OT:RR:CTF:EMAIN H312651 SKK
TARIFF NO.s: 8419.50.10; 8419.50.50
Center Director
Machinery Center of Excellence and Expertise
U.S. Customs and Border Protection
109 Shiloh Drive, Suite 300
Laredo, TX 78045
Attn: Jonathon McIlwain, Sr., Import Specialist
Re: Protest No. 3901-20-109677; classification of plate-fin air-cooled heat exchangers
Dear Center Director:
This is our decision regarding an Application for Further Review (AFR) of Protest No. 3901-20-109677, filed on behalf of Sullair, LLC (Protestant). The Protest and AFR concern the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of several styles of heat exchangers. The AFR was forwarded to this office for consideration. No samples were provided for examination.
FACTS:
The articles at issue in this Protest and AFR are described by Protestant as follows:
Model 88290014-225 is a brazed aluminum plate-fin heat exchanger. It is a combination air/oil cooler used on Sullair air compressor Shoptek models 11 and 15. Its first section is an oil cooler and its second section is an air cooler. In the first section, heated fluid (oil) enters the heat exchanger through the first port and exits through a second port. While the fluid travels through the heat exchanger, a fan blows ambient air in a cross flow or perpendicular direction across and through the cooling fins, lowering the temperature of the oil by convection. The cooled oil leaves the heat exchanger through the second port. In the second section, the unit performs an air-cooling function. Heated compressed air enters through the first port and traverses the heat exchanger while a fan blows ambient air through and across the cooling fins to remove heat, resulting in cooled compressed air that exits out a second port. This model does not use a second fluid as a cooling agent.
Models 02250137-799, 02250139-760 and 02250149-785 are brass plate-fin heat exchangers designed for glycol/water-based engine coolant. They are used in several Sullair air compressor models. These heat exchangers move heated coolant through one port while fan-driven air blows across and through the heat exchanger, with heat being carried away from the fluid through convection resulting in a now-cooled fluid leaving the heat exchanger through a second port. These models do not use a second fluid as a cooling agent.
In Protestant’s submission in support of this AFR, it is stated that the subject articles may be imported with or without a fan. In a subsequent email to this office, dated October 21, 2020, Protestant verified that the merchandise at issue in the subject entries was imported without fans.
The subject articles were liquidated on October 11, 2019, under heading 8419, HTSUS, specifically subheading 8419.89.95, HTSUS, which provides for “[M]achinery, 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: Other machinery, plant or equipment: Other.” As products of China, the merchandise was subject to duties imposed by heading 9903, HTSUS, specifically subheading 9903.88.02, HTSUS, which provides for “[E]xcept as provided in headings 9903.88.12, 9903.88.17, or 9903.88.20, articles the product of China, as provided for in U.S. note 20(c) to this subchapter and as provided for in the subheadings enumerated in U.S. note 20(d) [to this subchapter].”
Protestant submits that the brazed aluminum plate-fin air-cooled heat exchanger is properly classified under subheading 8419.50.10, HTSUS, which provides for “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: Heat exchange units: Brazed aluminum plate-fin heat exchangers.” Protestant submits that the brass plate-fin air-cooled heat exchangers are properly classifiable under subheading 8419.50.50, HTSUS, which provides for, in pertinent part, “[H]eat exchange units: Other.” Counsel further protests the classification and liquidation of the entries under subheading 9903.88.02, HTSUS. Counsel claims the brazed aluminum plate-fin heat exchangers are covered by the exclusion set forth in Chapter 99 Note 20(q)(37) under subheading 9903.88.14, HTSUS, which provides for “Brazed aluminum plate-fin heat exchangers, each valued not over $250 (described in statistical reporting number 8419.50.10).” Counsel further claims the brass plate-fin heat exchangers are covered by the exclusion set forth in Chapter 99 Note 20(q)(42) under subheading 9903.88.14, HTSUS, which provides for “Heat exchangers, each valued not over $17,000 (described in statistical reporting number 8419.50.50).”
ISSUE:
What is the proper classification of the subject merchandise under the 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 April 2, 2020, within 180 days of liquidation, pursuant to 19 U.S.C. 1514(c)(3).
Further Review of Protest No. 3901-20-109677 is properly accorded pursuant to 19 CFR § 174.24(b), as the Protestant has alleged that the decision against which the Protest was filed involves questions of law and fact that have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts.
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.
The following 2019 provisions of the HTSUS are under consideration:
8419 Machinery, plant or laboratory equipment, whether or not electrically heated, for
the treatment of materials by a process involving a change in 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:
8419.50 Heat exchange units:
8419.89 Other machinery, plant or equipment:
There is no dispute that the instant merchandise is classified under heading 8419, HTSUS. Because the instant matter pertains to the scope of provisions beyond the four-digit heading level, GRI 6 is implicated. GRI 6 states:
For legal purposes, the classification of goods in the subheading of a heading shall be determined according to the terms of those subheadings and any related subheading notes, and mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter, and subchapter notes also apply, unless the context otherwise requires.
The issue presented is whether the subject articles are classified in subheading 8419.50, HTSUS, which provides for heat exchanger units. Subheading 8419.50, HTSUS, is an eo nomine provision as it specifically names a covered article. Absent limiting language or contrary legislative intent, eo nomine provisions cover all forms of the named article. Nidec Corporation v. United States, 68 F.3d 1333, 1336 (Fed. Cir. 1995).
