CLA-2 OT:RR:CTF:TCM H248337 ALS
Port Director
U.S. Customs and Border Protection
605 West 4th Avenue, Suite 230
Anchorage, AK 99501
Attn: Debra Anderson, Import Specialist
RE: Internal Advice: Tariff Classification of a Gear Tooth Sensor
Dear Port Director:
This letter is in reply to your request for Internal Advice, which was initiated by a letter dated August 7, 2012, from counsel for Allegro MicroSystems, Inc. (“Allegro”). At issue is the tariff classification of a Gear Tooth Sensor (“GTS”) under the Harmonized Tariff Schedule of the United States (“HTSUS”). Under separate cover dated July 9, 2013, Allegro’s counsel forwarded samples of the GTS to our office. This letter addresses the initial IA request, the forwarded samples, and the arguments presented during our office’s meeting with Allegro and Allegro’s counsel on January 28, 2014.
FACTS:
The GTS is a Hall-Effect sensor assembly which consists of an integrated circuit chip connected to a Samarium Cobalt Magnet pellet (magnet). The chip is equipped with thin film resistors and capacitors, and is mounted onto the front of a copper lead frame. The magnet, and sometimes a ferrous concentrator, are attached to the back of the lead frame. Gold bond wires connect the chip to the lead frame. A silver filled epoxy is used to attach the chip to the front of the frame and the magnet to back of the frame. A molding compound encases the chip, the lead frame, the magnet and the concentrator into one indivisible package.
A Hall-effect sensor detects changes in magnetic fields which relate to changes in physical properties such as direction, presence, rotation, angle, and electrical currents. When a magnetic field change reaches a certain amplitude, the Hall-effect sensor converts that change into voltage, which is then processed into readable electrical information by on-chip amplifiers, logic circuitry and power drivers. Gear tooth sensors, such as the instant GTS, are commonly used to determine the rotation speed of a sensed object. Allegro’s customers use the instant GTS in applications such as automotive antilock brake systems, engine management systems, and transmission systems.
ISSUE:
Is the Gear Tooth Sensor properly classified under heading 8542, HTSUS, as an electronic integrated circuit, or under heading 8543, HTSUS, as an electrical machine having an individual function not specified or included elsewhere in [Chapter 85]?
LAW AND ANALYSIS:
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation. 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, GRIs 2 through 6 may be applied in order. GRI 3(a) provides that “the heading which provides the most specific description shall be preferred to headings providing a more general description.”
Note 8 of HTSUS Chapter 85 is as follows:
For the purposes of headings 8541 and 8542:
(a) "Diodes, transistors and similar semiconductor devices" are semiconductor devices the operation of which depends on variations in resistivity on the application of an electric field;
(b) "Electronic integrated circuits" are:
Monolithic integrated circuits in which the circuit elements (diodes, transistors, resistors, capacitors, inductances, etc.) are created in the mass (essentially) and on the surface of a semiconductor or compound semiconductor material (for example, doped silicon, gallium arsenide, silicon germanium, iridium phosphide) and are inseparably associated;
Hybrid integrated circuits in which passive elements (resistors, capacitors, inductances, etc.), obtained by thin- or thick-film technology, and active elements (diodes, transistors, monolithic integrated circuits, etc.), obtained by semiconductor technology, are combined to all intents and purposes indivisibly, by interconnections of interconnecting cables, on a single insulating substrate (glass, ceramic, etc.). These circuits may also include discrete components;
Multichip integrated circuits consisting of two or more interconnected monolithic integrated circuits combined to all intents and purposes indivisibly, whether or not on one or more insulating substrates, with or without leadframes, but with no other active or passive circuit elements.
For the classification of the articles defined in this note, headings 8541 and 8542 shall take precedence over any other heading in the Nomenclature, except in the case of heading 8523, which might cover them by reference to, in particular, their function.
(Underline emphasis in original.)
Heading 8542, HTSUS, provides for “Electronic integrated circuits; parts thereof.” Heading 8543, HTSUS, provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter.”
