• HQ H319996
• Apr 10, 2023

• Type : Classification and NAFTA • HTSUS : 8501.10.60; 8501.31.20
•  Related:   957575; 962289; 954581; 966036; 957555; 086832; 955037; 083955; 087909; 950557; 562196; N313648; W968210; N030575   

CLA-2 OT:RR:CTF:EMAIN H319996 SKK

TARIFF NOs.: 8501.10.60; 8501.31.20

Director
Electronics Center of Excellence and Expertise
U.S. Customs and Border Protection
301 E. Ocean Blvd., Suite 600
Long Beach, CA 90831

Attn: Import Specialist Sherill Stevens

Re: Application for Further Review (AFR) of Protest No. 2402-19-100089 (lead); electro- mechanical actuators; drive shift actuators; vehicle seat actuators: NAFTA parts exclusion

Dear Director:

The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 2402-19-100089 (“lead” Protest), timely filed on February 27, 2019, on behalf of Stoneridge Electronics, Inc. (“Stoneridge” or “Protestant”). The AFR concerns the classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of electro-mechanical actuators used in automotive applications and whether the “parts” exception to the North American Free Trade Agreement (“NAFTA”) tariff shift rule also applies to instant merchandise. The AFR was forwarded to this office for consideration.

Attorneys from this office participated in a teleconference with Counsel and Protestant’s Mexico Production Manager on February 3, 2023, as well as with Counsel on March 23, 2023. Counsel also submitted supplemental information to this office, dated March 31, 2023. This decision takes into consideration information presented in both Protestant’s written and oral submissions.

This Protest covers merchandise entered at the Port of El Paso between March 5 and March 29, 2018, and liquidated between February 1 and February 22, 2019, under subheading 8501.10.40, HTSUS, which provides for “[E]lectric motors and generators (excluding generating sets): Motors of an output not exceeding 37.5 W: Of under 18.65 W: Other.” This AFR also addresses protests of substantially similar merchandise that are suspended pending determination of lead Protest No. 2402-19-100089. Protestant’s submission (Attachment A) in support of this AFR identifies over 40 related pending Protests (Attachment A).

Protestant seeks classification of the actuators used with four-wheel drive (“4WD”) vehicle drive trains under heading 8708, specifically subheading 8708.50.89, HTSUS, which provides for “[P]arts and accessories of the motor vehicles of headings 8701 to 8705: Drive-axles with differential, whether or not provided with other transmission components, and non-driving axles; parts thereof: Parts: For vehicles of heading 8703: Other.” Alternatively, Protestant seeks classification of the 4WD actuators under HTSUS headings 8479, 8536, 8541, and 8543. Protestant seeks classification of the vehicle seat actuators under subheading 8708.29.50, HTSUS, which provides for “[P]arts and accessories of the motor vehicles of headings 8701 to 8705: Other parts and accessories of bodies (including cabs): Other: Other” or, alternatively, under heading 9401, HTSUS.

FACTS:

The merchandise at issue consists of several models of electro-mechanical actuators for use in automotive applications. The subject 4WD actuators create mechanical force to move a vehicle’s drive train. The vehicle seat actuators create mechanical force to move a vehicle’s seat. Both are similar in design, except that the 4WD actuator also features a shift fork mechanism. The subassemblies comprising both actuators are assembled separately and combined into the finished housing in Mexico prior to importation into the U.S.

4WD actuator

The subject 4WD actuators consist of several components and subassemblies combined in a single enclosure. The first subassembly contains an electric motor, a control printed circuit board assembly (“PCBA”), gearing and other components. The second subassembly contains a plunger, control spring, drive screw, position control circuitry and a shift fork.

The subject 4WD electro-mechanical actuator is referenced by the Protestant as the “Front Axle Disconnect Actuator” (model #’s 16-900/16-901). The 4WD actuator mounts to a center disconnect assembly, which is mounted on the front axle. It functions in a sealed housing to convert electrical energy from the vehicle’s electrical system into linear mechanical force. This linear force is used to move a shift collar in the axle disconnect assembly from the two-wheel drive (“2WD”) to 4WD position. The 4WD actuator also provides block shift compensation, internal positioning control (internal logic and switching circuitry controls start/stop at the expected 2WD and 4WD end positions), and provides output feedback (output signal to the vehicle controller indicates when the move from 2WD to 4WD position is completed). Vehicle seat actuator

The subject vehicle seat actuator includes an electric motor, gearing, a spring tensioner, and a movement control wire that attaches to the seat. When the operator presses a control button, the control wire is retracted or extended, in conjunction with a separate spring mounted in the seat frame, and the seat is unlocked. The retraction or extension of the wire results from reversal in the polarity of the motor, depending on the control button position being controlled by the driver.

ISSUE:

What is the proper classification of the subject electro-mechanical actuators?

