CLA-2 OT:RR:CTF:TCM H234005 LWF
Port Director
Service Port Chicago
U.S. Customs and Border Protection
5600 Pearl Street
Rosemont, IL 60018
Attn: Jason Bucatch, Import Specialist
Mary Lou Belfiore, Supervisory Entry Specialist
RE: Application for Further Review of Protest No. 3901-12-100740; Tariff classification of unassembled induction conveyors and unassembled belt conveyor carriages from Germany
Dear Port Director:
This is in reference to the Application for Further Review (“AFR”) of Protest No. 3901-12-100740, timely filed on June 25, 2012 on behalf of BEUMER Corporation (“Beumer”). This AFR concerns the classification of unassembled induction conveyors and unassembled belt conveyor carriages under the Harmonized Tariff Schedule of the United States (HTSUS). In reaching our decision, we considered supplemental information submitted by counsel for Beumer via an email, dated May 24, 2013.
FACTS:
The merchandise at issue is identified as unassembled induction conveyors (the “Induction Conveyors”) and unassembled, modular belt conveyor carriages (the “Belt Conveyor Carriages”), both of which are designed to function with the Beumer “Belt Tray Sorter,” a high-capacity, closed-loop belt conveyor and distribution system used to sort and move inventory within distribution centers and inventory warehouses. The unassembled Induction Conveyors and Belt Conveyor Carriages consist of several individual components, including belt conveyors, DC drive motors, medium frequency to direct current converters (MF/DC converters), modular carriages, linear induction motors (LIMs), brakes, safety covers, and infrared (IR) data transmitters. There is no indication that the instant merchandise involves the importation of spare or bulk parts and equipment, and consequently, this ruling does not address the classification of Induction Conveyor or Belt Conveyor Carriage components imported separately or in bulk.
After importation into the United States, the Induction Conveyors and Belt Conveyor Carriages are assembled atop the structural framing of the Beumer Belt Tray Sorter and integrated with a PC-based server that performs all machine-relevant control functions via a programmable logic controller (PLC). CBP emphasizes that although the imported merchandise consists only of unassembled Induction Conveyors and Belt Conveyor Carriages, the Beumer Belt Tray Sorter includes steel structures, platforms, feeding transport systems, destinations, discharge transport systems, and safety devices that are manufactured locally in the United States.
The Belt Tray Sorter forms a loop that measures approximately 931ft in length and features 405 Belt Conveyor Carriages and 16 Induction Conveyors. During the course of warehouse operations, inventory selected for transport to a particular retail location is barcoded with the item’s product identification and final retail destination. The barcoded inventory is then loaded onto an Induction Conveyor, and the Induction Conveyor transfers the items to their appropriate destination bin via a Belt Conveyor Carriage that travels along the Belt Tray Sorter loop. Each Belt Conveyor Carriage is driven by a standard DC-motor and is powered by a contactless energy supply which runs along the Belt Tray Sorter’s frame and track. Control units located along the conveyor loop feature stationary infrared (IR)-data transmitters that send handling commands to the Belt Conveyor Carriages to direct the Belt Conveyor Carriages to load or offload items, as appropriate.
The protest at issue involves the entry of the unassembled Induction Conveyors and Belt Conveyor Carriages entered on November 3, 2011 and classified under heading 8408.90.90, HTSUS, which provides for “Compression-ignition internal combustion piston engines (diesel or semi-diesel engines): Other engines: Other.” Following the receipt of additional information from Beumer in response to U.S. Customs and Border Protection’s (CBP) CF-28 Request for Information, CBP issued a CF-29 Notice of Action (“NOA”), dated December 5, 2011, reclassifying the merchandise under heading 8479, HTSUS, which provides for “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof.” The merchandise was liquidated pursuant to the NOA under subheading 8479.89.89, HTSUS, on December 30, 2011. Beumer filed its protest on June 25, 2012, claiming that the unassembled Induction Conveyors and Belt Conveyor Carriages are correctly classified under heading 8428, HTSUS.
ISSUE:
Whether the unassembled Induction Conveyors and Belt Conveyor Carriages are classified under heading 8428, HTSUS, as other lifting, handling, loading or unloading machinery, or heading 8479, HTSUS, as machines and mechanical appliances having individual function, not specified or included elsewhere in this chapter.
