OT:RR:CTF:EMAIN H317696 MFT
Mr. J. Scott Maberry
Sheppard, Mullin, Richter & Hampton LLP
2099 Pennsylvania Ave NW, Suite 100
Washington, D.C. 20006-6801
ATTN: Ms. Lisa Mays – Sheppard, Mullin, Richter & Hampton LLP
Re: Modification of NY N047175; Classification of beverage dispenser machines
Dear Mr. Maberry and Ms. Mays:
This letter is in response to your request, dated March 29, 2021, and filed on behalf of your client Welbilt, Inc., for the modification of New York Ruling Letter (“NY”) N047175, issued on January 13, 2009, in which U.S. Customs and Border Protection (CBP) classified certain beverage dispenser machines under subheading 8481.80.90 of the Harmonized Tariff Schedule of the United States (HTSUS), and statistical reporting number 8481.80.9050, HTSUS Annotated (HTSUSA). You request that CBP reclassify the merchandise at issue under statistical reporting number 8481.80.9005, HTSUSA.
We have reviewed NY N047175 and determined that the ruling is in error. For the reasons set forth below, CBP is revoking NY N047175. In reaching this determination, CBP relied on materials included with your submission, supplemental information you provided on March 2, 2023, and information provided during your meeting with CBP, held on April 6, 2023.
Pursuant to Section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by Section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice of the proposed action was published in the Customs Bulletin, Vol. 57, No. 18, on May 10, 2023. No comments were received in response to this notice.
FACTS:
The subject request and NY N047175 concern three models of beverage dispenser machines: Model DI-1522, Model DI-2323, and Model DIL-2323. NY N047175 describes the beverage dispenser machines as “drop-in ice/beverage dispensers” and states:
These free[-]standing dispensers are made of stainless steel and are designed to chill and dispense soda and non-carbonated beverages. The dispensers incorporate mixing valves that allow the components of a beverage to be mixed and ultimately dispensed on demand. They can be found in restaurants, supermarkets and cafeterias.
It is not disputed that the subject beverage dispenser machines “are essentially an arrangement of valves specifically designed to mix and/or dispense beverages.” The beverage dispenser machines incorporate the following valves: solenoid valves that allow the beverages to be dispensed; spring check valves that attach to a tap water inlet, prevent carbon dioxide gas from entering a machine’s water supply, and allow the machine to dispense plain water; and relief valves (for machines containing an internal carbonator) that assist with maintaining pressure within a carbon dioxide tank. The solenoid valves can be actuated using one of the following four methods:
Autofill Lever: A customer presses a lever to dispense a beverage. When the beverage contacts the lever, an electrical connection turns off the solenoid valve to prevent the customer’s cup from overflowing.
Sanitary Lever: A customer presses a lever to dispense a beverage. The lever’s shape prevents the lip of the customer’s cup from touching the lever, thereby making the lever more sanitary.
Push Button (Self-Serve): A customer presses a button on a keypad to dispense a beverage, which actuates the solenoid.
Portion Control Button: A customer presses a button on a keypad to dispense a beverage. When the keypad is pressed, an electrical circuit actuates a solenoid with timed response programming. The solenoid valve is programmed to close only after a predetermined portion of a beverage is dispensed. Restaurants and other operators may program the portion control to allow the machine to dispense amounts appropriate for various cup sizes.
The technical process for dispensing a beverage begins when a customer pushes down on a lever or button on a beverage dispenser machine. The lever or button triggers an actuator of a solenoid dispensing valve, which in turn closes the switch of an electrical circuit. The electrical circuit sends 24 Volts of electricity to solenoids controlling the water and syrup lines in the beverage dispenser machines. The electricity causes the solenoids to open valves that allow the water and syrup to enter the flow control portion of the solenoid dispensing valve. The flow control portion of the solenoid dispensing valve is preset such that the resulting mixture contains the correct mix of water and syrup to achieve the specified beverage. As this process is underway, syrup is dispensed from a “bag-in-box” (BIB) syrup carton.
ISSUE:
Whether the subject beverage dispenser machines are properly described under statistical reporting number 8481.80.9005, HTSUSA, as solenoid valves, or under statistical reporting number 8481.80.9050, HTSUSA, as other valves.
LAW AND ANALYSIS:
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 HTSUS headings and subheadings under consideration are as follows:
8481 Taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves; parts thereof:
8481.80 Other appliances:
8481.80.90 Other:
8481.80.9005 Solenoid valves
* * * * *
Other:
8481.80.9050 Other
Note 3 to Section XVI, HTSUS, provides as follows:
Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.
Note 5 to Section XVI, HTSUS, defines the expression “machine” as “any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of chapter 84 or 85.”
It is not disputed that the subject beverage dispenser machines consist of “an arrangement of valves.” Heading 8481, HTSUS, provides for “valves,” and is thus an appropriate heading for the beverage dispenser machines under GRI 1. As such, this matter is governed by GRI 6, which provides as follows:
For legal purposes, the classification of goods in the subheadings 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.
Given that the subject merchandise consists of multiple valves that are fitted together to form a whole, the beverage dispenser machines constitute “composite machines” under Note 3 to Section XVI via GRI 6. As such, the subject beverage dispenser machines must be classified as if consisting only of that component, or as being that machine, which performs the principal function.
To be properly classified under statistical reporting number 8481.80.9005, HTSUSA, Note 3 to Section XVI requires that the solenoid valves perform the principal function of the beverage dispenser machines. The principal function of these beverage dispenser machines is to mix and dispense ice and beverages, and we find that the solenoid valves are the components that perform this function. The solenoid valves control the water and syrup lines in the beverage dispensing machines, and their actuation by a customer directly causes the machine to release the beverages. No matter which method a customer uses to dispense a beverage – be it the autofill, sanitary lever, push button, or portion control method – the customer will inevitably interact with the actuator of the solenoid valve, which in turn will open valves releasing water and syrup. To be sure, other valves are present in the beverage dispenser machines and play important functions, such as preventing carbon dioxide from mixing with tap water and regulating pressure in a carbon dioxide tank. But these functions are secondary to the principal function of dispensing beverages, a function that the solenoid valves directly perform. Thus, statistical reporting number 8481.80.9050, HTSUSA, is inapposite.
Because the solenoid valves perform this principal function, we find that the beverage dispenser machines are to be classified as if consisting of solenoid valves, as described in statistical reporting number 8481.80.9005, HTSUSA.
HOLDING:
By application of GRIs 1 (Note 3 to Section XVI) and 6, HTSUS, the subject beverage dispenser machines are classified under heading 8481, HTSUS, specifically under statistical reporting number 8481.80.9005, HTSUSA, which provides for, Taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves; parts thereof: Other appliances: Other: Solenoid valves.” The general column one rate of duty is 2% 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/tata/hts/.
EFFECT ON OTHER RULINGS:
NY N047175, dated January 13, 2009, is hereby REVOKED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division