CLA-2 OT:RR:CTF:EMAIN H298151 DSR
Mr. Larry T. Ordet
Sandler, Travis & Rosenberg, P.A.
1000 NW 57th Court, Suite 600
Miami, FL 33126
RE: Revocation of treatment under 19 C.F.R. 177.12(c)(1); notice and comment requirements of 19 U.S.C. §1625(c)(2); various solar kits
Dear Mr. Ordet:
This is in response to your letter of June 26, 2017, on behalf of Sunforce Products, Inc., (Sunforce) concerning the classification of various solar kits under the Harmonized Tariff Schedule of the United States (HTSUS).
On July 24, 2008, U.S. Customs and Border Protection (CBP) – the Port of Champlain – issued a CBP Form 28 (CF-28) Request for Information to Sunforce relating to a single entry of a solar kit. CBP reviewed the information provided by Sunforce and liquidated the entry as entered in subheading 8541.40.60, HTSUS, which provides for “Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED); mounted piezoelectric crystals; parts thereof: Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED): Other diodes.” Sunforce alleges that it continued to use subheading 8541.40.60, HTSUS, for subsequent imports of such solar kits, as well as for similar solar kits, based upon having received “CBP’s approval regarding the classification of these goods and consistent with the company’s historic classification practice.”
In addition, on December 30, 2009, the Port of Champlain issued a CF-28 concerning the classification of “various solar products” on a line of a single entry dated December 11, 2009. The entry line included nine separate part numbers, including three items previously reviewed by CBP pursuant to the 2008 request, supra. CBP reviewed the information provided by Sunforce and liquidated the entry as entered in subheading 8541.40.60, HTSUS.
Sunforce asserts that it continued to use subheading 8541.40.60, HTSUS, for subsequent imports of such solar panels and kits, as well as substantially similar solar panels and kits between 2011 and 2012. The table below summarizes the entry dates, liquidation dates and HTSUS numbers that Sunforce assigned at entry to the items that are the subject of this protest:
Entry Date
Liquidation Date
Port of Entry
HTSUS subheading
9/15/2011
7/27/2012
3802
8541.40.60
9/7/2011
7/20/2012
3802
8541.40.60
8/5/2011
6/15/2012
3802
8541.40.60
4/25/2012
8/3/2012
3802
8541.40.60
4/27/2012
8/3/2012
3802
8541.40.60
5/18/2012
8/3/2012
3802
8541.40.60
6/15/2012
7/23/2012
3802
8501.31.80
7/26/2012
8/21/2012
3802
8501.31.80
7/30/2012
8/21/2012
3802
8501.31.80
Upon liquidation, U.S. Customs and Border Protection (CBP) classified all of the items as electric generators under subheading 8501.31.80, HTSUS, which provides for “Electric motors and generators (excluding generating sets): Other DC motors: DC generators: Of an output not exceeding 750 W: Generators.” We note that Sunforce alleges that it classified the last three entries listed under subheading 8501.31.80, HTSUS, in accordance with CBP’s guidance.
Sunforce describes the items as “solar panels, which are sometimes referred to battery maintainers, trickle chargers or battery chargers … all designed solely to supply power to a battery, which can then be used to provide power to another, primary device.” Sunforce states that each panel includes a backflow, or blocking, diode that allows the electric current to flow in one direction, thus preventing the current from flowing from the battery to the solar panel, and although some of the larger panels, e.g., those over 15W, include such a diode, a separate charge controller is typically used to protect the battery and the panel from overcharging or undercharging. The following table summarizes the items at issue:
Part No.
Description
50012
1.8W Solar Battery Charger
50013
1W Powersport Charger
50022
5W Solar Battery Trickle Charger
50032
15W Solar Battery Charger
50033
Four 15W Kits in Pop Display
58012
Coleman 2W Solar Battery Charger
58013
Coleman 1W Powersport Charger
58022
Coleman 6W Solar Battery Trickle Charger
58025
Coleman 10W Solar Power Panel
58033
Coleman 18W Solar Battery Charger Kit & Controller
58050
Coleman 55W Solar Charging Kit
58232
Coleman 36W Folding Solar Panel & 7 Amp Controller
Item 50012 – the 1.8W Solar Battery Charger – includes a wire connected to solar panel, extra wire, battery clamps, an O-Ring Connector and fuse, and “Quick Connect Technology.” It also has a built-in blocking diode to prevent discharge from the battery and integrated circuitry to prevent discharge and overcharge.