Allegro contends that the GTS is properly classified under heading 8542 because it “meets the requirements of the tariff definition of a hybrid integrated circuit.” Allegro states that because the subject GTS contains a semiconductor die that is built upon insulating, silicon substrate, onto which both passive and active elements are built, which is attached to a discrete, passive inductor, it meets the definition of a hybrid integrated circuit set forth in Note 8(b)(ii) to Chapter 85.
The Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff 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. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
Allegro cites to EN 85.42(II), which provides as follows:
(II) Hybrid integrated circuits.
These are microcircuits built up on an insulating substrate on which a thin or thick film circuit has been formed. This process allows certain passive elements (resistors, capacitors, inductances, etc.) to be produced at the same time. However, to become a hybrid integrated circuit of this heading, semiconductors must be incorporated and mounted on the surface, either in the form of chips, whether or not encased, or as encased semiconductors (e.g., in specially designed miniature casings). Hybrid integrated circuits may also contain separately produced passive elements which are incorporated into the basic film circuit in the same way as the semiconductors. Usually these passive elements are components such as capacitors, resistors or inductors in the form of chips.
Substrates made up of several layers, generally ceramic, heat-bonded together to form a compact assembly, are to be taken to form a single substrate within the meaning of Note 8 (b) (ii) to this Chapter.
The components forming a hybrid integrated circuit must be combined to all intents and purposes indivisibly, i.e., though some of the elements could theoretically be removed and replaced, this would be a long and delicate task which would be uneconomic under normal manufacturing conditions. [Emphasis in original.]
Allegro cites EN 85.42(II) to further contend that the subject GTS meets the Note 8(b)(ii) definition of a hybrid integrated circuit. Allegro specifically contends that the GTS’ Hall-effect semiconductor die is attached “indivisibly” to the topside of the lead frame using epoxy, and then the lead frame is molded into the plastic encasement, also using thermoset epoxy.
Further, Allegro cites to EN 85.42(I) to contend that the combination of active transistors and passive resistors and capacitors also indicate that the GTS meets the definition of a hybrid integrated circuit. Allegro also attempts to distinguish the GTS from products that are not formed by semiconductor technology, which are specifically excluded from heading 8542 according to last full paragraph of EN 85.42, by noting that the GTS “is a high-density integrated circuit, formed by semiconductor technology,” and it is not mounted onto a printed circuit board.
Allegro asserts that the magnet is a passive element. Both the HTSUS and ENs state that hybrid integrated circuits may include a passive element. A hybrid integrated circuit is formed by first laying down printed circuitry which contains passive elements and then mounting “semiconductor” elements to the insulating substrate. It goes on to state that these hybrid circuits may also contain separately produced passive elements which are incorporated into the basic film circuit in the same way as the semiconductors.
The lead frame is not an insulating substrate, and the magnet is not a semiconductor element. The magnet is not considered a passive element, and it is not incorporated into the basic film circuit in the same way as semiconductor devices.
Allegro cites to two CBP rulings to support its argument. In NY H80199 (May 21, 2001), CBP classified an electronic micro assembly that is mounted to a printed circuit board under HTSUS subheading 8542.30.00, claiming that it is similar to the article at issue here. We note, however, that NY H80199 has been revoked with the publishing of CBP Ruling HQ H122802 (May 23, 2012), which Allegro acknowledges in its submission. Having been revoked, NY H80199 has no bearing on the present case. Allegro cites CBP Ruling HQ 955416 (August 31, 1994) to contend that the TCO-series high frequency crystal oscillators that CBP classified under subheading 8542.20.00 in that ruling are similar to the GTS. Allegro notes in particular that the crystal oscillator “appears to contain passive elements, which are capacitors and resistors, integrated circuits, and a discrete electrical component, which is a magnet.” We do not find the mere “appearance” of similarity between the TCO-series high frequency crystal oscillators and the subject article to be persuasive.
