CLA–2 OT:RR:CTF:TCM H240128 AMM
Port Director
Service Port of Houston
2350 N. Sam Houston Pkwy E. #1000
Houston, TX 77032-3100
Attn: Kristopher Burton
RE: Request for Internal Advice; Classification of Certain Wind Turbine and Generator Components
Dear Port Director,
This is in reference to your request for internal advice, dated October 8, 2012, filed on behalf of Sany Electric Company, Inc. (Sany), regarding the classification by U.S. Customs and Border Protection (CBP) of certain wind turbine and generator components, under the Harmonized Tariff Schedule of the United States (HTSUS), as entered on August 13, 2012, under Entry No. XXX-XXXX516-4, at the Service Port of Houston (the Port).
FACTS:
On October 8, 2012, the Port requested internal advice, pursuant to 19 C.F.R. §177.11(b)(2), with regard to the classification of products, imported by Sany, described in the commercial invoice as a “wind turbine generator set.”
In their submission, Sany described their products in the following manner:
In the instant case, an assembled generator, mounted to the inside of the nacelle, is imported. The nacelle also features a motor controller system, air regulator and other support components. Motors for rotor shaft/yaw drive control may also be incorporated. The nacelle is designed to be installed atop a utility scale wind tower. A nacelle cover is installed after final assembly of the wind generator. In addition, unassembled components of the “prime mover” – the wind turbine – are imported. These include the large turbine blades, the pitch controller motors and systems, the low speed shaft, the hub, the cone which covers the hub, and related hardware. After importation, the nacelle will be assembled with the low-speed shaft, the hub, pitch controller motors and other components, and will be placed atop the utility scale wind tower. Thereafter, the remaining components of the turbine will be assembled onto the hub, the “prime mover” will be joined to the generator, and electrical generation can begin. In addition to the above, the import entry contained a wide range of installation materials and components, such as epoxies, fasteners, polyurethanes, and the like. These are neither parts of turbines, nor parts of generators.
See “Request for Internal Advice Concerning Tariff Classification of Certain Wind Turbine and Generator Components Imported at Port of Houston,” dated September 25, 2012, page 4. When entered, the instant product was presented unsassembled. The tower is not included with this entry.
ISSUE:
Whether the instant wind turbine generator set is properly classified under heading 8502, HTSUS, as an “electric generating set,” or whether the individual disassembled components should be classified separately, under heading 8412, HTSUS, which provides for “Other engines and motors, and parts thereof,” and under heading 8501, HTSUS, which provides for “Electric motors and generators (excluding generating sets).”
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.
The 2014 HTSUS provisions at issue are as follows:
8412 Other engines and motors, and parts thereof:
8412.90 Parts:
8412.90.90 Other
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8501 Electric motors and generators (excluding generating sets):
Other DC motors; DC generators
8501.34 Of an output exceeding 375 kW:
8501.34.60 Generators
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8502 Electric generating sets and rotary converters:
Other generating sets:
8502.31.00 Wind-powered
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GRI 2(a) states:
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 Harmonized Commodity Description and Coding System Explanatory Notes (ENs), 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:
(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.
* * *
(VII) For the purposes of this Rule, “articles presented unassembled or disassembled” means articles the components of which are to be assembled either by means of fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only assembly operations are involved.
* * *
General EN(V) to Section XVI (which covers headings 8502 and 8503), states, in pertinent part:
(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 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).
* * *
EN 84.12 states, in pertinent part:
(D) WIND ENGINES (WINDMILLS)
This group includes all power units (wind engines or wind turbines), which directly convert into mechanical energy the action of the wind on the blades (often of variable pitch) of a propeller or rotor.
Usually mounted on a fairly tall metal pylon, the propellers or rotors have an arm perpendicular to their plane, forming a vane, or some similar device for orientating the apparatus according to the direction of the wind. The motive force is generally transmitted by reduction gearing through a vertical shaft to the power take-off shaft at ground level …
* * *
Electric generator units composed of wind motors mounted integrally with an electric generator (including those for operation in aircraft slipstreams) are excluded (heading 85.02).
EN 85.01 states, in pertinent part:
(II) ELECTRIC GENERATORS
Machines that produce electrical power from various energy sources (mechanical, solar, etc.) are classified here, provided they are not more specifically covered by any other heading of the Nomenclature.
* * *
Electric generators may be hand or pedal operated, but usually they have prime movers (e.g., hydraulic turbines, steam turbines, wind engines, reciprocating steam engines, internal combustion piston engines). However, this heading only covers generators when presented without prime movers.
* * *
EN 85.02 states, in pertinent part:
(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).
* * *
Sany entered the instant product under heading 8412, HTSUS, which provides for “Other engines and motors, and parts thereof”. Sany asserts that the individual components of the wind turbine generator set should be classified separately, under headings 8412 and 8501, HTSUS. The Port asserts that the instant wind turbine generator set is properly classified under heading 8502, HTSUS, by operation of GRI 2(a).
Heading 8502, HTSUS, provides for “Electric generating sets”. EN 85.02 states that “[t]he expression ‘generating sets’ applies to the combination of an electric generator and any prime mover other than an electric motor (e.g., … wind engines, …).” Furthermore, EN 85.01 explains that “electric generators” are “[m]achines that produce electrical power from various energy sources (mechanical, solar, etc.) …”.