Item 50013 – the 1W Powersport Charger – includes a solar charger, a set of O-Rings, and a set of battery clamps. It may be attached directly to a battery and contains a blocking diode that prevents discharge and overcharge.
Item 50022 – the 5W Solar Battery Trickle Charger – includes a12V DC Plug, alligator clamps, an 11.5 foot wire, a solar panel, and four stainless steel mounting screws. It may be installed by connecting its 12V DC plug into a vehicle’s DC socket to charge the vehicle’s battery, or by directly connecting it to a vehicle’s battery by using the alligator clamps. The solar panel has a built-in blocking diode to prevent reverse discharge.
Item 50032 – the 15W Solar Battery Charger – includes a 12V DC plug, alligator clamps, an 11.5 foot wire, a solar panel and four stainless steel mounting screws. It may be installed by connecting its 12V DC plug into a vehicle’s DC socket to charge the vehicle’s battery, or by directly connecting it to a vehicle’s battery by using the alligator clamps. The solar panel has a built-in blocking diode to prevent reverse discharge. The set also includes a voltage tester.
Item 50033 – the “4 15W Kits with Pop Display” – includes a seven amp charge controller, 12V DC plug, alligator clamps, an 11.5 foot wire, a solar panel, and four stainless steel mounting screws. The kit also includes a voltage tester. The charge controller is attached to a vehicle’s battery via the included alligator clips and cuts voltage, thereby ensuring no overcharging of the battery. The solar panel itself is connected to the charge controller via the included 11.5 foot wire. The solar panel contains a built-in blocking diode that protects the battery from reverse discharge.
Item 58012 – the Coleman 2W Solar Battery Maintainer – includes a solar panel, alligator battery clamps, and a 12V DC plug. It may be installed by connecting its 12V DC plug into a vehicle’s DC socket to charge the vehicle’s battery, or by directly connecting it to the battery by using the alligator clamps. The solar panel has a built-in blocking diode to prevent reverse discharge.
Item 58013 – the Coleman 1W Powersport Charger – is described thusly: “The 12 Volt Power Sports Charger may be attached directly to your battery using either of the accessories included with the charger. Included with the charger are a set of ‘O’ Rings as well as a set of battery clamps. Both are equipped with quick connect technology to allow quick and easy connections.” The panel contains a blocking diode that prevents discharge and overcharge.
Item 58022 – the Coleman 6W Solar Battery Trickle Charger – includes a 12V DC plug, alligator battery clamps, a ten-foot wire, a solar panel and four stainless steel mounting screws. It may be installed by connecting its 12V DC plug into a vehicle’s DC socket to charge the vehicle’s battery, or by directly connecting it to the battery by using the alligator clamps. The panel also includes a blocking diode to prevent battery drain and reverse discharge.
Item 58025 – the Coleman 10W Solar Power Panel – includes a 12V DC plug, battery clamps, four stainless steel mounting screws and a ten-foot wire. The kit may be installed by connecting its 12V DC plug into a vehicle’s DC socket to charge the vehicle’s battery, or by directly connecting it to a vehicle’s battery by using the battery clamps. The panel also includes a built-in blocking diode to prevent reverse discharge.
Item 58033 – Coleman 18W Solar Battery – includes a 12V DC plug, alligator battery clamps, a twelve-foot wire, a solar panel, four stainless steel mounting screws and an LED voltage indicator light. We note that the product page for the item depicts a 7A charge controller as being included in the kit, along with a voltage tester. The kit may be installed by connecting its 12V DC plug into a vehicle’s DC socket to charge the vehicle’s battery, or by directly connecting it to the battery by using the battery clamps. The panel also includes a built-in blocking diode to prevent reverse discharge.
Item 58050 – the Coleman 55W Solar Charging Kit – includes the following:
1. Three x 18 Watt Amorphous Solar Panels with blocking diodes
2. 7 Amp Solar Charge Controller
3. ‘Quick connect’ extension cable
4. 12 Volt plug
5. Female 12 Volt connector
6. 12 Volt inverter plug
7. 3 in 1 cable connector
8. ‘Stripped’ wire charge controller connector
9. 200 watt power Inverter
10. Support frame
Item 58232 – the Coleman 36W Folding Solar Panel & 7A Controller – includes the following items:
12 Volt plug
1 Set of Alligator Battery Clamps
Solar Panel
Brackets (4)
Screws (15)
LED Voltage Indicator
Support rods (3)
Stripped wire for connection to charge controller
7 amp charge controller
ISSUES:
Are the sets described above classifiable under heading 8501, HTSUS, which provides for electric generators, or under heading 8541, HTSUS, which provides for photosensitive semiconductor devices?
