CLA-2 OT:RR:CTF:TCM H300305 ALS
Stuart Seidel, Esq.
Baker & McKenzie, LLP
815 Connecticut Avenue, N.W.
Washington, D.C. 20006-4078
RE: Tariff classification of Allegro Microsystems “CA/CB and GTS Integrated Circuits (GTS I and II)”
Dear Mr. Seidel:
This letter is in reply to your request for a ruling on the tariff classification, under the Harmonized Tariff Schedule of the United States (“HTSUS”), of “CA/CB and GTS [Gear Tooth Sensor] Integrated Circuits (GTS I and II)” on behalf of Allegro MicroSystems, LLC. Our decision, which also considers the substance of our meeting with you and Allegro officials on July 30, 2019, is set forth below.
You note in your submission that the “GTS II is the next generation of GTS IC and so is also covered by this ruling request. GTS II is very similar to the GTS I with the only difference between the models being the inclusion of passive components (resistors and/or capacitors) on the lead frame (on the same side as the die). [In your submission] both products GTS I and GTS II are referred to as GTS IC or GTS ICs.” For consistency sake, we will also hereinafter refer to GTS I and GTS II as GTS ICs.
FACTS:
In CBP Ruling HQ H243640 (November 21, 2014), CBP described the CA and CB integrated circuits as follows:
The two configurations of the HEIC at issue are composed of 1) bipolar transistors, CMOS transistors, polysilicon thin film and diffused resistors, thin film capacitors, specially designed epitaxial silicon configured Hall element within the silicon substrate, which are combined to form a semiconductor die; and 2) a separately produced ferromagnetic core that is mounted to a copper frame. The semiconductor die is joined together with the ferromagnetic core/copper frame structure. The resulting device is then encased in an epoxy resin mold to complete the HEIC. There are two versions of the HEIC at issue, with either a magnetic ferrite (the CA version) or a soft iron magnetic material (the CB version) as the ferromagnetic material. For the purposes of tariff classification, we will consider the CA and CB configurations as one.
In CBP Ruling HQ H248337 (April 20, 2015), CBP described the GTS I integrated circuit as follows:
The GTS is a Hall-Effect sensor assembly which consists of an integrated circuit chip connected to a Samarium Cobalt Magnet pellet (magnet). The chip is equipped with thin film resistors and capacitors, and is mounted onto the front of a copper lead frame. The magnet, and sometimes a ferrous concentrator, are attached to the back of the lead frame. Gold bond wires connect the chip to the lead frame. A silver filled epoxy is used to attach the chip to the front of the frame and the magnet to back of the frame. A molding compound encases the chip, the lead frame, the magnet and the concentrator into one indivisible package.
A Hall-effect sensor detects changes in magnetic fields which relate to changes in physical properties such as direction, presence, rotation, angle, and electrical currents. When a magnetic field change reaches a certain amplitude, the Hall-effect sensor converts that change into voltage, which is then processed into readable electrical information by on-chip amplifiers, logic circuitry and power drivers. Gear tooth sensors, such as the instant GTS, are commonly used to determine the rotation speed of a sensed object. Allegro’s customers use the instant GTS in applications such as automotive antilock brake systems, engine management systems, and transmission systems.
In HQ H243640, CBP concluded that the CA and CB integrated circuits are “Hall-effect sensors” and that such sensors are “transducers classified under heading 8543.” CBP specifically held that the CA and CB integrated circuits are “properly classified under HTSUS subheading 8543.70.40 as an ‘electrical machine… having individual functions, not specified or included elsewhere in [chapter 85]…: Other machines and apparatus: … transducers…’”
In HQ H248337, CBP concluded that the GTS I integrated circuit “is not properly classifiable as a hybrid integrated circuit under heading 8542” but rather is a transducer properly classified under heading 8543. CBP specifically held that the GTS I integrated circuit is “properly classified under HTSUS subheading 8543.70.40 as an ‘electrical machine… having individual functions, not specified or included elsewhere in [chapter 85]…: Other machines and apparatus: … transducers…’”
ISSUE:
Are the CA/CB integrated circuits and GTS ICs properly classified under HTSUS heading 8542, which provides for “Electronic integrated circuits; parts thereof”, or under HTSUS heading 8543, which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof”?
LAW AND ANALYSIS:
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation. GRI 1 provides that the classification of goods shall be “determined according to the terms of the headings 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, GRIs 2 through 6 may be applied in order.
