading 8422, HTSUS, based on their function of filling a container, the item being filled into a container was some sort of product that was bought, sold, shipped, and/or distributed in commerce.
In New York Ruling (“NY”) 879640, dated November 17, 1992, the machine at issue formed plastic pouches and then filled them with milk or other liquids and in NY N012291, dated June 19, 2007, the machine at issue made plastic bottles from plastic bottle blanks, filled the bottles with a liquid, and then capped the bottles. In both of these rulings, the machines were classified under subheading 8422.30, HTSUS, as machinery for filling, closing, sealing, capsuling or labeling bottles, cans or similar containers. These machines were filling their respective containers with products that were sold and distributed into commerce.
In a ruling cited by Roche in its memorandum, NY K86998, dated June 17, 2004, the machines there automatically filled and closed a syringe or vial with a specific volume of liquid. These machines were classified under subheading 8422.30, HTSUS. As with the rulings discussed above, these machines in NY K86998 filled containers with a product, in this case vaccines, which were distributed and sold into commerce.
In addition, machines in other rulings that were performing some other function listed in heading 8422 besides filling a container and were classified under heading 8422, were all involved in the context of packaging and packing of a product that was bought, sold, shipped, and/or distributed in commerce. See Headquarters Ruling (“HQ”) W968275, dated January 26, 2010 (classifying machines that labeled and sealed pre-filled syringes that contained pharmaceutical substances which were sold and distributed in commerce under subheading 8422.30.91); HQ 966109, dated November, 24, 2003 (classifying a machine that coiled finished copper wire into cardboard drums for shipment to customers under heading 8422.30.90); HQ 963651, dated October 11, 2000 (classifying machines that formed pantyhose around a cardboard insert which was then put inside a plastic bag and then into a cardboard package under subheading 8422.40.90); NY G84376, dated December 4, 2000 (classifying machines involved in the filling and sealing of packages of inhaled insulin in powder form that is sold to diabetics under subheading 8422.30.90); and HQ 088851, August 9, 1991 (classifying a machine that packed cartons of cigarettes into boxes for shipment under subheading 8422.30.90).
Roche also cited a number of rulings during the September 29, 2010, teleconference meeting in support of its argument for classifying the Aliquoter in heading 8422. In NY 866831, dated September 19, 1991, CBP classified a machine used by greenhouses and nursery farms that automatically filled pots and trays with soil that would then be used for planting plants and such into the pots and trays of soil. Because these machines were used by nursery farms in the production of plants that would presumably then be sold to customers (whether individuals or retails vendors such as Home Depot for resale), the functions of these machines had a nexus with goods in commerce.
In NY K87599, dated July 30, 2004, and N007679, dated March 15, 2007, which involved tape dispensers, Roche claims that these articles are not involved in the packaging of goods in commerce. However, even though the articles in these rulings were classified in heading 8422, NY K87599 and N007679 are not probative in the analysis of whether an aliquoter is classifiable in heading 8422 because there is no discussion in these rulings of the context in which the functions of heading 8422 occur and there are no details concerning how and where the tape dispenser articles are used and to whom the articles are marketed. One inference that could be made is that the tape dispensers are primarily used by small businesses in the packaging and shipping of products, which, if true, would have a nexus with commerce.
Finally, Roche cited NY 881575, January 19, 1993, as an example of a machine used in a laboratory that fills Petri dishes and tubes that was classified in heading 8422. However, this ruling is not probative either because an aliquoter and a Perimatic machine are completely different machines with different functions. The Perimatic machine does not aspirate or draw a small fixed amount of fluid, move the pre-determined amount of fluid to another container, and dispense it. Instead, the Perimatic machine seems to work more like a water pump in that it inserts a tube into a large container containing a fluid, in this case liquid agar gel, and continually draws out the fluid from one end and dispenses it out the other end into some type of container. The pumping mechanism the Perimatic machine uses also appears to be different than the type used by an aliquoter as well. Finally, there is no analysis in NY 881575 on why the Perimatic machine was classified in heading 8422 nor was there any explanation on the scope or context in which the Perimatic machine was used during the time of the ruling. Therefore, the rulings cited by Roche during the teleconference do not contradict the analysis here on the context of the scope of heading 8422 and on the function of the Aliquoter.
Thus, although the dispensing of a fractional volume of fluid from a clinical parent sample to child sample involves the action of filling a container, unless the fluid is being dispensed into a container in the context that has some type of nexus with commerce, such dispensation of a fluid is not a function described by heading 8422, HTSUS.