Has CBP accorded a treatment to Sunforce for the classification of these goods under subheading 8541.40.60, HTSUS?
LAW AND ANALYSIS:
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall 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 may then be applied in order. The HTSUS provisions under consideration are as follows:
8501 Electric motors and generators (excluding generating sets):
* * *
Other DC motors: DC generators:
8501.31 Of an output not exceeding 750 W:
* * *
8501.31.80 Generators.
* * *
8541 Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED); mounted piezoelectric crystals; parts thereof:
* * *
8541.40 Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED):
* * *
8541.40.60 Other diodes.
* * * *
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the HTSUS. While not legally binding or 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 (August 23, 1989). Legal Note 4 to Section XVI (which contains Chapter 85) states that:
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.
Explanatory Note (“EN”) 85.01(II) describes two categories of items that are specifically included in heading 8501, HTSUS. To wit, the EN states:
(II) ELECTRIC GENERATORS
Machines that produce electrical power from various energy sources (mechanical, solar, etc.) are classified here [in heading 8501], provided they are not more specifically covered by any other heading of the Nomenclature.
*** The heading also covers photovoltaic generators consisting of panels of photocells combined with other apparatus, e.g., storage batteries and electronic controls (voltage regulator, inverter, etc.) and panels or modules equipped with elements, however simple (for example, diodes to control the direction of the current), which supply the power directly to, for example, a motor, an electrolyser.
In these devices, electricity is produced by means of solar cells which convert solar energy directly into electricity (photovoltaic conversion).
EN 85.41 provides, in pertinent part:
(B) PHOTOSENSITIVE SEMICONDUCTOR DEVICES
This group comprises photosensitive semiconductor devices in which the action of visible rays, infra-red rays or ultra-violet rays causes variations in resistivity or generates and electromotive force, by the internal photoelectric effect.
*** The main types of photosensitive semiconductor devices are:
*** (2) Photovoltaic cells, which convert light directly into electrical energy without the need for an external source of current. […]
Special categories of photovoltaic cells are:
(i) Solar cells, silicon photovoltaic cells which convert sunlight directly into electric energy. They are usually used in groups such as source of electric power, e.g., in rockets or satellites employed in space research, for mountain rescue transmitters.
The heading also covers solar cells, whether or not assembled in modules or made into panels. However the heading does not cover panels or modules equipped with elements, however simple, (for example, diodes to control the direction of current), which supply the power directly to, for example, a motor, an electrolyser (heading 85.01).
Thus, per the ENs, panels or modules with elements that can supply the power directly to an external load, are precluded from classification in heading 8541, HTSUS, and are classified in heading 8501, HTSUS.
The subject items are “goods put up in sets for retail sale” per GRI 3(b) and are goods of different headings particular for use in charging a vehicle battery. The included solar panels provide the essential character of the sets. Therefore, the sets must be classified according to the classification of the solar panels.
Sunforce asserts that the sets are classified under subheading 8541.40.60, HTSUS, based upon an interpretation of Headquarters Ruling Letter (“HQ”) H084604, dated May 3, 2010 (revoking New York Ruling Letter (“NY”) N047472, dated January 9, 2009). In HQ H084604, CBP noted that “a solar module is not precluded from classification under heading 8541, HTSUS, simply because it contains ‘elements’ (e.g., diodes which control the direction of the current). Those elements must also ‘supply power directly’ to an external load, such as a motor or an electrolyser.” See EN 85.41(B)(2)(i). CBP then classified the device as a photosensitive semiconductor device in subheading 8541.40.60, HTSUS, because the device lacked blocking diodes and inverters to convert DC power produced by the solar panels into AC power usable by items such as appliances. What is determinative in such cases is whether or not the device under consideration consisting of panels of photocells is combined with elements that enable the device to supply power directly and irreversibly to another device. The module in question in HQ H084604 could only connect to other solar modules in order to create a single solar panel and could not connect to external devices or an electrical grid. CBP explicitly noted the lack of such connectors in the underlying, and revoked, ruling New York Ruling Letter (NY) N047472 but that fact was not explicitly acknowledged in HQ H084604. In addition, although CBP noted that “[t]he vast majority of applications require that the DC produced by the module be converted into alternating current (‘AC’) by an inverter” and the module in question did not generate AC power, that does not completely illuminate the delineation between headings 8501 and 8541, HTSUS. In any event, CBP correctly concluded that the module was classified in heading 8541 as a solar cell because it could not supply power to an external load.
