CLA-2 OT:RR:CTF:EMAIN H293457 SK
Port Director
U.S. Customs and Border Protection
Port of Charleston
200 East Bay Street
Charleston, SC 29401
Attn: Robert Fencel, Port Director; Randy Rhoades, Senior Import Specialist, Port of Los Angeles/Long Beach; Harriett Carter-Range, Import Specialist, CEE Industrial and Manufacturing Materials.
RE: EREMA recycling machine; Plastic granules; Heat exchange; Application for Further Review of lead Protest Number 1601-14-100083; Protest Numbers 1601-13-100278 and 1601-13-100277.
Dear Port Director:
This is in response to an Application for Further Review (AFR) of Protest No. 1601-14-100083 (“lead” protest), timely filed on May 5, 2014, by Polyplex USA LLC (Protestant). The AFR is against U.S. Customs and Border Protection’s (CBP) classification of a recycling machine used to convert trims and scraps of thin polyester film into granules of polyester under the Harmonized Tariff Schedule of the United States (HTSUS). One entry of the subject merchandise was made at the Port of Charleston, South Carolina on June 5, 2012, and liquidated as entered on January 3, 2014 under subheading 8477.80, HTSUS, which provides for other machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter.
This ruling also addresses Protest No’s. 1601-13-100278 and 1601-13-100277, both timely filed on September 20, 2013, which concern entries of substantially similar merchandise and were suspended pending determination of Protest No. 1601-14-100083.
FACTS:
The subject merchandise at issue in Protest No. 1601-14-100083 is identified as an EREMA recycling plant, model 1514 T-DD ecoSAVE. The function of the EREMA recycling plant is to to convert trims and scraps of thin polyester film from the main line of the Protestant’s BOPET (biaxially oriented polyethylene terephthalate) manufacturing plant into granules of polyester. The resulting granules, along with virgin raw material, are then re-used as raw material and fed back into the main manufacturing line. The subject plant is imported complete, consisting of the following:
Permanent magnetic trap
Moisture and dust reduction system (includes filter bags for cyclone, frequency controller for suction fan, up to 7m pipes)
1 EREMA “Processing Combination Type PC” featuring: enlarged cutter drum; cutter compactor/liquid-cooled extruder combination (reinforced with 200KW Siemans motor); Siemens CPU; temperature control valve; shock sensor-vibration meter; melt pressure indicator; 4m cable; screw extractor with gear/spindle; interconnection cables
As specified in EREMA’s product literature, the processes performed include cutting, drying, condensing, extruding, and die-cutting. Heat is used to melt polymer flakes into polymer. The melted polymer is sent through a die that forms the polymer into strands. The strands pass through a cutter and are cut into resin granules.
The subject plants at issue in Protest No’s. 1601-13-100278 and 1601-13-100277 are substantially similar in design and function to the plant the subject of lead Protest No. 1601-14-100083, except that they manufacture polyester chips from different raw materials (i.e., terephthalic acid and ethylene glycol). Based on the supplier’s letters, the machines at issue in Protest No.s 1601-13-100278 and 1601-13-100277 are identified as the “Pre-Poly, “UPR,” and the “Finisher.”
In all three Protests, the Protestant submits that heat exchange units perform the primary recycling process (i.e., melting the polyester solids into a liquid) and that classification is proper under subheading 8419.50, HTSUS, as a heat exchange unit. In this regard, the Protestant submitted a statement from the machine’s supplier stating that the heat exchange function is not only essential, but the main function of the machine.
ISSUE:
Whether the subject EREMA recycling machine used to convert thin polyester film into polyester granules is classifiable under heading 8419, HTSUS, as machinery, plant, or laboratory equipment, whether or not electrically heated, for the treatment of materials by a process involving a change of temperature, or under heading 8477, HTSUS, as other machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter.
LAW AND ANALYSIS:
This matter is protestable under 19 U.S.C. 1514(a)(2) as a decision on classification. The protest was timely filed on April 6, 2015, within 180 days of liquidation, pursuant to 19 U.S.C. 1514(c)(3). Further Review of Protest No. 1601-14-100083 is properly accorded pursuant to 19 CFR § 174.24(b), as this protest is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of CBP or his designee or by the customs courts. AFR was forwarded for our consideration.
Classification under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods will 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 GRIs 2 through 6 will then be applied in order.
GRI 6 provides that classification of goods at the subheading level will be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the preceding GRIs on the understanding that only subheadings at the same level are comparable.
The HTSUS provisions under consideration are set forth below:
8419 Machinery, plant or laboratory equipment, whether or not electrically heated
(excluding furnaces, ovens and other equipment of heading 8514), for the treatment of materials by a process involving a change of 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
8477 Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter; parts thereof
Note 2 to Chapter 84, HTSUS, states, in relevant part:
2. Subject to the operation of Note 3 to Section XVI and subject to Note 9 of this chapter, a machine or appliance which answers to a description in one or more of the headings of 8401 to 8424, or heading 8486 and at the same time to a description in one or more of the heading 8425 to 8480 is to be classified under the appropriate heading of the former group or under heading 8486, as the case may be, and not the latter group.
Heading 8419 does not, however, cover:
* * *
(e) Machinery, plant or laboratory equipment, designed for mechanical operation, in which a change of temperature, even if necessary, is subsidiary….
The Harmonized Commodity Description and Coding System Explanatory Notes
(ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTS and are thus useful in ascertaining the proper classification of merchandise. It is CBP’s practice to follow, whenever possible the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN to heading 84.19 provides, in relevant part:
[T]the heading covers machinery and plant designed to submit materials (solid, liquid or gaseous) 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., heating, cooking, roasting, distilling, rectifying, sterilising, pasteurising, steaming, drying, evaporating, vaporising, condensing or cooling 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, e.g., machines for coating biscuits, etc., with chocolate, and conches (heading 84.38), washing machines (heading 84.50 or 84.51), machines for spreading and tamping bituminous road-surfacing materials (heading 84.79).
