CLA–2 OT:RR:CTF:TCM H136455 AMM
Port Director
Service Port – Houston Airport
2350 N. Sam Houston Pkwy E. #1000
Houston, TX 77032-3100
Attn: Kathy Coffman, SIS
RE: Internal Advice 10/037; classification of a forged body for a compressor cylinder
Dear Port Director,
This is in regard to your memorandum dated November 24, 2010, forwarding with comments a request for Internal Advice, reference number 10/037, initiated by Cameron International Corporation (Cameron), pursuant to 19 CFR 177.11. At issue is the classification of a forged body for a compressor cylinder under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The merchandise at issue is a metal forged body for a compressor cylinder. Although the forged body is one piece, it appears to consist of two combined geometrical shapes. The first is a rectangular box, with a width between 40 and 40.125 inches, a height between 29.875 and 30 inches, and a depth between 14.250 and 14.375 inches. On the left side face of this box sits a disk with a diameter of 20.375 inches, and a thickness of 3.875 inches. Two holes have been drilled into the forged body. The first hole goes through the center of the disk and all the way through the body. Its diameter is 2.75 inches. The second hole is drilled into the top, near to the right side. This hole has a diameter of 2.25 inches, and a depth of 10 inches. Photos of the forged body and the finished compressor cylinder are included below:
Forged Body, as imported
Finished Compressor Cylinders
Cameron states that the subject forged body will be machined after importation into a compressor cylinder used to compress either air or natural gas. The outer surfaces are polished to remove the rust and create a machined surface. The rough dimensions are cut down to slightly smaller dimensions with tighter tolerances. According to Cameron, the final dimensional tolerance for the finished compressor cylinder is +/- 0.010 inches (one hundredth of an inch), which is much tighter than the dimensional tolerances allowable for the forged body. Once the dimensions are stabilized, the existing holes are bored out to larger dimensions (the exact size of which depends on the final configuration), and several additional holes are bored into the forged body.
The finished compressor cylinder pictured above, on the right, is an integral element of compressors manufactured by Cameron. Although the finishing operations may result in different variations of the compressor cylinder bodies, the finished products are in all cases compressor cylinders. Cameron states that the forged body is unsuitable for any other use besides finishing into compressor cylinders.
ISSUE:
What is the proper classification under the HTSUS of the forged body?
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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 GRI may then be applied.
GRI 2 states, in pertinent part:
(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
The 2011 HTSUS provisions at issue are as follows:
7224 Other alloy steel in ingots or other primary forms; semifinished products of other alloy steel:
7224.90.00 Other
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8414 Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; parts thereof:
8414.90 Parts:
Of compressors:
8414.90.41 Other
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Note 1 to Section XV, HTSUS (which covers heading 7224, HTSUS), states, in pertinent part: “This section does not cover: … (f) Articles of section XVI (machinery, mechanical appliances and electrical goods); …”
Note 1(ij) to Chapter 72, HTSUS, states, in pertinent part:
In this chapter … the following expressions have the meanings hereby assigned to them:
* * *
(ij) Semifinished products … Other products of solid section, which have not been further worked than subjected to primary hot-rolling or roughly shaped by forging, including blanks for angles, shapes or sections …
* * *
Note 2(a) to Section XVI, HTSUS (which covers heading 8414, HTSUS), states, in pertinent part:
Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:
(a) Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;
* * *
The Harmonized Commodity Description and Coding System Explanatory Notes (EN), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to consult, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89–80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN to GRI 2(a) states, in pertinent part:
(II) The provisions of this Rule also apply to blanks unless these are specified in a particular heading. The term “blank” means an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part (e.g., bottle preforms of plastics being intermediate products having tubular shape, with one closed end and one open end threaded to secure a screw type closure, the portion below the threaded end being intended to be expanded to a desired size and shape). Semi manufactures not yet having the essential shape of the finished articles (such as is generally the case with bars, discs, tubes, etc.) are not regarded as “blanks”.
The EN to Heading 84.14 states, in pertinent part: “This heading covers machines and appliances, hand operated or power driven, for the compression of air or other gases, or for creating a vacuum, and also machines for circulating air or other gases.”
