CLA-2 OT:RR:CTF:EMAIN H287893 PF
TARIFF NOS.: 8504.40.95, 8517.62.00, 8537.10.91, 8538.90.30
Electronics Center of Excellence and Expertise
U.S. Customs and Border Protection 6601 NW 25th Street Miami, Florida 33122
Attn: Ivon Spataro, Supervisory Import Specialist
RE: Request for internal advice; Classification of a Power Grid Protective Relay and Components
Dear Center Director:
This is in response to a request by the Electronics Center of Excellence and Expertise (“ECEE”) for internal advice as to the proper classification of a power grid protective relay (“protective relay” or “subject merchandise”) and components under the Harmonized Tariff Schedule of the United States (“HTSUS”). ECEE submitted its request following receipt of a December 13, 2016 request on behalf of ABB Distribution Automation (“ABB-DA”) that seeks internal advice from our office pursuant to 19 C.F.R. §177.11(a) (“internal advice request”). Our determination as to the classification of the subject merchandise is set forth below.
FACTS:
The subject merchandise is described and marketed as the “Relion Relay family,” which are enclosures containing various printed circuit board assemblies (“PCBAs”), switches, relays, and indicators that are used in various electrical monitoring and switching applications to control certain systems, power grids, motors, and external relays. The protective relay collects data and provides a user interface for a technician to interact with these systems in order to affect a change in the configuration or open/close switches. The protective relay is equipped with a central processor unit (“CPU”) PCBA that contains the control circuitry and allows for automatic or user operated remote control of the system it is designed to supervise. The CPU is imported with memory, a processor, and a pre-programmed Basic Input/Output System. The subject merchandise also contains input/output PCBAs or modules, including an analog and binary input module, binary input/output module, and sensory input module, that receive sensor data and issue control signals, as commanded by the CPU to perform some action.
The protective relay is furnished with an external control panel ranging from a basic front panel and switches/indicators to a human machine interface (“HMI”), which consists of a keypad and display screen, where users can physically control and program the device. The analog and binary input modules are the interface between the CPU and allow the protective relay to make decisions based on that input data. The protective relay also has a communication module, which is the interface between the protective relay and the outside world, which can include other protective relays, supervisory computers, or other devices connected on a Smart Grid network. The communications module has a variety of communications capabilities under standard Information Technology standards, such as Ethernet, RS-485, and IRIG-B. The backplane board is fitted with connectors and physically holds and electrically connects the other modules within the unit. The power supply board is the power supply for the various modules within the unit.
ABB-DA states that the “central function of the [protective relay] is the routing of information and control signals throughout a data network that serves to monitor and control the power transmission system.” According to product literature provided by ABB-DA, the function of the protective relay, includes, feeder protection, bay control, transformer protection, line distance protection, line differential protection, motor protection, generator protection, busbar protection, capacitor bank protection, breaker protection, voltage protection, feeder automation, and railway application. ABB-DA’s protective relay 605 Series is noted to perform “feeder protection, motor protection, and current protection.” ABB-DA’s protective relay 615 Series is noted to be a “grid automation protection and control relay designed for remote control and monitoring, protection, fault indication, power quality analyzing and automation in medium-voltage secondary distribution systems.”
ABB-DA requests classification of the protective relay as a finished unit and the classification of the eight individual components that make up the protective relay, described as PCBAs. Specifically, the eight individual components at issue are the HMI module, CPU/signal processing module, power supply board, backplane board, communication module, analog and binary input module, binary input/output module, and sensory input module.
ISSUE:
Whether the subject protective relay is classifiable as an apparatus for communication of heading 8517, HTSUS, or a programmable controller of heading 8537, HTSUS.
What is the tariff classification of the subject PCBAs?
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUSA. 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 (AUSRIs). The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
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. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS provisions under consideration in this case are as follows:
8504 Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof
8517 Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528; parts thereof
8537 Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 85.35 or 85.36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of Chapter 90, and numerical control apparatus, other than switching apparatus of heading 85.17
8538 Parts suitable for use solely or principally with the apparatus of heading 8535, 8536 or 8537
General Rule of Interpretation 2(a) states in pertinent part that: 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.
Note 2 to Section XVI, HTSUS, further provides that:
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 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
EN 85.17 states, in relevant part: This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electromagnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks.