LAW AND ANALYSIS:

This matter is protestable under 19 U.S.C. 1514(a)(2) as a decision on classification. The protest was timely filed on February 27, 2019, within 180 days of liquidation, pursuant to 19 U.S.C. 1514(c)(3).

Further Review of Protest No. 2402-19-100089 is properly accorded pursuant to § 174.24(b) of Title 19 of the Code of Federal Regulations (19 C.F.R. § 174.24(b)), as this protest is alleged to involve questions of law or fact that have not been ruled upon by the Commissioner of CBP or his designee or by the customs courts.

Classification:

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. If 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 2018 HTSUS provisions under consideration are set forth below:

8479    Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:

8501 Electric motors or generators (excluding generating sets):  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:

8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:

8708 Parts and accessories of the motor vehicles of headings 8701 to 8705:

9401 Seats (other than those of heading 9402), whether or not convertible into beds, and parts thereof: Section XVI Note 1(l) excludes “[A]rticles of section XVII.”

Section XVII Note 2(f) states that the expressions "parts" and "parts and accessories" do not apply to “[E]lectrical machinery or equipment (chapter 85).”

The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While not 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 (August 23, 1989).

The General EN to Section XVII (III) provides, in pertinent part: (III) PARTS AND ACCESSORIES * * * * * It should, however, be noted that these headings apply only to those parts or accessories which comply with all three of the following conditions:

They must not be excluded by the terms of Note 2 to this Section (see paragraph (A) below), and

(b) They must be suitable for use solely or principally with the articles of Chapters, and

(c) They must not be more specifically included elsewhere in the Nomenclature (see paragraph (C) below). (A) Parts and accessories excluded by Note 2 to Section XVII.

This Note excludes the following parts and accessories, whether or not they are identifiable as for the articles of this Section: * * * * * (7) Electrical machinery or equipment of Chapter 85, for example:

(a) Electric motors, generators, transformers, etc., of heading 85.01 or 85.04.

The EN to Chapter 94 state, in pertinent part: PARTS

This Chapter only covers parts, whether or not in the rough, of the goods of headings 94.01 to 94.03 and 94.05, when identifiable by their shape or other specific features as parts designed solely or principally for an article of those headings. They are classified in this Chapter when not more specifically covered elsewhere.

The EN to 85.01 states, in pertinent part:

(I) ELECTRIC MOTORS

Electric motors are machines for transforming electrical energy into mechanical power. This group includes rotary motors and linear motors.

Rotary motors * * * * * Motors remain classified here even when they are equipped with pulleys, with gears or gear boxes, or with a flexible shaft for operating hand tools. * * * * *

The headings under consideration for the subject actuators fall under Harmonized System (“HS”) Sections XVI (headings within Chapters 84 and 85), XVII (heading 8708) and XX (heading 9401). As set forth supra, Section XVI Note 1(l) excludes articles of Section XVII and Section XVII Note 2(f) excludes electrical machinery or equipment of Chapter 85 from consideration as “parts and accessories” of that section. Consistent with Note 2(f) to Section XVII, the General EN to Section XVII (III)(7)(a) clarifies that “electric motors” of heading 85.01 are not classified as “parts” or “parts and accessories” of Section XVII. Based on the foregoing, the initial determination is whether the subject actuators fall within the scope of heading 8501, HTSUS.

The subject actuators consist of an electric motor with additional components (i.e., PCBA, plunger sub-assembly consisting of control spring and drive screw, position control circuitry and, in the case of the 4WD actuator, a shift fork mechanism). Although the term “actuator” is not defined in the HTSUS or in the ENs, the term may be construed for tariff classification purposes according to its 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). The term “actuator” is generally defined as a mechanical device that converts energy into mechanical force. See https://www.progressiveautomations.com/pages/actuators (site last visited July 14, 2022).

In the instant case, the conversion of electric energy into mechanical force is accomplished by the electric motor. The actuators’ additional components complement this function by directing the motor’s force for various automotive applications (i.e., to move a drive shaft or vehicle seat). Specifically, the PCBA controls operation of the drive motor with position and provides feedback signal, the lead nut and drive screw convert the motor’s rotary motion into linear force, the plunger and spring provide blocked shift compensation to ensure completion of the shift and prevent motor stall, the positioning control circuitry governs the position of the motor, and the shift fork mechanism straddles the transmission gear shaft to transmit mechanical force from the actuator to the axle. As heading 85.01 provides for, in pertinent part, electric motors, and the EN clarifies that the heading includes motors equipped with additional components such as pulleys, gears or gear boxes, or flexible shafts for operating hand tools, the subject actuators are classified under heading 8501, HTSUS, by application of GRI 1. As such, classification is precluded from heading 8708, HTSUS, by application of Section XVII Note 2(f). Classification of the subject merchandise as parts of seats under heading 9401, HTSUS, is also incorrect because Additional U.S. Rule of Interpretation 1(c) indicates that specific headings take precedence over provisions for parts and accessories. This is supported by the General EN to Chapter 94, which indicates that parts of articles of the chapter are only classified under Chapter 94 when not specifically covered elsewhere in the nomenclature.