The term “prime mover” is not defined in the HTSUS or in the ENs. The Merriam-Webster Online Dictionary defines the term “prime mover” as “1.a: an initial source of motive power (as an engine) designed to receive and modify force and motion as supplied by some natural source and apply them to drive other machinery (as a waterwheel, turbine, or steam engine).” See (last viewed on November 12, 2013). Other relevant technical definitions of the phrase “prime mover” are similar. Wind Turbine Technology defines a “prime mover” as “A source of mechanical power that turns an electric generator.” See Ahmed Hemani, Wind Turbine Technology, p. 98 (Centage Learning, 2011). The Electric Power Engineering Handbook states, “The system that drives the generator rotor is often referred to as the prime mover. The prime mover system includes the turbine (or other engine) driving the shaft, the speed control system, and the energy supply system for the turbine.” See Leonard Grigsby, et. al., Power System Stability and Control: Electric Power Engineering Handbook, 2nd Ed., p. 13-6 (CRC Press, 2007). The Comprehensive Dictionary of Electrical Engineering defines “prime mover” as “the system that provides the mechanical power input for a mechanical-to-electrical energy conversion system (generator), e.g., the diesel engine of an engine-generator set.” See Phillip A. Laplante, Comprehensive Dictionary of Electrical Engineering, 2nd Ed., p. 543 (CRC Press, 2005). The Electric Generators Handbook states that “Electric energy (power) is produced by coupling a prime mover that converts the mechanical energy (called a turbine) to an electrical generator, which then converts the mechanical energy into electrical energy …”. See Ian Boldea, The Electric Generators Handbook: Synchronous Generators, pp. 1-5 to 1-6 (CRC Press, 2006). Drawing from the above definitions, we conclude that the “prime mover” of a wind turbine is a system which performs three functions: it captures the kinetic energy of the wind, converts that energy to rotational mechanical energy, and feeds that energy into a generator. See Headquarters Ruling Letter (HQ) H148455, dated April 4, 2014.
EN 85.02 lists “wind engines” as an example of a prime mover. According to EN 84.12, wind engines are “power units … which directly convert into mechanical energy the action of the wind on the blades (often of variable pitch) of a propeller or rotor.” The phrase “wind engines” does not appear to be used by the trade, which instead prefers the term “prime mover.” Therefore, because wind engines are a type of prime mover, these terms are identical with respect to wind turbine technology. See HQ H148455.
The process by which a complete wind turbine (which consists of a prime mover and a generator; See EN(I) to 85.02) generates electricity can be summarized as follows: First, wind energy is captured by the rotor blades, hub, and nose cone. The pitch system and yaw drive both optimize this function, by rotating the blades or the nacelle housing, respectively. Next, the kinetic energy is converted into a force which turns the rotor shaft. Once the wind energy has been converted into rotational energy of the rotor shaft, this force is transmitted to the generator through the gear box and brake system. The generator then converts the rotational energy to useful electricity. See James Manwell, et. al., Wind Energy Explained: Theory, Design, and Application, 2nd Ed., pp. 3-5 (Wiley Publ., 2009). The rotor bearing and main frame support the weight of these components, and ensure proper alignment.
The wind engine (prime mover) is generally comprised of the following components: the blade assembly, rotor shaft, rotor bearing, gear box, brake system, mainframe, nacelle housing, and yaw system. The point where the shaft is attached to the generator, at the generator coupling, represents the boundary of the “prime mover,” because that is the exact point at which the rotational mechanical energy is fed into the generator, and the force of the wind is applied to drive other machinery.
CBP’s understanding of the term “prime mover” contemplates a wind engine that not only receives the force and motion of the wind, but modifies that force and applies it to drive other machinery. The blade assembly (blades, nose cone, hub, and pitch system) and vane (nacelle housing and yaw system) are designed to receive the force, the remaining components (rotor shaft, rotor bearing, gear box, brake system, and mainframe) are designed modify that force and to drive other machinery (the generator).
Now that the components which comprise the prime mover of a wind turbine have been specifically identified, we turn to consideration of the instant product. The imported product contains a generator and all of the component parts of a wind engine, including the entire blade assembly. The product consists of a generator and a prime mover, presented together, designed to be mounted together as one unit or on a common base, namely a utility scale wind tower. However, the product is presented in an unassembled state.
GRI 2(a) provides, in pertinent part, that “[a]ny reference in a heading to an article 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.” In its condition as imported, the instant nacelle contains all of the components necessary to capture wind energy and convert it into useful electrical energy. It contains the low speed shaft and yaw system, which, together with the blade assembly, convert wind energy into rotational mechanical energy. It contains all of the components which transmit the rotational mechanical energy to the generator. It contains the nacelle housing, which encapsulates and protects the individual components. Finally, it contains the generator, which is responsible for converting rotational energy into useful electrical energy. As such, the instant product is properly classified as an unassembled electric generating set in heading 8502, HTSUS, pursuant to GRI 2(a). See, e.g., HQ H148455; HQ H010810, dated March 13, 2009; New York Ruling Letter (NY) N099779, dated April 20, 2010; EN(V) and (VIII) to GRI 2(a); General EN(V) to Section XVI. Specifically, the instant product is classified under subheading 8502.31.00, HTSUS, which provides for “Electric generating sets and rotary converters: Other generating sets: Wind-powered”.
HOLDING
By application of GRI 1 and GRI 2(a), HTSUS, the instant unassembled wind turbine generator sets are properly classified under heading 8502, HTSUS, specifically under subheading 8502.31.00, HTSUS, which provides for: “Electric generating sets and rotary converters: Other generating sets: Wind-powered”. The general column one rate of duty is 2.5% ad valorem.
Duty rates are provided for your convenience, and are subject to change. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
You are to mail this decision to the internal advice requester no later than 60 days from the date of the decision. At that time, the Office of 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 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