The machinery and plant classified in this heading may or may not incorporate mechanical equipment.
* * *
(I) HEATING OR COOLING PLANT AND MACHINERY
This group covers plant of general use in many industries for the simple treatment of materials by heating, boiling, cooking, concentration, evaporation, vaporisation, cooling, etc. They include:
* * *
(B) Heat exchange units in which a hot fluid (hot gas, steam or hot liquid) and a cold fluid are made to traverse parallel paths, but usually in opposite directions, separated by thin metal walls in such a manner that the one fluid is cooled and the other heated. These units are usually of the three following types, viz., in the form of:
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.
The EN to heading 84.77 provides, in relevant part:
The heading covers machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this Chapter.
This heading includes:
Moulding machines for tyres or other articles of rubber or plastics excluding moulds as such (headings 68.15, 69.03 and 84.80 in particular).
(2) Inner tube valve hole cutting machines.
(3) Special rubber thread cutting machines and appliances.
(4) Forming presses for rubber or plastics.
(5) Special presses for moulding thermoplastic powders.
(6) Presses for making gramophone records.
(7) Machinery for the manufacture of vulcanised fibre.
(8) Extruders.
As heading 8477, HTSUS, provides for “[M]achinery for working rubber or plastics
or for the manufacture of products from these materials, not specified or included elsewhere in this chapter; parts thereof,” the initial determination is whether the subject merchandise is prima facie classifiable in heading 8419, HTSUS.
Heading 8419, HTSUS, provides for “[M]achinery, plant or laboratory equipment… for the treatment of materials by a process involving a change of temperature such as heating….” Note 2(e) to Chapter 84, HTSUS, as set forth above, states that “the heading excludes machinery, plant or laboratory equipment in which a change of temperature, even if necessary, is subsidiary. See also EN 84.19, which provides that “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.”
The United States Court of International Trade (CIT) has addressed the scope of heading 8419, HTSUS. In Applied Biosystems v. United States, 34 C.I.T. 769, 777 (Ct. Int'l Trade 2010), the CIT held that the treatment of DNA and RNA materials by a change in temperature was central to the function of the polymerase chain reaction (PCR) machine. By contrast, where the control of temperature is not the primary purpose of laboratory equipment, the CIT has held that such machines fall outside the scope of heading 8419, HTSUS. For example, in Applikon Biotechnology, Inc. v. United States, 807 F. Supp. 2d 1323 (Ct. Int'l Trade 2011), the CIT found that the regulation of temperature was not essential to a machine’s primary purpose of growing cells, concluding in the alternative that the machine’s heating function was “subsidiary to the cell growth function […] in the same manner that the water heating circuit in a washing machine is subsidiary to its function of cleaning clothes.” Applikon Biotechnology, Inc. v. United States, 807 F. Supp. 2d 1323, 1331 (classifying under heading 8479, HTSUS, a machine
designed to maintain, via a mixing function, an aseptic and homogenous environment in which to culture cells). In reaching its holding, the CIT considered that the merchandise’s temperature control capability was not used by every process for which the machine was suited.
In the instant case, the primary function of the EREMA recycling machine, as its name implies, is to recycle trims and scrap of thin polyester film into granules of polyester for use as raw material in the manufacture of the BOPET. As specified in EREMA’s product literature, the processes performed include cutting, drying, condensing, extruding, and die-cutting. Heat is used to melt polymer flakes into polymer. The melted polymer is sent through a die that forms the polymer into strands and those strands then pass through a cutter and are cut into resin granules. The EREMA plastic recycling machine’s heat exchange units perform only one of several conversion processes that the machine employs to perform its primary recycling function. The role of heat in the function of the EREMA machine, while necessary to melt the polymer flakes, is subsidiary to the primary purpose of recycling. It is further noted that not all of the processes performed by the EREMA plant involve a change of temperature.
Upon application of the CIT’s guidance concerning the scope of heading 8419, HTSUS, to the instant merchandise, we do not consider the role of the heating process, as it relates to the overall function of the EREMA machine, to be the primary function; rather, the heating process is but one of several processes that contribute to the overall function of converting trims and scrap of thin polyester film into granules of polyester. As such, classification in heading 8419, HTSUS, is precluded by application of Note 2(e) to Chapter 84.
The subject EREMA recycling plant is described by heading 8477, HTSUS, and classified under subheading 8477.80, HTSUS, which provides for other machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter (chapter 84).
This determination is consistent with New York Ruling Letter (NY) D84411, dated November 24, 1998, in which CBP classified a pelletizing machine used in the recycling of polypropylene and ABS plastic scrap in subheading 8477.59.80, HTSUS, which provides for machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere (in chapter 84): other machinery for molding or otherwise forming: other. The machine utilized a heated screw to melt the scrap and force the molten material through a die, forming it into strands. The unit then cuts the strands, producing pellets which are re-used as raw material in the molding process.
HOLDING:
By application of GRI’s 1 and 6, the subject EREMA recycling plant is classified in heading 8477, HTSUS, specifically under subheading 8477.80.00, HTSUS, which provides for “other machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter.”
The 2015 column one, general rate of duty is 3.1 percent 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 online at http://www.usitc.gov/tata/hts/.
You are instructed to DENY 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 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, CBP will make the decision available to CBP personnel and the public via www.cbp.gov, the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division