Allegro also contends that several other CBP rulings to which you cite are distinguishable from your argument. CBP Ruling HQ 967134 (July 20, 2004) classified a Hall-effect Gear Tooth Sensor under HTSUS subheading 8543.89.40 as an electrical machine having individual functions not specified or included elsewhere in [Chapter 85], other, electric synchros and transducers; flight data recorders; defrosters and demisters with electric resistors for aircraft. Allegro argues that the article classified in HQ 967134 is a finished assembly which differs from the GTS because the latter is incorporated into other components. Our reading of HQ 967134 does not support that contention. There is nothing in the ruling that suggests that the article classified therein is a finished assembly. HQ 967134 revokes CBP Ruling HQ 965764 (August 13, 2002); therefore, HQ 965764 has no bearing on the present case. Allegro also cites CBP Rulings NY N216101 (May 17, 2012), NY J87417 (August 8, 2003), NY N029247 (June 19, 2008), HQ 967103 (July 20, 2004), NY N009077 (April 5, 2007), and HQ 966732 (August 13, 2004) as being distinguishable from the present case. We do not invoke those cases in our analysis here. Thus, they have no bearing on the present case.
Within the context of our review of the subject GTS, we note again that the circuit elements of the GTS are polysilicon thin film and diffused resistors, thin film capacitors, and a specially designed epitaxial silicon configured Hall element within the silicon substrate, which are combined to form the semiconductor die. The separately produced ferromagnetic core is mounted to a lead frame and the semiconductor die is then joined together with the ferromagnetic core/lead frame structure. The resulting device is then encased in an epoxy resin mold to complete the GTS. The magnetic material is not combined with the chip by a single insulating substrate as required by Note 8(b)(ii) to Chapter 85, HTSUS. Given that the magnetic material is mounted on the lead frame, which in turn surrounds the insulating substrate, it is clearly distinct from the insulating substrate and the elements encapsulated therein.
Consequently, the GTS does not meet the definition provided in Chapter 85, Note 8(b)(ii) for hybrid integrated circuits. Thus, the subject Gear Tooth Sensor is not properly classifiable as a hybrid integrated circuit under heading 8542.
We have previously held that Hall-effect sensors are transducers classified under heading 8543. See CBP Ruling HQ 967134 (July 20, 2004) and CBP Ruling HQ 967103 (July 20, 2004). In both of those cases, the item at issue consisted of a flex circuit board, a magnetic material, plastic molding surrounding the magnetic material, and three conductor wires, all combined in a plastic housing. In both cases, we noted that the term transducer is not defined in the text of either the HTSUS or the ENs. As each case noted, the common and commercial meaning may be determined by consulting dictionaries, lexicons, scientific authorities, and other reliable sources. Nippon Kogasku (USA Inc. v. United States, 69 CCPA 89, 673 F.2d 380 (Fed. Cir. 1982). “Transducer” is defined as “a device that changes power from one system into another form for another system.” Merriam-Webster Online Dictionary, http:// www.merriam-webster.com /dictionary/ transducer (2014). As noted above, the HEIC converts a magnetic field into voltage. Thus, it meets the definition of a transducer.
It is well-settled that transducers are properly classified under heading 8543. See, e.g., CBP Ruling HQ W967689 (March 17, 2008); HQ 967134 and HQ 967103, supra. Therefore, the subject Hall-Effect Current Sensor Integrated Circuit is properly classified under HTSUS subheading 8543.70.40 as an “electrical machine… having individual functions, not specified or included elsewhere in [chapter 85]…: Other machines and apparatus: … transducers…”
HOLDING:
By application of GRI 3(a), the Hall-Effect Current Sensor Integrated Circuit is properly classified in heading 8543, HTSUS. It is specifically classified under HTSUS subheading 8543.70.40 as an “electrical machine… having individual functions, not specified or included elsewhere in [chapter 85]…: Other machines and apparatus: … transducers…” The 2015 column one, general rate of duty, for merchandise classified in this subheading is 2.6 percent ad valorem.
Duty rates are provided for your convenience and 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 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 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