In their submission, Cameron alleges that the forged body should be classified under heading 8414, HTSUS, which provides for “… air or other gas compressors and fans; …; parts thereof”. Note 1(f) to Section XV (which includes heading 7224), HTSUS, precludes the classification of articles of Section XVI (which includes heading 8414), HTSUS, under heading 7224, HTSUS. Accordingly, the classification of the forged body under heading 8414, HTSUS must be considered first.
In Bauerhin Techs. Ltd. P’ship. v. United States, 110 F. 3d 774 (Fed. Cir. 1997), the court identified two distinct lines of cases defining the word “part.” Consistent with United States v. Willoughby Camera Stores, Inc., 21 C.C.P.A. 322, 324 (1933), one line of cases holds that a part of an article is an “integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article.” The other line of cases evolved from United States v. Pompeo, 43 C.C.P.A. 9, 14 (1955), which held that a device may be a part of an article even though its use is optional and the article will function without it, if the device is dedicated for use upon the article, and, once installed, the article will not operate without it. Under either line of cases, an imported item is not a part if it is “a separate and distinct commercial entity.” ABB, Inc. v. United States, 28 Ct. Int’l Trade 1444, 1452-53 (2004). Bauerhin, 100 F. 3d at 1452-32.
The forged body at issue is machined into a compressor cylinder after importation. The finished compressor cylinder is a “part” of a compressor. The compressor cylinder meets the Willoughby definition of the term “part”, in that the cylinder is necessary to the completion of a compressor, and the compressor could not function without it. The compressor cylinder serves as an outer frame component and holds other items (liners, valves, etc.) that allow the compressor to operate as designed. The compressor cylinder also meets the Pompeo definition of “part”, in that the cylinder is dedicated for use on a compressor, and, once installed, the compressor will not function without it. Furthermore, the compressor cylinder is not a separate and distinct commercial entity.
GRI 2(a) states that “any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article.” The EN to GRI 2(a) is instructive in this situation, in that it considers “blanks” to fall within the provisions of GRI 2(a).
The EN to GRI 2(a)(II) explains that, “[t]he term ‘blank’ means an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part”. We note, first, that the forged body at issue is not ready for direct use, as it must first be finished. The finishing process includes removal of small amounts of surface material and the boring of holes in certain locations. Second, the forged body has the approximate shape of the finished part, the compressor cylinder. The finished part has slightly smaller dimensions, tighter dimensional tolerances, and additional drillings, but it still maintains the “box plus disk” overall outline of the forged body. And third, the forged body may only be used to manufacture a compressor cylinder, which is a part of an air or natural gas compressor. Therefore, the forged body is a “blank” as defined in EN GRI 2(a)(II).
It is CBP’s position that articles qualifying as “blanks” possess the essential character of the complete or finished good, which in this case is a compressor cylinder. See Headquarters Ruling Letter (HQ) H006327, dated August 28, 2007; HQ 967908, dated January 24, 2006. Accordingly, we find that the subject forged body is an unfinished article that has the essential character of a compressor cylinder, a part for an “air or other gas compressor”.
By application of GRI 2(a) and Note 2(a) to Section XVI, HTSUS, the forged body is classified as a “part” of a compressor under heading 8414, HTSUS. Specifically, the forged body is classified under subheading 8414.90.41, HTSUS, which provides for “… air or other gas compressors and fans; …; parts thereof: Parts: Of compressors: Other”.
Because the forged body is properly classified under heading 8414, HTSUS, Note 1(f) to Section XV, HTSUS, precludes it from classification under heading 7224, HTSUS.
HOLDING:
By application of GRI 2(a) and Note 2(a) to Section XVI, HTSUS, the forged body for a compressor cylinder imported by Cameron is classified in heading 8414, HTSUS, specifically under subheading 8414.90.41, HTSUS, which provides for “Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; parts thereof: Parts: Of compressors: Other”. The rate of duty is free.
Duty rates are provided for the internal advice applicant’s convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
You are directed to mail this decision to the internal advice applicant, no later than 60 days from the date of this letter. On that date the Office of Regulations and Rulings will 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 public methods of distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division