EN 85.37 explains, in relevant part:
This heading also covers:
…
(3) “Programmable controllers” which are digital apparatus using a programmable memory for the storage of instructions for implementing specific functions such as logic, sequencing, timing, counting and arithmetic, to control, through digital or analog input/output modules, various types of machines.
* * * * *
ABB-DA maintains that the primary function of the subject protective relay is data communication and, as such, should be classified in subheading 8517.62.00, HTSUS, which provides for “Telephone sets. . . .; other apparatus for the transmission or reception of voice, images or other data. . . .: Other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as local or wide area network): Machines for the reception, conversion and transmission or regeneration of voices, images or other data, including switching and routing apparatus.”
While ABB-DA maintains that the primary function of the protective relay is to “send, receive, and process data in wired and wireless networks,” it also states that the protective relay facilitates the monitoring and control of power generation and consumption in a Smart Grid-enabled environment. ABB-DA describes the protective relay as “elements of the data communications network that perform a variety of monitoring and control functions over the power grid,” “receive signals from a variety of sensors and monitoring equipment . . . send out control signals,” and whose “central function is the routing of information and control signals throughout a data network that serves to monitor and control the power transmission system.”
We are of the view, however, that the primary function of the subject protective relay is to provide control to electrical systems, which is not a telecommunications function. The product literature of different models of the subject protective relay does not describe the subject protective relay as a data telecommunication appliance. For example, ABB-DA’s protective relay 605 Series is noted to perform “feeder protection, motor protection, and current protection.” ABB-DA’s protective relay 615 Series is noted to be a “grid automation protection and control relay designed for remote control and monitoring, protection, fault indication, power quality analyzing and automation in medium-voltage secondary distribution systems.”
ABB-DA maintains that the protective relay functions in a similar manner as the articles classified in New York Ruling Letter (“NY”) N254412, dated June 20, 2014, NY N130617, dated December 2, 2010, and NY N084496, dated December 18, 2009. In NY N254412, CBP classified EtherCat I/O terminals in heading 8517, HTSUS. The subject EtherCat I/O terminals were used to facilitate the transfer of data between various electronic devices (sensors and actuators) and a computer which was responsible for the monitoring and control of those components. In NY N130617, the device at issue was an Infi-Net Ethernet Transfer (“IET”) Module that was designed to handle all communication with a host computer. The IET Module received data from the controllers over an open system advanced communication highway, then sorted, organized, and stored data in a database. When the host computer was ready to process the data, it would issue a command to the IET Module and the IET Module would forward the data as the reply. CBP classified the IET Module under heading 8517, HTSUS. Moreover, in NY N084496, CBP classified a Tendril Translate/Link and a Tendril Relay in subheading 8517.62.00, HTSUS. The Tendril Translate/Link was a meter bridge, which collected and received energy consumption data from an Automatic Meter Reading meter and delivered that data to utilities and consumers via a home area network. The Tendril Relay was a device that was noted to enhance the coverage and range of the home area wireless network by receiving, boosting, and retransmitting an incoming signal.
The rulings cited by ABB-DA are distinguishable. The devices at issue in NY N254412 were described as facilitating the transfer of data between various electronic devices and a computer whereas the subject protective relay receives signals which it uses to control circuits and not to provide a telecommunications function. Similarly, the IET Module in NY N130617, was designed to “handle all communication with a host computer,” and received data from the controllers of an open advanced data communication highway that it processed and subsequently forwarded. Unlike the subject protective relay, the IET Module in NY N130617 was a data telecommunications device. Similarly in NY N084496, the Tendril Translate Link was described as delivering information to consumers and utilities and the Tendril Relay was noted to enhance coverage in a wireless network by receiving, boosting, and retransmitting a signal. The functions of the Tendril devices in NY N084496 were to transfer data and signals, which is different than the function of the protective relay which receives data to issue control signals, as commanded by the CPU, to perform some action. As a result, the primary function of the devices in NY N254412, NY N130617, and NY N084496 was to perform a telecommunications function whereas the function of the protective relay is to control circuits and provide electrical protection to those circuits as a result of the sensor data it receives.
