CLA-2 OT: RR: CTF: TCM H261125 LOR
Port Director
Port of Charleston
U.S. Customs and Border Protection
200 East Bay Street
Charleston, SC 29401
RE: Application for Further Review of Protest Number 1601-14-100018; Tariff classification of bulk wire spooling machines
Dear Port Director:
This is in reference to the Application for Further Review (AFR) of Protest Number 1601-14-100018, timely filed on January 22, 2014 by counsel on behalf of its client, Windak AB (Windak). The AFR concerns U.S. Customs and Border Protection’s (CBP) tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS) of spooling machines. In arriving at our conclusion, this office took into account extra information, including product brochures and videos, presented at its meeting with counsel on December 10, 2015.
FACTS:
The subject merchandise consists of three machines that work in conjunction to spool flexible bulk wire or cable from very large spools onto smaller spools, which are then wrapped, boxed, and palletized.
The subject entry included a vertical accumulator (part number AV75/300), a spool winder 6-14 (part number SW6-14), and a spool/carton palletizer (part number GP6-14) which are connected to each other by conveyor belts. Extra-large spools of flexible bulk wire or cable are loaded onto the vertical accumulator and hoisted. The accumulator maintains the tension for the spooling machine line. Empty spools are lined up on two in-feed conveyors that transport the spools to the spooling head with the spool winder. The spool is then positioned in the spooling head to a winding position. The wire is then wound from the large spools loaded on the accumulator, and unspooled onto the smaller spools to the desired length. After the desired length has been reached, the cable is cut and the process begins again on the second spooling head. While the next spool is being wound, the full spool is wrapped with plastic. It is in this condition, wrapped with plastic wrap, that the spools are sold to consumers. The wrapped spool moves along the conveyor belt to the spool/carton palletizer. There the wrapped spools are boxed. The boxes are sealed, labelled, and then palletized. The wrapped spools are lifted and positioned on the pallet in the appropriate stacking pattern.
One entry of the subject merchandise is at issue. Windak entered the merchandise on February 6, 2013, with all three units classified together under subheading 8479.81.00, HTSUS, which provides for, “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: For treating metal, including electric wire coil winders.” CBP subsequently liquidated the subject merchandise on July 26, 2013, classified under subheading 8479.89.98, HTSUS, which provides for, “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: Other: Other: Other.”
Windak argues in the instant AFR that the goods were properly classified as entered. In its meeting with this office, Windak also argued that in the alternative, (1) the goods are classified together in subheading 8428.90.02, HTSUS, which provides for, “Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics): Other machinery: Other” or, (2) the goods are classified together in subheading 8422.40.91, HTSUS, which provides for “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: Other packing or wrapping machinery (including heat-shrink wrapping machinery): Other.” Windak also argues that the three units that make up this machine could be classified separately.
ISSUE:
Whether three machines imported finished and together, which unspool flexible bulk wire or cable onto smaller spools, and then wrap, box, and palletize the spools, are classified together as a functional unit, or if the machines are classified separately.
If classified together, whether the subject merchandise is classified as packing machinery under subheading 8422.40, HTSUS, or as other lifting machinery under subheading 8428.90, HTSUS, or as machines that treat metal, including electric wire coil-winders under subheading 8479.81, HTSUS, or if it is classified in subheading 8479.89, HTSUS, as other machines, not elsewhere specified.
LAW AND ANALYSIS:
CBP first notes that the matter is protestable under 19 U.S.C. § 1514(a) (2), as a matter on classification. The AFR was timely filed, within 180 days of liquidation for entries made on or after December 18, 2004. See 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 Number 1601-14-100018 is properly accorded to the Protestant pursuant to 19 C.F.R. § 174.24(a) because the decision against which the protest was filed is alleged to be inconsistent with another ruling of the Commissioner of Customs. Specifically, Windak argues that New York Ruling Letter (NY) 859751, dated February 11, 1991, which classified armature and stator manufacturing machines (specifically an automatic armature winder) in subheading 8479.81.00, HTSUS, is inconsistent with CBP’s rate advance and liquidation of the subject merchandise.
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs). GRI 1 requires that classification be determined first according to the terms of the heading of tariff schedule and any relative section or chapter notes, and unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The HTSUS subheadings at issue are the following:
8422 Dishwashing machine; 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:
8422.40 Other packing or wrapping machinery (including heat-shrink wrapping machinery):
8422.40.91 Other:
8422.40.9181 Other
8428 Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics):
8428.90 Other machinery:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
Other machines and mechanical appliances:
8479.81.00 For treating metal, including electric wire coil-winders
Other:
8479.89.98 Other
Note 4 to Section XVI, which covers Chapter 84 states:
Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are generally indicative of the proper interpretation of these headings. See T.D. -80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN to Section XVI, which covers Chapter 84, states the following in relevant part:
(VII) FUNCTIONAL UNITS (Section Note 4)
This note applies when a machine (including a combination of machines) consists of separate components which are intended to contribute together to a clearly defined function covered by one of the headings of Chapter 84 or, more frequently, Chapter 85. The whole then falls to be classified in the heading appropriate to that function, whether the various components (for convenience or other reasons) remain separate or are interconnected by piping (carrying air, compressed gas, oil, etc.), by devices used to transmit power, by electric cables or by other devices.