The following headings and subheadings of the HTSUS are under consideration in this case:
8542 Electronic integrated circuits; parts thereof:
Electronic integrated circuits:
8542.39.00 Other...
* * *
8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:
8543.70 Other machines and apparatus:
Electric synchros and transducers; flight data recorders; defrosters and demisters with electric resistors for aircraft:
8543.70.45 Other...
* * * * * *
As of the 2017 Preliminary Edition of the HTSUS, issued January 1, 2017, Note 8 to chapter 85, HTSUS, was changed, and Note 9 to chapter 85, HTSUS, was amended as follows:
For the purposes of headings 8541 and 8542:
"Diodes, transistors and similar semiconductor devices" are semiconductor devices the operation of which depends on variations in resistivity on the application of an electric field;
(b) "Electronic integrated circuits" are:
(i) Monolithic integrated circuits in which the circuit elements (diodes, transistors, resistors, capacitors, inductances, etc.) are created in the mass (essentially) and on the surface of a semiconductor or compound semiconductor material (for example, doped silicon, gallium arsenide, silicon germanium, iridium phosphide) and are inseparably associated;
(ii) Hybrid integrated circuits in which passive elements (resistors, capacitors, inductances, etc.), obtained by thin- or thick-film technology, and active elements (diodes, transistors, monolithic integrated circuits, etc.), obtained by semiconductor technology, are combined to all intents and purposes indivisibly, by interconnections or interconnecting cables, on a single insulating substrate (glass, ceramic, etc.). These circuits may also include discrete components;
(iii) Multichip integrated circuits consisting of two or more interconnected monolithic integrated circuits combined to all intents and purposes indivisibly, whether or not on one or more insulating substrates, with or without leadframes, but with no other active or passive circuit elements.
(iv) Multi-component integrated circuits (MCOs): a combination of one or more monolithic, hybrid, or multi-chip integrated circuits with at least one of the following components: silicon-based sensors, actuators, oscillators, resonators or combinations thereof, or components performing the functions of articles classifiable under heading 8532, 8533, 8541, or inductors classifiable under heading 8504, formed to all intents and purposes indivisibly into a single body like an integrated circuit, as a component of a kind used for assembly onto a printed circuit board (PCB) or other carrier, through the connecting of pins, leads, balls, lands, bumps, or pads.
For the purpose of this definition:
“Components” may be discrete, manufactured independently then assembled onto the rest of the MCO, or integrated into other components.
“Silicon-based” means built on a silicon substrate, or made of silicon materials, or manufactured onto integrated circuit die.
(a) “Silicon-based sensors” consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of detecting physical or chemical quantities and transducing these into electric signals, caused by resulting variations in electric properties or displacement of a mechanical structure. “Physical or chemical quantities” relates to real world phenomena, such as pressure, acoustic waves, acceleration, vibration, movement, orientation, strain, magnetic field strength, electric field strength, light, radioactivity, humidity, flow, chemicals concentration, etc.
(b) “Silicon-based actuators” consist of microelectronic and mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of converting electrical signals into physical movement.
(c) “Silicon-based resonators” are components that consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and have the function of generating a mechanical or electrical oscillation of a predefined frequency that depends on the physical geometry of these structures in response to an external input.
(d) “Silicon-based oscillators” are active components that consist of microelectronic or mechanical structures that are created in the mass or on the surface of a semiconductor and that have the function of generating a mechanical or electrical oscillation of a predefined frequency that depends on the physical geometry of these structures.
For the classification of the articles defined in this note, headings 8541 and 8542 shall take precedence over any other heading in the Nomenclature, except in the case of heading 8523, which might cover them by reference to, in particular, their function.
The issue before us is whether the subject merchandise is a multi-component integrated circuit (MCO) as defined in Note 9(b)(iv) to Chapter 85, HTSUS.
An MCO consists of a combination of [First Part] one or more monolithic, hybrid, or multi-chip integrated circuits and [Second Part] at least one of either 1) silicon-based sensors, 2) actuators, 3) oscillators, 4) resonators or, 5) combinations thereof, or components performing the functions of articles classifiable under heading 8532, 8533, 8541, or inductors classifiable under heading 8504. The combination must be formed indivisibly into a single body like an integrated circuit, as a component of a kind used for assembly onto a printed circuit board.