The subject actuators were entered and liquidated under subheading 8501.10.40, HTSUS, which provides for “[E]lectric motors and generators (excluding generating sets): Motors of an output not exceeding 37.5 W: Of under 18.65 W: Other.” Protestant submits that the subject actuators were imported in the following wattages: 30.282W, 29.98W, and 49.18W. Therefore, classification of the subject actuators will fall under HTSUS subheading 8501.10.60 or 8501.31.20 as corresponds to the actual wattage. See Attachment E of Protestant’s AFR. Protestant argues that as the subject actuators contain additional components that perform “distinct” functions from that of the motor, the actuators as a whole fall outside the scope of heading 8501, HTSUS. Specifically, Protestant submits that the shift fork’s function is beyond that of an electric motor in that it moves the shift collar to engage 4WD function. Protestant argues that as the internal PCB and printed circuit sensors initiate the 4WD sequence, they do not complement the function of the actuator. Protestant describes the actuators’ internal spring mechanisms as safety devices not commonly equipped on motors as they ensure that the actuators are not inadvertently engaged at a time and in a manner that would damage the differential that links the 4WD function. Protestant also states that some of the additional components, namely the drive screw and plunger sub-assembly, are not commonly found on motors and therefore classification as a motor of heading 8501, HTSUS, is inappropriate. In support of these arguments, Protestant cites to the following rulings in which the former U.S. Customs Service (“Customs”) and CBP classified various types of actuators consisting of motors combined with additional components outside of heading 8501, HTSUS:

Headquarters Ruling Letter (“HQ”) 950834 (Mar. 3, 1992) in which Customs classified a seat belt motor drive assembly in heading 8708, HTSUS;

HQ 957575 (Jul. 10, 1995) in which Customs classified an automotive window motor drive assembly in heading 8708, HTSUS;

HQ 962289 (Jun. 24, 1999) in which Customs classified audio tape motors with limit controls in heading 8543, HTSUS

HQ 954581 (Oct. 8, 1993) in which Customs classified an oven latch assembly with motor and limit control switches in heading 8537, HTSUS.

HQ 966036 (Oct. 14, 2003) in which CBP classified a seat actuator in heading 9401, HTSUS.

New York Ruling Letter (“NY”) N313648 (Aug. 26, 2020) in which CBP classified an actuator consisting of a motor and a brake caliper under heading 8708, HTSUS.