Heading 8537, HTSUS, provides for bases equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90. As the EN to heading 8537, HTSUS, explains, articles of this heading consist of an assembly of apparatus from small switchboards to complex control boards or panels which usually also incorporate meters, transformers, and voltage regulators. The EN to heading 8537, HTSUS, further states that the heading covers “programmable controllers” which use “programmable memory for the storage of instructions for implementing specific functions such as logic, sequencing, timing, counting and arithmetic, to control, through digital or analog input/output modules, various types of machines.”
The function of the subject protective relay is to control circuits and provide electrical protection to those circuits. The product literature submitted by ABB-DA attests that the subject protective relay provides electrical protection functions, which include feeder protection, bay control, transformer protection, generator protection, voltage protection, and load-shedding. All of these functions are specific control and protection functions, which specifically meet the heading description of heading 8537, HTSUS.
In addition, the subject protective relay is a programmable controller as described in EN 85.37, HTSUS. The instant merchandise consists of both analog, binary input/output and sensory input modules which are specifically described in EN 85.37, HTSUS. The analog, binary input/output, and sensory input modules receive sensor data and issue control signals, as commanded by the CPU to perform some action. The controllers of the protective relay also contain an external control panel, which ranges from a basic front panel and switches/indicators to a complex HMI, where users can physically control and program a device.
CBP has previously held that control equipment and apparatus which function to control machinery, apparatus, or equipment, are classifiable in heading 8537, HTSUS. See, e.g., Headquarters Ruling Letter (“HQ”) HQ 085281, dated November 8, 1989 (optimizer system in which dimensions of logs and boards are digitally input to a process controller which makes necessary calculations for optimal method to cut logs, and then instructs the saws how to slice the logs); HQ 950120, dated May 13, 1992 (laser vision system in which controller directs servomotors to move welding apparatus); and HQ 954972, dated January 23, 1994 (brake and steering control unit (BSCU) in which the pilot sends instructions to the BSCU in the form of database signals, which the BSCU processes and transmits to servovalves on each wheel, and sensors on brakes and nose wheel transmit positional data back to the cockpit to insure proper brake function). In HQ H008631, dated March 11, 2010, CBP classified a process control system designed to control the production, distribution, and transmission of electricity in an electrical power plant by monitoring and switching power loads in heading 8537, HTSUS. Moreover, in NY N281443, dated December 19, 2016, CBP classified a universal controller, which consisted of a processing unit, relays, contacts, terminal blocks, and slots for sensor and communication modules, and was designed to monitor and collect sensor data and perform electrical control functions, under heading 8537, HTSUS.
In addition, CBP classified similar electrical protection systems in NY N269937, dated November 19, 2015, under heading 8537, HTSUS. The functions of the electrical protection systems in NY N269937 were to monitor vital statistics and electrical systems for certain fault conditions, quality and performance data logging, and provide electrical protection. The electrical protection systems in NY N269937 incorporated a processor module, an input/output module, an analog module and contained relays, fuses, terminal blocks, contacts, and switches that contributed to the intended purpose of electrical protection. In addition, the electrical protective systems received performance data and provided power protection and control of electrical shutdown, which are similar functions performed by the subject protective relay. Similar to the device at issue in NY N269937, we find that the primary function of the subject protective relay is to automatically analyze, control, and protect the production and transmission of electricity. As such, we find that the subject protective relay is properly classified under heading 8537, HTSUS, and is specifically provided for in subheading 8537.10.91, HTSUS.
Furthermore, under Note 2(a) to Section XVI, HTSUS, parts that are themselves goods (that is, articles) of any of the headings of Chapter 84 or 85, HTSUS, are properly classified in Chapter 84 or Chapter 85. This is consistent with Additional U.S. Rule of Interpretation (AUSRI) 1(c), which provides that “a provision for parts of an article covers products solely or principally used as a part of such articles but a provision for ‘parts’ or ‘parts and accessories’ shall not prevail over a specific provision for such part or accessory.” See AUSRI 1(c). Thus, we first examine whether the subject PCBAs are themselves prima facie classifiable as articles of headings in Chapters 84 or 85.
The first PCBA at issue the HMI, which is an LCD screen and keypad assembly that acts as a control and input unit for the protective relay. ABB-DA maintains that the HMI should be classified under subheading 8537.10.91, HTSUS, which provides for “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity . . . For a voltage not exceeding 1,000 V: Other: Other.” Since the HMI is specifically provided for in subheading 8537.10.91, as a control panel, we agree with ABB-DA that the subject HMI is covered by subheading 8537.10.91, HTSUS.
