CLA-2 OT:RR:CTF:TCM H276289
Port Director
U.S. Customs and Border Protection
333 Ponoma Street
Port Hueneme, CA 93041
RE: Classification of Fin Tube Bundles for air cooled heat exchangers; Application for Further Review of Protest No. 2704-15-100594
Dear Port Director:
The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 2704-15-100594 timely filed on behalf of SPX Cooling Technologies, Inc. (”SPX” or “Protestant”), concerning the tariff classification of fin tube bundles under the Harmonized Tariff Schedule of the United States (“HTSUS”). Technical information was provided with your request.
FACTS:
Counsel for the protestant describes the merchandise at issue as components of an air cooled heat exchanger. As per his submission, the fin tube bundles are components of a heat exchanger designed to cool industrial and power generation machinery, such as pumps, compressors, engines and turbine components. The heat exchanger utilizes fan cooled air as a cooling medium that dissipates heat released from a particular process. The heat exchanger is designed to cool gases and liquids when the outlet temperature is greater than the surrounding ambient air temperature. The bundles of tubes are described as being engineered to receive high temperature fluid, providing a means for cool air to pass over the tubes that result in a cooled fluid.
Protestant entered the articles on April 28, 2014. On April 17, 2015, U.S. Customs and Border Protection (“CBP”) reclassified and liquidated the goods under subheading 8419.90.9580, HTSUS, which provides for, in pertinent part, “Machinery, plant or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature ...; parts thereof: Parts: Other: Other…”.
Protestant filed the instant protest and AFR, i.e. No. 2704-15-100594, on May 5, 2015. Protestant avers that the subject merchandise is classified under the subheading used at time of entry, i.e. subheading 8419.90.30, HTSUS, which provides for, in pertinent part, “Machinery, plant or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature…; parts thereof: Parts: Of heat exchange units…”.
ISSUE: What is the tariff classification of the Fin Tube Bundles for air cooled heat exchangers under the HTSUS subheading 8419.90?
LAW AND ANALYSIS: Initially, we note that the matter 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 all involved entries (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, §2103(2)(B) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).
Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation ("GRIs"). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6, taken in order.
The 2014 HTSUS provisions under consideration are as follows:
8419 Machinery, plant or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change in temperature such as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, nonelectric; parts thereof:
8419.90 Parts:
8419.90.30 Of heat exchange units….
* * *
Other:
8419.90.95 Other….
There is no dispute that the instant merchandise is classified under heading 8419, HTSUS. Because the instant matter pertains to the scope of provisions beyond the four-digit heading level, (i.e. whether the Fin Tube Bundles fall under the scope of subheading 8419.90.30, HTSUS) GRI 6 is implicated. GRI 6 states:
For legal purposes, the classification of goods in the subheading of a heading shall be determined according to the terms of those subheadings and any related subheading notes, and mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter, and subchapter notes also apply, unless the context otherwise requires.
Note 2 to Section XVI, HTSUS, provides for, in pertinent part, the following:
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:
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;
Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 84.79 or 85.43) are to be classified with the machines of that kind or in heading 84.09, 84.31, 84.48, 84.66, 84.73, 85.03, 85.22, 85.29 or 85.38 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 85.17 and 85.25 to 85.28 are to be classified in heading 85.17….
Accordingly, if the subject merchandise is suitable for use solely or principally with heat exchange units of subheading 8419.50, HTSUS, then they are properly classified under subheading 8419.90.30, HTSUS, by operation of Note 2(b) to Section XVI.
The Harmonized Commodity Description and Coding System Explanatory Notes ("ENs") constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the ENs should always be consulted. See T.D. 89 80, published in the Federal Register August 23, 1989 (54 FR 35127, 35128).
EN 84.19 explains that heading 8419, HTSUS, covers machinery and plant designed to submit materials … to a heating or cooling process in order to cause a simple change of temperature, or to cause a transformation of the materials resulting principally from the temperature change (e.g., evaporating, vaporizing …processes). But the heading excludes machinery and plant in which the heating or cooling, even if essential, is merely a secondary function designed to facilitate the main mechanical function of the machine or plant.
Heat exchange units are specifically designed to cool materials. EN 84.19 (B) indicates that heat exchange units are configured for a hot fluid (hot gas, steam or hot liquid) and a cold fluid to traverse parallel paths. These paths are usually in opposite directions and separated by thin metal walls in such a manner that one fluid is cooled and the other is heated. Such heat exchange units are usually in one of the three arrangements:
Concentric tube systems: one fluid flows in the annular interval, the other in the central tube;
A tubular system for the one fluid, enclosed in a chamber through which flows the other fluid; or
Two parallel series of interconnected narrow chambers formed of baffle plates.
In the “Facts” section above, it is mentioned that the Fin Tube Bundles are used in an air cooled heat exchanger. The air cooled heat exchanger consists of axial fans that are mounted above or below the finned bundles. The fans move air over the finned tubes in a cross flow pass, which then cools the fluids traveling through the finned tubes. Based on the functionality and the configuration of the air cooled heat exchanger, this article is a heat exchanger unit provided for under HTSUS subheading 8419.50. See also New York Ruling Letter N187077, dated October 28, 2011. As an integral component of an air cooled heat exchanger, the subject Fin Tube Bundles are indeed suitable for use solely or principally with heat exchange units of subheading 8419.50, HTSUS, and are thus properly classified under subheading 8419.90.30, HTSUS, per Note 2(b) to Section XVI, HTSUS.
HOLDING:
By application of GIRs 1 (Note 2(b) to Section XVI) and 6, the Fin Tube Bundles designed for use with an air cooled heat exchanger are classified under subheading 8419.90.30, HTSUS, as parts of heat exchange units. Under the 2014 HTSUS, the column one, general rate of duty was Free.
Duty rates are provided for convenience only 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 https://hts.usitc.gov/current.
You are instructed to GRANT 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 reliquidation 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 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