LAW AND ANALYSIS:
The matter protested 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 for entries made on or after December 18, 2004. (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. 3901-12-100740 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 Customs courts. Specifically, the Protestant states because the principal function of the merchandise is to convey items within warehouse facilities, the merchandise is properly classified as other lifting, handling, loading, or unloading machinery of heading 8428, HTSUS.
Merchandise imported in the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context, which requires otherwise, by the Additional U.S. Rules of Interpretation. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order. GRI 2(a) states as follows:
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 failing to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
* * * * *
The following HTSUS provisions will be referenced:
8428: Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics):
8479: Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
* * * * *
Note 3 to Section XVI, HTSUS, states, in pertinent part, the following:
3. 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 Explanatory Notes to the Harmonized Commodity Description and Coding System (ENs) represent the official interpretation of the Harmonized System at the international level. While neither 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. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN for GRI 2(a) provides, in pertinent part, as follows:
RULE 2(a)
(Articles presented unassembled or disassembled)
(V) The second part of Rule 2 (a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport.
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The ENs to Section XVI, provide, in relevant part, as follows:
(V) UNASSEMBLED MACHINES
(See General Interpretative Rule 2 (a))
For convenience of transport many machines and apparatus are transported in an unassembled state. Although in effect the goods are then a collection of parts, they are classified as being the machine in question and not in any separate heading for parts. The same applies to an incomplete machine having the features of the complete machine (see Part (IV) above), presented unassembled (see also in this connection the General Explanatory Notes to Chapters 84 and 85). However, unassembled components in excess of the number required for a complete machine or for an incomplete machine having the characteristics of a complete machine, are classified in their own appropriate heading.
…
(VI) MULTI-FUNCTION MACHINES
AND COMPOSITE MACHINES
(Section Note 3)
In general, multi-function machines are classified according to the principal function of the machine.
…
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.
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Beumer asserts in its memorandum in support of Protest No. 3901-12-100740 that the principal function of the Induction Conveyors and the Belt Conveyor Carriages is the conveyance of merchandise, a function specified in the text of heading 8428, HTSUS. Specifically, Beumer submits that the instant Induction Conveyors and Belt Conveyor Carriages are properly classified in subheading 8428.90.01, HTSUS, which provides for “Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics): Other.”
As an initial matter, CBP notes that because the instant merchandise consists of all necessary components to assemble several complete Induction Conveyors and Belt Conveyor Carriages and does not include spare or bulk parts, there is no dispute that the unassembled Induction Conveyors and Belt Conveyor Carriages are classified, in accord with GRI 2(a), according to the terms of the headings of the tariff schedule and any relative section or chapter notes. See EN(V) to Section XVI, HS.
Note 3 to Section XVI, HTSUS, directs that unless context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole are to be classified as if consisting only of that component or as being that machine which performs the principal function. As described above, the instant Induction Conveyors and Belt Conveyor Carriages consist of belt conveyors, DC drive motors, medium frequency to direct current converters (MF/DC converters), modular carriages, linear induction motors (LIMs), brakes, safety covers, and infrared (IR) data transmitters that are fitted together to form complete, individual machines. Together, those components (which are in and of themselves “machines”), perform separate but complementary functions described in different headings of Section XVI. See Note 3 to Section XVI, HTSUS; EN(VII) to Section XVI, HS.
In accord with Note 3 to Section XVI, HTSUS, the Induction Conveyors and Belt Conveyor Carriages are classified as if consisting only of that component or as being that machine which performs the device’s principal function. CBP has found the analysis developed and utilized by the courts in relation to “principal use” (the “Carborundum factors”) to be a useful aid in determining the principal function of such machines. Generally, the courts have provided several factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. They include: (1) general physical characteristics; (2) expectation of the ultimate purchaser; (3) channels of trade, environment of sale (accompanying accessories, manner of advertisement and display); (4) use in the same manner as merchandise that defines the class; (5) economic practicality of so using the import; and (6) recognition in the trade of this use. See United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, 377 (1976), cert. denied, 429 U.S. 979 (1976); Lennox Collections v. United States, 20 Ct. Int’l Trade 194, 196 (1996); Kraft, Inc. v. United States, 16 Ct. Int’l Trade 483, 489 (1992); and G. Heileman Brewing Co. v. United States, 14 Ct. Int’l Trade 614, 620 (1990). See also HQ W968223, dated January 12, 2007, and HQ 966270, dated June 3, 2003.