The second PCBA is the CPU board that contains the control circuitry which allows for automatic or user operated remote control of the system it is designed to supervise. ABB-DA maintains that all of the decision, monitoring, and control place takes place on the CPU and, as a result, that the CPU should also be classified under subheading 8537.10.91, HTSUS. ABB-DA states that the CPU is imported with memory, a processor, and a pre-programmed Basic Input/Output System. As a result and pursuant to General Rule of Interpretation 2(a), we find that the CPU possesses the essential characteristics of a complete programmable controller and is provided for in subheading 8537.10.91, HTSUS.
The third PCBA is the power supply, which is the power supply for the various modules within the protective relay. ABB-DA contends that the power supply should be classified in subheading 8504.40.95, HTSUS, which provides for Electrical transformers, static converters . . . and inductors; parts thereof: Static converters: Other. If the power supply is imported separately, we agree. Therefore, we find that power supply is classified under subheading 8504.40.95, HTSUS.
The fourth PCBA is the backplane board, which is fitted with connectors and physically holds and electrically connects the other modules within the unit. ABB-DA suggests that the backplane for the protective relay should be classified under subheading 8517.70.00, HTSUS, as parts of telecommunications apparatus. Notably, ABB-DA states that the backplane “has no control or data communications functions,” and that it is an important component of the protective relay. Because we find that the subject protective relay is not a telecommunications device, we also find that the “parts” to the protective relay are not telecommunications devices and therefore cannot be classified under heading 8517, HTSUS. Instead, we find that the backplane board is specifically described under subheading 8537.10.91, HTSUS. This is consistent with CBP rulings. See HQ 962946, May 1, 2000 (finding that a backplane board that was comprised of connectors, which enabled data to be temporarily stored until controllers within the entire assembly allowed its onward transmission, was classified under subheading 8537.10.90, HTSUS); NY N239877, dated April 9, 2013 (holding that a backplane which was a board which operated as a connector between other boards inside industrial equipment was covered by subheading 8537.10.90, HTSUS); and NY N057186, dated April 22, 2009 (concluding that a backplane assembly that operated as a connector which allowed for electrical connections between printed circuit boards with numerous components for a variety of applications was provided for in subheading 8537.10.90, HTSUS).
The fifth PCBA is the communications module. According to ABB-DA, the communications module provides two-way digital communication capability between the protective relay and the outside world, which can include other protective relays, supervisory computers, and any number of devices connected on a Smart Grid network. The communications module serves to interface between the CPU/Signal Processing Module and other apparatus, by converting internal signals into communication packets under specific communications protocol. ABB-DA asserts that the communications module is properly classified in subheading 8517.62.00, HTSUS, which provides for “Telephone sets. . . .; other apparatus for the transmission or reception of voice, images or other data. . . .: Other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as local or wide area network): Machines for the reception, conversion and transmission or regeneration of voices, images or other data, including switching and routing apparatus.” Since the communications module has a variety of communications capabilities under standard Information Technology standards, we find that it is specifically provided for under subheading 8517.62.00, HTSUS.
The sixth, seventh, and eighth PCBAs are the analog and binary input modules, the binary input/output modules, and the sensor input modules (“modules”) that receive sensor data from the various connected components and are the interface between the CPU and allows the protective relay to make decisions based on that input data. ABB-DA suggests that the modules should be classified under subheading 8517.62.00, HTSUS. However, the function of the modules is not to transmit voice, images, or other data, but to issue control signals to perform some action. Therefore, classification under subheading 8517.62.00, HTSUS, is not supported.
In addition, the subject modules cannot be used by themselves. In order to function, they must be incorporated into the protective relay and connected to other components. As such, the modules cannot, in their condition as imported, be classified as articles of Chapter 85.