For the purposes of this Note, the expression “intended to contribute together to a clearly defined function” covers only machines and combinations of machines essential to the performance of the function specific to the functional unit as a whole, and thus excludes machines or appliances fulfilling auxiliary functions and which do to contribute to the function of the whole.
The EN 84.22 provides the following, in relevant part:
This heading covers dishwashing machines … the heading also covers machines of different types designed for cleaning or drying bottles or other containers, for filling or closing such containers … and, generally, for packing (including heat-shrink wrapping) goods for sale, transport or storage. These include:
***
(4) Wrapping or cartoning machines, including those with provision for forming, printing, tying, stapling, taping, glueing, closing or otherwise finishing the packing. The heading includes machines for packing filled cans or bottles into external containers (crates, boxes, etc.).
(5) Labelling machines, including those which also print, cut and gum the labels.
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.
Note 4 to Section XVI, which covers machinery of Chapter 84 directs that imports of machines consisting of separate components which will be interconnected post-importation, and are intended to contribute together to a clearly defined function, are to be classified as one functional unit, rather than separately, and according to the tariff classification that describes the machines clearly defined function. See Note 4 to Section XVI, see also EN to Section XVI, (VII) Functional Units (Section Note 4), and see NY N265287, dated June 16, 2015.
Here, the three machines are connected via conveyor belts, much like the examples found in the EN to Section XVI, under section (VII) Functional Units, and all three work together to package suitably sized spools of flexible bulk wire or cable for consumer purchase. Therefore, in accordance with Note 4 to Section XVI, and in consideration of the ENs to that section, these subject machines will be classified together, in the heading of Chapter 84 which describes the clearly defined function of the functional unit.
CBP has consistently classified spooling or winding machines in subheading 8479.89, HTSUS. See HQ 086736, dated June 7, 1990, where CBP classified tandem coilers used in coiling aluminum strip under subheading 8479.89, HTSUS; HQ 965122, dated July 10, 2002, where CBP classified articles that uncoil wire from a spool under subheading 8479.89, HTSUS. See also EN 84.79 (III)(18). And if respooling was all that the subject merchandise did, then it too would be classified in the residual provision for machines not elsewhere specified in subheading 8479.89, HTSUS. However, the function of the three machines together is to package flexible bulk wire for direct consumer purchase. It does this by unspooling and respooling the flexible bulk wire or cable and wrapping, boxing, and palletizing the spools, so they are ready for retail sale. Therefore, the subject merchandise is described as packing machinery, in 8422.40.91, HTSUS, because packing the smaller spools, which are suitably sized for consumer purchase, is the clearly defined function of this combination of machines.
This is also consistent with the EN to 84.22 subsection (4) which states that wrapping or cartoning machines, or machines that otherwise finish the packing are included therein. Additionally, the EN 84.22 subsection (5) states that labelling machines are included in this heading. Finally, the EN 84.22 states that machinery that wraps goods into the forms or presentations in which they are normally distributed and sold in commerce, are classified in this heading. The subject merchandise wraps the spools, packs the spools in boxes, labels the boxes and finally palletizes the labelled boxes. Further, the wrapped spools are in the form in which they are normally sold to consumers. Therefore, classification of the subject merchandise in subheading 8422.40, HTSUS, comports with the ENs.
Subheading 8479.81.00, HTSUS, is not the correct classification for the subject merchandise because it provides for machines designed for treating metal, such as scouring, pickling, tin-plating and de-sanding. Specifically, the tariff text of subheading 8479.81, HTSUS, refers to machines which wind electric wire around a specific part of an electric article so as to complete the manufacture of that electric article. Such coilers work exclusively with electric wire, and are distinguishable from coiling/winding/spooling machines which are basically for putting flexible bulk wire into a ready form for sale or storage purposes. As such, the subject merchandise is not described as a machine for treating metal, of subheading 8479.81.00, HTSUS.
Heading 8428, HTSUS, is also not the correct classification for the subject merchandise, because this heading text does not describe Windak’s machines clearly defined function. Information provided to this office and videos shown to this office show that the vertical accumulator machine has a lifting component. It hoists the giant spools of flexible bulk wire or cable via pintels which are inserted into either side of the spools. But the purpose of the lifting component of this unit is to accommodate and support the enormous spools. The spools are so large and so heavy that they cannot be placed onto the pintels by human strength alone. As such, the vertical accumulator unit must raise the spool so that it can unspool and the wire can proceed through the other two units. The vertical accumulator does not lift the spools for the purpose of moving them or relocating them to an alternate or secondary location. It is not the purpose of the functional unit simply to hoist large spools. The lifting component is subsidiary to the machine’s clearly defined function as packing machinery.
Finally, as subheading 8422.40, HTSUS, describes the functional unit’s principal function as packing machinery, the subject merchandise is not classified in the residual subheading for miscellaneous machines not elsewhere specified or included in Chapter 84, in heading 8479, HTSUS.
HOLDING:
By operation of GRI 1, the subject merchandise is specifically provided for in subheading 8422.40.9181, HTSUSA (Annotated), which provides for, “Dishwashing machine; 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: Other packing or wrapping machinery (including heat-shrink wrapping machinery): Other: Other.” The column one rate of duty is free. The Protest should be GRANTED.
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 reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of International Trade 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