In contrast to these rulings, the clinical fluid samples derived from patients that the Aliquoter is dispensing into smaller tubes do not have a nexus with commerce, i.e., they are not bought, sold, shipped, and/or distributed in commerce. Instead, they are samples made ready for analysis for diagnostic purposes related to the health of a patient. Accordingly, the biological fluid samples from patients that the Aliquoter works with do not qualify as the type of fluids or things that would be considered goods in a heading 8422 context. The action of dispensing a fixed volume of a patient’s biological clinical sample into a smaller tube or vial to be used in diagnostic testing is not the equivalent function of filling a container in the context of heading 8422, HTSUS.
Thus, there are two different and separate reasons why the Aliquoter is not classifiable under heading 8422, HTSUS. The first reason is that the dispensing of a patient’s biological clinical fluid sample into a vial or tube for the purposes of diagnostic testing is not equivalent to the filling of a container with a good in the context of heading 8422. The second reason, irrespective of the issue on the scope of heading 8422, is that the dispensing of a patient’s clinical fluid sample into a vial or tube is only one step in the overall function of an aliquoter, which is creating fractional fluid samples through the aspiration of a fixed volume of fluid from a parent sample and transferring that to a smaller container by dispensing that sample: hence, the “filling of a container” function in heading 8422 does not adequately or specifically capture or describe the full overall function of an aliquoter.
Furthermore, in previous rulings involving machines that aspirate and dispense fluids, such as pipetting systems and other similar machines, CBP has consistently classified these type of machines under heading 8479, HTSUS, because the functions of aspirating a pre-selected fixed volume from a larger reservoir of liquid and then transferring that smaller fixed volume to a different receiving receptacle, such as a vial tray or test tubes, in the context of diagnostic testing and analysis equipment is not specifically defined in any other heading in
the HTSUS. See Rainin Instrument C. Inc. v. United States, 27 C.I.T. 1619 (2003) (classifying a hand operated pipetting apparatus under heading 8479). See also NY L80994, dated December 20, 2004 (classifying pipetting systems under heading 8479); NY J87394, dated August 8, 2003 (classifying an electronic pipetting machine under heading 8479); and HQ 957301, dated January 18, 1995 (classifying a pipetting machine under heading 8479).
Roche also claimed during the teleconference meeting that aliquoting is distinguishable from pipetting. However, both the primary function of aliquoting and pipetting is the same: the creation of fractional fluid samples from a parent source. In addition, the steps to carry out this primary function is the same for both aliquoting and pipetting which is to aspirate a pre-determined amount of fluid and transferring this fractional volume by dispensing it into another, presumably smaller, container. The differences between aliquoting and pipetting that Roche enumerated—precision requirements, that cups/tubes are moved to another space for analysis, the archiving of the parent sample tube, and analytics include other functionality necessary to generate an accurate diagnostic test result (of which this does not seem to have anything to do with actually creating the aliquots)—are neither substantive nor pertinent differences in the primary functions of aliquoting and pipetting. On a fundamental level, an aliquoter and a pipetting machine employ the same methods and processes to create fractional fluid samples from a parent source. Furthermore, Roche’s aliquoters are listed by the FDA Classification Name as “station, pipetting and diluting, for clinical use”, which gives support to the notion that an aliquoter is considered to be some type of pipetting machine. Hence, CBP has a long history of interpreting the scope of heading 8479, HTSUS, in accord with the Court of International Trade decision in Ranin. We do not, as Roche claims, depart from that treatment here.
According to the terms of heading 8479, HTSUS, and the ENs thereto, classification here is appropriate when no other heading more specifically provides for a particular machine. Pursuant to the above analysis, there is no heading that describes a machine that performs the specific functions of the Aliquoter, which is to create aliquots by aspirating and dispensing fluids. Because the functions of the Aliquoter machine is not described in a specific heading and because it performs an overall function—taking discrete volumes of fluid from a larger sample and dispensing the volume into smaller containers—that is not describe in another heading, it is classified under heading 8479, HTSUS.
Therefore, the MPA system is classified under heading 8479, HTSUS, as “[m]achines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof.” Additionally, the TUL of the March 8, 2008, entry is part of the MPA system and, when shipped with an MPA system, is not classified separately but is classified in the same subheading as a complete MPA system.
HOLDING:
Pursuant to GRI 1 and Note 3 to Section XVI, the MPA system, along with the TUL of the March 9, 2008 entry, is classified under heading 8479, HTSUS, specifically subheading 8479.89.98, HTSUS, as “[m]achines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: [o]ther machines and mechanical appliances: [o]ther: [o]ther: [o]ther.” The general, column one, rate of duty is 2.5 percent, ad valorem.
The Protest should be DENIED. A copy of this ruling should be attached to the CBP Form 19 and provided to the protestant as part of the notice of action on the protest.
Sixty days from the date of the decision the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website located 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