The courts have considered the nature of “parts” under the HTSUS, and two distinct though not inconsistent tests have resulted. See Bauerhin Technologies Limited Partnership, & John V. Carr & Son, Inc. v. United States, (“Bauerhin”) 110 F.3d 774. The first, articulated in United States v. Willoughby Camera Stores, (“Willoughby Camera”) 21 C.C.P.A. 322 (1933) requires a determination of whether the imported item is “an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article.” Bauerhin, 110 F.3d at 778 (quoting Willoughby Camera, 21 C.C.P.A. 322 at 324). The second, set forth in United States v. Pompeo, (“Pompeo”) 43 C.C.P.A. 9 (1955), states that “an imported item dedicated solely for use with another article is a ‘part’ of that article within the meaning of the HTSUS.” Id. at 779 (citing Pompeo, 43 C.C.P.A. 9 at 13). Under either line of cases, an imported item is not a part if it is “a separate and distinct commercial entity.” Id.
As stated above, the modules receive sensor data from the various connected components, which allow the protective relay to make decisions based on that input data. The protective relay to which the modules are connected would not function without the subject modules. The modules contribute to the overall functionality of the protective relay and have no other purpose or use. Therefore, the subject modules are “parts” of the protective relay.
Under Note 2(b) to Section XVI, parts which are suitable for use solely or principally with a particular kind of machine are to be classified with machines of that kind. Since the modules are suitable for use solely or principally with the protective relay, they are classified as parts of machines of the same kind as the protective relay. Therefore, since we find that the protective relay is classified in heading 8537, HTSUS, the subject modules are properly classified as in subheading 8538.90.30, HTSUS, as other parts of an apparatus of heading 8537, HTSUS.
This conclusion is consistent with many prior CBP rulings that have classified PCBAs as parts of the machine for which they are intended. See, e.g., HQ 967519, dated July 11, 2006 (classifying a controller module that provided communication functions for a process control system and control between field devices and other nodes on a control network as parts in subheading 8538.90.80, HTSUS); HQ H079395, dated October 26, 2009 (classifying an expansion module kit for microcontrollers containing a socket board, three adapter (routing) boards and an AVR microcontroller in subheading 8473.30.11, HTSUS, as parts of machines of heading 8471, HTSUS); HQ H071900, dated December 29, 2010 (classifying a printed circuit board assembly that was a component of a siren system and includes an amplifier, an embedded modem, an analog to digital converter, a serial port interface, a wireless and hardwired communication interface and a sine wave tone generator as a part of a signaling apparatus in subheading 8531.90.30, HTSUS).
HOLDING:
By application of GRI 1, the subject protective relay, the HMI, and the backplane board are classified in heading 8537, HTSUS. By application of GRI 6, they are specifically provided for in subheading 8537.10.91, HTSUS, as “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517: For a voltage not exceeding 1,000 V: Other: Other.” The column one, general rate of duty is 2.7% ad valorem.
By application of GRIs 1 (Note 2(a) to Section XVI) and 2(a), the subject the CPU is classified in heading 8537, HTSUS. It is are specifically provided for in subheading 8537.10.91, HTSUS, as “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517: For a voltage not exceeding 1,000 V: Other: Other.” The column one, general rate of duty is 2.7% ad valorem.
By application of GRI 1 (Note 2(a) to Section XVI), the subject power supply is classified in heading 8504, HTSUS. By application of GRI 6, it is specifically provided for in subheading 8504.40.95, HTSUS, as “Electrical transformer, static converters (for example, rectifiers) and inductors; parts thereof: Static converters: Other.” The column one, general rate of duty is .7% ad valorem.
By application of GRI 1 (Note 2(a) to Section XVI), the subject communication module is classified in heading 8517, HTSUS. By application of GRI 6, it is specifically provided for in subheading 8517.62.00, HTSUS, as “Telephone sets. . . .; other apparatus for the transmission or reception of voice, images or other data. . . .: Other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as local or wide area network): Machines for the reception, conversion and transmission or regeneration of voices, images or other data, including switching and routing apparatus.” The column one, general rate of duty is Free.
By application of GRI 1 (Note 2(b) to Section XVI), the subject analog and binary input modules, binary input/output modules, and sensor input modules are classified in heading 8538, HTSUS. By application of GRI 6, they are specifically provided for in subheading 8538.90.30, HTSUS, as “Parts suitable for use solely or principally with the apparatus of heating 8535, 8536, or 8537: Other: Other. The column one, general rate of duty is 3.5% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
Sixty days from the date of this decision, the Office of Trade, Regulations and Rulings, will make this decision available for CBP personnel, and to the public on the CBP Home Page at http://www.cbp.gov by means of the Freedom of Information Act, and other methods of publication.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division