The term “heat exchange unit” is not defined in the HTSUS, however it is interpreted by the Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System which represent the official interpretation of the Harmonized System (HS) 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 heading 84.19(I)(B) describe “heat exchange units” of heading 8419 as follows:
(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.
Tariff terms are construed according to their common commercial meaning. See Millennium Lumber Distrib. Ltd., v. United States, 558 F.3d 1326, 1329 (Fed. Cir. 2009). To ascertain the common commercial meaning of a tariff term, CBP “may rely on its own understanding of the term as well as lexicographic and scientific authorities.” See Lon-Ron Mft. Co. v. United States, 334 F.3d 1304, 1309 (Fed. Cir. 2003). CBP consulted several lexicographic sources that defined “heat exchanger” as a device for transferring heat “from one fluid to another” without allowing the fluids to mix. See https://www.merriam-webster.com/dictionary/heat%20exchanger (site last visited November, 2020). See also https://www.thefreedictionary.com/heat+exchanger (site last visited November, 2020), in which “heat exchanger” is defined as “[A] device, such as an automobile radiator, used to transfer heat from a fluid on one side of a barrier to a fluid on the other side without bringing the fluids into direct contact.” Other lexicographic sources, however, provide broader definitions of “heat exchanger” that include devices for transferring the heat “of one substance to another.” See https://www.dictionary.com/browse/heat-exchanger (site last visited November, 2020). See also https://www.oxfordlearnersdictionaries.com/definition/english/heat-exchanger (site last visited November, 2020), which defines “heat exchanger” as “[A] device for making heat pass between a solid object and a liquid or gas, or between two liquids/gases, without allowing the liquids/gases to mix.” More specifically, an “air cooled heat exchanger” is defined as “[A] finned-tube (extended-surface) heat exchanger with hot fluids inside the tubes, and cooling air that is fan-blown (forced draft) or fan-pulled (induced draft) across the tube bank. See
https://encyclopedia2.thefreedictionary.com/air-cooled+heat+exchanger (site last visited November, 2020).
Scientific and industry sources also establish that there are different types of heat exchangers, including those that use air as a coolant in industrial processes (air-cooled heat exchangers). The following is noted:
How Do Heat Exchangers Work?
Different types of heat exchangers work in different ways, use different flow arrangements, equipment, and design features. One thing that all heat exchangers have in common is that they all function to directly or indirectly expose a warmer medium to a cooler medium, hence, exchanging heat. This is usually accomplished by using a set of tubes housed within some type of casing. Heat exchanger fans, condensers, belts, coolants, additional tubes and lines, along with other components and equipment work to increase heating and cooling efficiency or improve flow. (https://setxind.com/downstream/industrial-heat-exchangers-what-they-are-how-they-work-and-why-they-are-needed/) (site last visited November, 2020)
AIR COOLED HEAT EXCHANGER
Air cooled heat exchangers are used to transfer heat from a process fluid to ambient air. The process fluid is contained within heat conducting tubes. Atmospheric air, which serves as the coolant, is caused to flow perpendicularly across the tubes in order to remove heat. In a typical air cooled heat exchanger, the ambient air is either forced or induced by a fan or fans to flow vertically across a horizontal section of tubes. (https://www.sciencedirect.com/topics/engineering/air-cooled-heat-exchangers) (site last visited November 2020).
The foregoing lexicographic and industry sources establish that the common commercial meaning of “heat exchanger” includes air-cooled variants. The fact that the ENs to heading 8419, HTS, do not include air-cooled heat exchangers in the specified exemplars does not serve to limit the scope of the legal text. See Sigma-Tau HealthScience, Inc. v. United States, 98 F. Supp. 3d 1365 (CIT 2015), in which the U.S. Court of International Trade (CIT) held that the ENs are not binding where they contradict the tariff term they are intended to explain. This decision was reversed on other grounds in Sigma-Tau HealthScience, Inc. v. United States, 838 F.3d 1272 (Fed. Cir. 2016), but the Federal Circuit followed the same rationale as the lower court in holding that if a definition in the EN is too narrow it must be rejected.
Accordingly, as the subject air-cooled plate-fin heat exchangers fall within the common commercial meaning of “heat exchanger,” they are prima facie classified in subheading 8419.50, HTSUS, as “heat exchange units.” See New York Ruling Letter (NY) H292834, dated January 17, 2018 and NY 187077, dated October 28, 2011, in which CBP classified air-cooled plate-fin heat exchangers in subheading 8419.50.10, HSTUS.
Lastly, Protestant requests that “any articles that are solely or principally used on the heat exchangers” should be classified under subheading 8419.90.30, HTSUS, as parts of heat exchange units. As regards prospective rulings, Protestant is advised to seek an advance classification ruling from CBP pursuant to 19 C.F.R. § 177.
HOLDING:
By application of GRIs 1 and 6, the brazed aluminum plate-fin air-cooled heat exchanger (model 88290014-225) is properly classifiable under heading 8419, HTSUS, specifically subheading 8419.50.10, HTSUS, which provides for “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: Heat exchange units: Brazed aluminum plate-fin heat exchangers.” The 2019 column one, general rate of duty is 4.2% ad valorem.
By application of GRI 1 and GRI 6, the brass plate-fin air-cooled heat exchangers (models 02250137-799, 02250139-760 and 02250149-785) are properly classifiable under subheading 8419.50.50, HTSUS, which provides for, in pertinent part, “[H]eat exchange units: Other.” The 2019 column one, general rate of duty is free.
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 ALLOW 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 the 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,
Craig T. Clark, Director
Commercial and Trade Facilitation Division