The pertinent facts of HQ H084604 are distinguishable from the facts at hand. Here, each set’s essential character is determined by the classification of the solar panel components, and those solar panel components include apparatus (such as battery clamps, DC socket plugs and a blocking diode) that allow the components to supply power to a vehicle’s battery. The sets are therefore excluded from heading 8541, HTSUS, and classified in heading 8501, HTSUS, as generators. See HQ H136116 (March 2, 2011) and HQ H255441 (August 30, 2016), classifying similar solar generators in heading 8501, HTSUS.
However, Sunforce also claims that CBP was precluded from liquidating the subject articles in heading 8501, HTSUS, as opposed to heading 8541, HTSUS, because such an action runs afoul of the notice and comment requirements of 19 U.S.C. §1625(c).That provision provides that:
A proposed interpretive ruling or decision which would –
(1) modify (other than to correct a clerical error) or revoke a prior interpretive ruling or decision which has been in effect for at least 60 days; or
(2) have the effect of modifying the treatment previously accorded by the Customs Service to substantially identical transactions;
shall be published in the Customs Bulletin. The Secretary shall give interested parties an opportunity to submit, during not less than the 30-day period after the date of such publication, comments on the correctness of the proposed ruling or decision. After consideration of any comments received, the Secretary shall publish a final ruling or decision in the Customs Bulletin within 30 days after the closing of the comment period. The final ruling or decision shall become effective 60 days after the date of its publication.
Section 1625(c)(1) applies only to a proposed ruling that would be inconsistent with a “prior interpretive ruling or decision.” Such a prior interpretative ruling or decision cannot also be considered to be “treatment” covered by 19 U.S.C. §1625(c)(2). See Motorola, Inc. v. United States, 30 C.I.T. 1766, 1780, 462 F.Supp. 2d 1368, 1380 (2006); aff’d by Motorola Inc. v. United States, 509 F.3d 1368 (Fed. Cir. 2007) (“ ‘… a more logical reading of [19 USC 1625] is that Congress intended subsections (c)(1) and (c)(2) to have the same impact, but under different situations, the former when a prior interpretative ruling . . . has been issued, and the latter when no previous interpretative ruling or decision has been issued.’ … Reading subsection (c)(2) as including interpretative rulings … would render subsection (c)(1) redundant.” (quoting Def. Brief). Sunforce has not demonstrated that CBP has issued a pertinent “prior interpretive ruling or decision” within the meaning 19 U.S.C. §1625(c)(1), and Sunforce’s claim regarding that provision fails.
However, with regard to 19 U.S.C. §1625(c)(2) and Sunforce’s treatment claim, Title 19 of the Code of Federal Regulations (CFR) sets forth the evidentiary standards for determining whether treatment was previously accorded to substantially similar transactions. Section 177.12(c)(1) of the regulations (19 C.F.R. 177.12(c)(1)) provides that the following rules will apply for purposes of determining whether a “treatment” was previously accorded by CBP:
(i) There must be evidence to establish that: (A) There was an actual determination by a Customs officer regarding the facts
and issues involved in the claimed treatment; (B) The Customs officer making the actual determination was responsible for the
subject matter on which the determination was made; and (C) Over a 2-year period immediately preceding the claim of treatment, Customs
consistently applied that determination on a national basis as reflected in
liquidations of entries or reconciliations or other Customs actions with respect
to all or substantially all of that person's Customs transactions involving
materially identical facts and issues. 19 C.F.R. 177(c)(1)(ii) provides that the determination will be made on a case-by-case basis and will involve an assessment of all relevant factors. In particular, CBP will focus on past transactions to determine whether there was an examination of the merchandise by CBP or the extent to which those transactions were reviewed by CBP to determine the proper application of the CBP laws and regulations. Diminished weight will be given to transactions involving small quantities or values, and no weight to informal entries or transactions processed without examination or CBP officer review.
Further, 19 C.F.R. 177.12(c)(1)(iv) provides that "(t)he evidentiary burden as regards the existence of the previous treatment is on the person claiming the treatment. …" and:
The evidence of previous treatment by Customs must include a list of all materially identical transactions by entry number (or other Customs assigned number), the quantity and value of merchandise covered by each transaction (where applicable), the ports of entry, the dates of final action by Customs, and, if known, the name and location of the Customs officer who made the determination on which the claimed treatment is based. In addition, in cases in which an entry is liquidated without any Customs review (for example, the entry is liquidated automatically as entered), the person claiming a previous treatment must be prepared to submit to Customs written or other appropriate evidence of the earlier actual determination of a Customs officer that the person relied on in preparing the entry and that is consistent with the liquidation of the entry.