With the CA/CB and the GTS ICs, an integrated circuit chip is present. Thus, the CB/CB and GTS ICs meet the first part of the required combination for an MCO. Either a ferromagnetic core (CA/CB) or a samarium cobalt magnetic pellet (GTS) is combined with the integrated circuit chip, the combination of which is in turn mounted onto a copper frame. The magnetic components in either case are not silicon-based sensors, actuators, oscillators, resonators, or any combination thereof.
Heading 8532 covers electrical capacitors, fixed, variable, or adjustable (pre-set) and parts thereof. Heading 8533 covers electrical resistors (including rheostats and potentiometers), other than heating resistors and parts thereof. Heading 8541 covers 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, and parts thereof. Neither the ferromagnetic core nor a samarium cobalt magnetic pellet meet the definition of any of the articles covered under headings 8532, 8533, or 8541.
The Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. While neither legally binding nor 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, 35128 (August 23, 1989). The EN for heading 8504 describes an inductor as “essentially of a single coil of wire which, inserted in an AC circuit, limits or prevents by its self induction the flow of the AC.” Neither the ferromagnetic core nor a samarium cobalt magnetic pellet are single coils of wire. Consequently, they do not meet the definition of an inductor under heading 8504.
With the ferromagnetic core and the samarium cobalt magnetic pellet not meeting the definition of silicon-based sensors, actuators, oscillators, resonators, or any combination thereof, not meeting the definition of any articles covered under headings 8532, 8533, or 8541, and not meeting the definition of an inductor of heading 8504, the CA/CB and the GTS ICs do not meet the second part of the required combination to be considered an MCO in accordance with Note 9(b)(iv) to chapter 85, HTSUS.
We also note that the EN for heading 8542 states the following under the heading “(IV) Multi component integrated circuits (MCOs)” in two separate places:
All separate (tradeable) units, which are not classifiable under 85.04, 85.32, 85.33, 85.41 or which do not fall under the definition of silicon based sensors, actuators, resonators, oscillators and combinations thereof are excluded from the definition of an MCO (e.g., transformers (heading 85.04) or magnets (heading 85.05)). [Emphasis in original.]
Except for the combinations (to all intents and purposes indivisible) referred to in Parts (II), (III) and (IV) above concerning hybrid integrated circuits, multichip integrated circuits and multi component integrated circuits (MCOs), the heading also excludes assemblies formed by:
(d) Combinations of one or more monolithic, hybrid, multi-chip, or multi-component integrated circuits with components not mentioned in Note 9 (b) (iv) to this Chapter (e.g., transformers (heading 85.04) or magnets (heading 85.05)). [Emphasis in original.]
Therefore, given that the CA/CB and the GTS ICs do not meet the definition of MCOs as provided for in note 9(b)(iv) to chapter 85, HTSUS, and are specifically meant to be excluded from heading 8542, as suggested by the EN to heading 8542, we conclude that the CA/CB and the GTS ICs are not classifiable under heading 8542, HTSUS. We refer back to our analysis in HQ H243640 and HQ H248337 in further concluding that the CA/CB and the GTS ICs remain classified under heading 8543, HTSUS.
Specifically, the CA/CB and the GTS ICs are properly classified under subheading 8543.70.45, HTSUS, which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Electric synchros and transducers; flight data recorders; defrosters and demisters with electric resistors for aircraft: Other...”
HOLDING:
The subject “CA/CB and GTS [Gear Tooth Sensor] Integrated Circuits (GTS I and II)” are properly classified under heading 8543, HTSUS. Specifically, they are classified under subheading 8543.70.45, HTSUS, which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Electric synchros and transducers; flight data recorders; defrosters and demisters with electric resistors for aircraft: Other...” The general column one rate of duty, for merchandise classified in this subheading is 2.6 percent ad valorem.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
Please note that this ruling letter is “issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect.” 19 CFR 177.9(b)(1). The application of this ruling letter “is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” See id. CBP therefore reserves the right to verify all facts as noted herein. Furthermore, this ruling letter will be “applied only with respect to transactions involving articles identical to the sample submitted with the ruling request or to articles whose description is identical to the description set forth in the ruling letter.” 19 CFR 177.9(b)(2).
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Gregory S. Connor, Chief
Electronics, Machinery, Automotive, and
International Nomenclature Branch