Here, CBP finds that the Carborundum factors, when considered in total, indicate that the principal function of the Induction Conveyors and Belt Conveyor Carriages is to convey inventory within distribution centers and inventory warehouses. This conveyance function is accomplished by the use of belt conveyors that physically move inventory items that have been placed on Induction Conveyors and Belt Conveyor Carriages along the Belt Tray Sorter system. As such, CBP concludes that the belt conveyors perform the principal function of the Induction Conveyors and Belt Conveyor Carriages, and pursuant to Note 3 to Section XVI, HTSUS, the devices shall be classified as if consisting only of the belt conveyors.
Heading 8428, HTSUS, provides for “Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics),” and in prior rulings, CBP has distinguished between machines that perform functions falling within the examples provided by the text of heading 8428, HTSUS, and other devices that remain classified in heading 8479, HTSUS, as machines having individual functions, not specified or included elsewhere in Chapter 84. In New York Ruling Letter (“NY”) N206598, dated March 5, 2012, for example, CBP classified multi-lane divider and converging conveyors capable of high-speed, continuous motion in subheading 8428.33.00, HTSUS which provides for “Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics): Other continuous-action elevators and conveyors, for goods or materials: Other, belt type.”
By contrast, however, in Headquarters Ruling Letter (“HQ”) W968282, dated July 27, 2009, CBP classified the “AutoMate 800,” an automated blood sample processing system featuring a series of conveyors and test tube carriers used to prepare and move barcoded blood samples through clinical testing machines, in heading 8479, HTSUS, because CBP determined that the AutoMate 800’s sample preparation functions–including centrifuging, decapping, serum volume detection, and aliquoting–distinguished the system from “merely a loading and transporting machine” of heading 8428, HTSUS. There, CBP noted that for purposes of classification, “the lifting, loading, and unloading function” of the AutoMate 800 was described by heading 8428, HTSUS, even if entire machine was classified elsewhere. However, because the lifting, loading, and unloading function of the AutoMate 800 was not the device’s principal function and did not describe the machine’s blood sample preparation functionality, CBP ruled that other headings of Chapter 84 (including heading 8479), HTSUS, must be considered. Consequently, where the principal function of a machine is not described by the text of heading 8428, HTSUS, CBP will evaluate whether the device is more-appropriately classified elsewhere in Chapter 84, HTSUS.
Unlike the AutoMate 800 in HQ W968282, the Induction Conveyors and Belt Conveyor Carriages do not perform secondary functions beyond the high-speed transport of inventory items. Here, we find that the Induction Conveyors and Belt Conveyor Carriages are akin to the divider and converging conveyors classified in NY N206598, under heading 8428, HTSUS, because the instant merchandises’ function is to load and convey pre-sorted items to their appropriate destination bins. Consequently, as the Induction Conveyors and Belt Conveyor Carriages are properly described as handling, loading, or unloading machinery that possess electrically-powered belt conveyors, they are provided for under heading 8428, HTSUS. See EN 84.28, HS. Specifically, the Induction Conveyors and Belt Conveyor Carriages are provided for in subheading 8428.33, HTSUS, the eo nomine provision for other “belt type” continuous-action conveyors.
As the unassembled Induction Conveyors and Belt Conveyor Carriages are specifically described by the terms of heading 8428, HTSUS, consideration of heading 8479, HTSUS, which provides for, “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof,” is precluded.
HOLDING:
By application of GRI 1 (Note 3 to Section XVI, HTSUS) and GRI 2(a), the unassembled Induction Conveyors and Belt Conveyor Carriages are classified in heading 8428, HTSUS, specifically in subheading 8428.33.00, HTSUS, which provides for “Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics): Other continuous-action elevators and conveyors, for goods or materials: Other, belt type.” The 2012 column one, general rate of duty under this provision is free. You are instructed to APPROVE the protest.
In accordance with Sections IV and VI of the CBP 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 re-liquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office International Trade, 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 http://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