Here, Sunforce asserts that an “actual determination” was made by CBP regarding substantially similar transactions in 2008 and 2009 “following a review of detailed product information provided in response to specific questions made by the Port of Champlain.” In support, Sunforce cites to the following actions:
On July 24, 2008, the Port of Champlain issued a CBP Form 28 (“CF-28”) Request for Information to Sunforce relating to a single entry of a solar panel kit. After CBP reviewed the information provided by Sunforce, the entry was liquidated as entered in subheading 8541.40.60, HTSUS, which provides for solar cells assembled into modules or made up into panels. Sunforce asserts that it continued to use subheading 8541.40.60, HTSUS, for subsequent imports of such solar panels and kits, as well as similar solar panels and kits, based upon having received “CBP’s approval regarding the classification of these goods and consistent with the company’s historic classification practice.”
On December 30, 2009, the Port of Champlain issued a CF-28 concerning the classification of “various solar products” on a line of a single entry dated December 11, 2009. The entry line included nine separate part numbers, including three items previously reviewed by CBP pursuant to the 2008 request, supra. After CBP reviewed the information provided by Sunforce, the entry was liquidated as entered in subheading 8541.40.60, HTSUS. Sunforce asserts that it continued to use subheading 8541.40.60, HTSUS, for subsequent imports of such solar panels and kits, as well as substantially similar solar panels and kits.
Given the above, Sunforce claims that CBP’s reclassification and liquidations of the subject items in 2012 violates the notice and comment requirements of 19 U.S.C. §1625(c)(2) because CBP had previously made “actual determinations” on a national basis when classifying substantially similar items imported by Sunforce in subheading 8541.40.60, HTSUS, during at least the two years prior. In support, Sunforce has submitted a spreadsheet that identifies over 200 entries filed from June 22, 2010 through September 12, 2011 (after CBP issued the two CF-28’s) and liquidated in subheading 8541.40.60, HTSUS. The entries contain over 3000 items that Sunforce attests are substantially similar to the items that are the subject of this protest. The spreadsheet shows the model numbers and values of the merchandise, the ports of entry (Champlain, NY; Alexandria Bay, NY; and Port Huron, MI) and the dates of liquidation. Sunforce has also submitted an affidavit affirming the veracity of the information presented in the spreadsheet. Sunforce concludes that the aforementioned “treatment” can only be revoked or modified pursuant to the procedures outlined in 19 U.S.C. §1625(c)(2).
Given the volume of evidence submitted by Sunforce (and notwithstanding that the subject items are correctly classifiable in heading 8501, HTSUS, as electric generators) we find that Sunforce has shown that CBP has consistently applied the determination that the subject items were classified in subheading 8541.40.60, HTSUS, on a national basis as reflected in liquidations of entries or reconciliations or other CBP actions with respect to all or substantially all of Sunforce’s CBP transactions involving materially identical facts and issues. Therefore, we find that the notice and comment requirements of 19 U.S.C. §1625(c)(2) are applicable to the matter at hand and Sunforce has shown that those requirements were not met when CBP liquidated the entries that are the subject of Sunforce’s protest.
Under the facts presented, we conclude under 19 C.F.R. 177.12(c), that a treatment does, in fact, exist in classifying Sunforce’s solar kits under subheading 8541.40.60, HTSUS, which provides for “Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED); mounted piezoelectric crystals; parts thereof: Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED): Other diodes.”
HOLDING:
Under the authority of GRI 1, the subject solar kits are provided for in heading 8501, HTSUS, specifically in subheading 8501.31.80, HTSUS, which provides for “Electric motors and generators (excluding generating sets): Other DC motors: DC generators: Of an output not exceeding 750 W: Generators.”
On January 23, 2018, Presidential Proclamation 9693 imposed safeguard measures on imports of crystalline silicon photovoltaic (CSPV) cells and certain products incorporating CSPV cells in the form of additional tariffs or tariff rate quotas for a period of three years. Products classified under subheading 8501.31.80, HTSUS, unless specifically excluded, are subject to the additional duties. See Note 20 to Chapter 99 and subheading 9903.45.25, HTSUS.
Pursuant to 19 U.S.C. § 1625(c)(2), the treatment previously accorded Sunforce’s importations of this merchandise is revoked.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division