OT:RR:CTF:EMAIN H306166 JRG
Port Director
U.S. Customs and Border Protection
City View Plaza, Suite 3000
#48 Rd. 165 Km. 1.2
Guaynabo, Puerto Rico 00968-8000
Attn: Sigfredo Falero, Supervisory Import Specialist
RE: Application for Further Review of Protest No. 4909-19-100056; Classification of Certain Indoor and Outdoor Units of Air Conditioning Systems from China
Dear Port Director:
This is our decision regarding the Application for Further Review (AFR) of Protest No. 4909-19-100056 filed on behalf of Carrier Puerto Rico, Inc. (Protestant). The Protest and AFR concern the classification of indoor and outdoor units of air conditioning systems (AC units) from China under the Harmonized Tariff Schedule of the United States (HTSUS). The AFR was forwarded to this office for consideration.
FACTS:
The “Freedom Floor Ceiling Inverter,” Product No. CF43AX060-M3H1H, is an indoor unit HP inverter comprised of a centrifugal fan, stepping motor, and connected board (evaporator). The “Freedom Horizontal Discharge Inverter Heat Pump,” Product No. CM43AX060-H3H1H, is an outdoor unit HP inverter containing a compressor, centrifugal fan, condenser assembly, and magnet coil.
The subject AC units are both advertised as being a part of Protestant’s “Freedom” series. As such, the AC units are compatible and intended to be distributed together. Upon importation, the outdoor unit is installed outside of a home, typically on the ground or an outside wall, while the indoor unit is mounted to an interior wall. The AC units are then connected to each other through a combination of electrical wiring and refrigerant tubing, which allow two AC units to function as a system.
The AC units were entered on October 30, 2018, and liquidated on September 27, 2019. According to the entry documents, the shipment contained 47 of the indoor ceiling inverter units, and 47 of the outdoor heat pump units. The AC units were liquidated under heading 8415, specifically under subheading 8415.10.90, HTSUS, which provides for “Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated; parts thereof: Of a kind designed to be fixed to a window, wall, ceiling or floor, self-contained or split system: Other: Other.”
On October 9, 2019, Protestant filed the instant Protest and AFR. Protestant argues the AC units are properly classified under subheading 8415.90.80, HTSUS, which provides for “Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated; parts thereof: Parts: Other.” Protestant contends the AC units should be classified as parts, not a complete system, because they “are not imported as a complete unit.”
ISSUE:
Whether the AC units are properly classified under subheading 8415.10, HTSUS, or under subheading 8415.90, HTSUS.
LAW AND ANALYSIS:
A decision on classification and the rate and amount of duties chargeable is a protestable matter under 19 U.S.C. § 1514(a)(2). The subject Protest was timely filed on October 9, 2019, within 180 days of liquidation of the entry, pursuant to 19 U.S.C. § 1514(c)(3). Further Review of Protest No. 4909-19-100056 is properly accorded pursuant to 19 CFR § 174.24(a), as the decision against which the protest was filed is alleged to be inconsistent with a U.S. Customs and Border Protection (CBP) ruling or decision with respect to the same or substantially similar merchandise. As justification for further review pursuant to 19 CFR § 174.24(a), Protestant cites to New York Ruling Letter (NY) N303597, dated May 2, 2019, which was also issued to Carrier Puerto Rico for different models of their indoor and outdoor AC units. In that ruling, CBP found that the “applicable heading for the evaporator units and condensing units imported separately will be 8415.90.80.85, HTSUS” (emphasis added).
Classification under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods is determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event 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.
The HTSUS heading and subheadings at issue are:
8415 Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated; parts thereof:
8415.10 Of a kind designed to be fixed to a window, wall, ceiling or floor, self-contained or “split system” . . .
* * *
8415.90 Parts . . .
Note 4 to Section XVI, HTSUS, provides:
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.
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 ENs to subheading 8415.90, HTSUS, indicate: “This subheading includes both indoor and outdoor units for split-system air conditioning machines of subheading 8415.10 when presented separately. The units are designed to be connected by electrical wiring and copper tubing through which refrigerant passes between the indoor and outdoor units.”
It is undisputed that the AC units are classified under heading 8415, HTSUS. As a result, the threshold question is whether the AC units comprise a complete split-system under subheading 8415.10, HTSUS, or are simply parts of an air conditioning system under subheading 8415.90, HTSUS. A split-system under subheading 8415.10, HTSUS, is described in the ENs as follows: “units . . . designed to be connected by electrical wiring and copper tubing through which refrigerant passes between the indoor and outdoor units.” The subject AC units are the indoor and outdoor units for a split-system that are connected by wiring and piping to create a complete system. Therefore, the AC units are “intended to contribute together to [the] clearly defined function” of being a split-system and, consequently, are appropriately classified in subheading 8415.10, HTSUS, pursuant to Note 4 to Section XVI, HTSUS.
Notably, the instant protest and AFR are factually distinct from NY N303597 because the subject AC units were entered together. The ENs to subheading 8415.90, HTSUS, support this distinction by stating indoor and outdoor units of split-systems are included in 8415.90, HTSUS, “when presented separately.” The facts in this case more closely resemble the facts set forth in NY N332381, dated May 8, 2023. In that ruling, CBP found that an outdoor heat pump unit and an indoor air handler unit which work together for heating and cooling air were classified under subheading 8415.10, HTSUS, when imported and entered together. For all these reasons, we find that the instant merchandise is classified under subheading 8415.10, HTSUS.
HOLDING:
By application of GRIs 1 and 6, the AC units will be classified under subheading 8415.10.90, HTSUS, which provides for “Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated; parts thereof: Of a kind designed to be fixed to a window, wall, ceiling or floor, self-contained or split system: Other: Other.” The general, column one rate of duty is 2.2%.
Pursuant to U.S. note 20 to subchapter III, chapter 99, HTSUS, products of China classified under subheading 8415.10.90, HTSUS, unless specifically excluded, were subject to an additional 10 percent ad valorem rate of duty. At the time of importation, an importer was required to report the chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8415.10.90, HTSUS, listed above.
You are instructed to DENY the Protest.
You are instructed to notify the Protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/, or other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division