HQ W968210 (Feb. 6, 2007), revoking HQ 95755 (Jan. 30, 1995) in which CBP classified an automatic metered aerosol dispenser comprised of an aerosol spray can, motorized gear and lever system, and control board under heading 8501, HTSUS. In HQ W968210, CBP determined that classification was proper under subheading 8424.90, HTSUS, as other parts of mechanical appliances for projecting, dispersing, or spraying liquids or powders. CBP determined that the analysis in HQ 957555, stating that the primary function of the aerosol dispenser was to initiate spraying action and the component that performs this function is the motorized gear system, was incorrect. CBP revoked that ruling to reflect that while the gears and lever may complement the function of the motor, the control board initiated the action sequence and there was no basis to conclude that it complemented the motor. As regards Protestant’s assertion that the subject actuators’ additional components perform functions “distinct” from that of the motor such that the whole falls outside the scope of heading 8501, HTSUS, we disagree. As explained above, the subject actuators convert energy into mechanical force for certain automotive applications and this function is performed by the electric motor, classified in heading 8501, HTSUS, by application of GRI 1. We do not find Protestant’s reliance on NY N313648 to be persuasive in the instant case. In that ruling, CBP determined that classification in heading 8708, HSTUS, was based on brake calipers as they imparted the essential character to the article. Protestant argues that as the motor in NY N313648 exerts force on the brake calipers, and the motor in the instance case exerts force on the subject shift fork, classification of the subject actuators should also fall to heading 8708, HTSUS. We do not agree and note that the article at issue in NY N313648 and the subject merchandise are not substantially similar in either design or function. The brake caliper at issue in NY N313648 created friction that performed an actual braking function, whereas the subject shift fork straddles the axle to transmit the motor’s force to the drive shaft. We do not agree with Protestant’s argument that the actuators’ internal spring mechanisms are safety mechanisms and not commonly equipped on motors as they serve to ensure that the actuators are not inadvertently engaged at a time and in a manner that would damage the differential that links the 4WD function. We view this function as controlling motor engagement and complementing the operation of the actuators, which would be common in an automotive context. We also do not agree with Protestant’s statement that the subject actuators’ drive screw and plunger are not commonly found on motors. As described by Protestant, the drive screw assists in the conversion of the motor’s rotary motion into linear force and the plunger helps provide blocked shift compensation that prevents the motor from stalling. Therefore, we do not find the presence of these components to be uncommon in the context of actuators used in automotive applications. Lastly, the merchandise at issue in the rulings cited by counsel, supra, are not substantially similar to the instant actuators. Actuators are used in a wide variety of applications, and it follows that the components that make up a particular actuator will vary according to its intended application. For this reason, it is imperative that any ruling cited as precedence be based on goods that are substantially similar in design and function. In this regard, we note that the merchandise at issue in NY N030575, dated June 27, 2008, in which CBP classified a vehicle seat actuator consisting of a housing, control PCBA, gearing, and connecting cable under heading 8501, HTSUS, is substantially similar to the seat actuators at issue and supports our classification determination. Notwithstanding the above, CBP has issued a well-settled line of rulings that sets forth guidelines for classifying electric motors combined with various additional components. In HQ 086832, dated May 21, 1990, CBP held “that a motor remains a motor for tariff purposes despite having other articles attached to it,” and the other articles “can be quite substantial.” In HQ 955037, dated February 14, 1994, concerning the classification of electric actuators/motors, CBP explained that an electric motor is classifiable under heading 8501, HTSUS, even when imported with additional components if those additional components: (1) complement the function of the motor (HQ 083955, dated July 10, 1989); (2) are commonly equipped with motors (HQ 087909, dated December 26, 1990), and; (3) serve merely to transmit the motor’s power (HQ 950557, dated July 10, 1995). In applying these guidelines to the instant case, we find that the subject actuators’ “additional components” complement the function of the motor, may reasonably be expected to be found in actuators that function in an automotive capacity, and serve to transmit the motor’s power (i.e., the gear train and shift fork). It is further noted that the courts have spoken to the issue of the classification of motors equipped with additional components. In Nidec Corporation v. United States, 861 F. Supp. 136, (Ct. Int’l Trade 1994), aff'd 68 F. 3d 1333 (Fed. Cir. 1995), the CIT classified an actuator used in an ADP as a “motor” of heading 8501, HTSUS, denying arguments that the presence of additional components made the goods something more than an electric motor. This position was reinforced in Belimo Automation A.G. v. United States, 774 F. 3d 1362 (Fed. Cir. 2014), in which the CAFC affirmed the CIT’s holding that a motor actuator assembly containing an Application Specific Integrated Circuit (“ASIC”) remained classified in heading 8501, HTSUS. The court reasoned that although the ASIC contributed additional functions beyond those of an electric motor (i.e., continuous monitoring of the motor absent a signal from the central controller, adapting to AC or DC electrical signals, storing energy for use in the event of a power failure), those additional functions were complementary to the principal function of an electric motor. Belimo at 1363.

"Parts" exception to the NAFTA tariff shift rule:

The subject actuators with electric motors are classified in heading 8501, HTSUS, specifically under subheadings 8501.10.60 or 8501.31.20, HTSUS, and the NAFTA tariff shift rule (“A change to heading 8501 from any other heading, except from tariff items 8503.00.35, 8503.00.45 or 8503.00.65”) is not satisfied, unless the parts exception to the NAFTA tariff shift rule applies. The rules set forth in Chapter 4 and Annex 401 of the NAFTA were promulgated in the United States through General Note (“GN”) 12, HTSUS. Pursuant to GN 12(b)(iv), HTSUS (2018), goods will be deemed as originating in the territory of a NAFTA party if:

iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the non-originating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because—

… (B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts, provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.

For purposes of this note, the term “material” means a good that is used in the production of another good, and includes a part or an ingredient; ….

Appendix to Part 181.131 (19 C.F.R. § 181.131 Appendix, Part II, Section 4 (Originating Goods)) implements the rules of origin provisions of GN 12, HTSUS. Section 4(4)(b) sets forth certain exceptions to the change in tariff classification requirement provided for in GN 12(b)(ii). Section 4(4)(b)(ii) provides, in pertinent part, that with the exception of a good of Chapters 61 through 63, a good originates in the territory of a NAFTA country where:

(ii) one or more of the non-originating materials used in the production of the good do not undergo an applicable change in tariff classification because

(A) those materials are provided for under the Harmonized System as parts of the good, and

(B) the heading for the good provides for both the good and its parts and is not further subdivided into subheadings, or the subheading for the good provides for both the good and its parts ….

In HQ 562196, dated Nov. 5, 2001, a power pack assembly was imported from the United States into Mexico and the importer claimed NAFTA preferential tariff treatment. Both the power pack assembly and its Chinese motor were classified in heading 8501, HTSUS, and the Chinese origin motor did not undergo the required change in tariff classification (change to heading 8501 from any other heading). The importer argued that the NAFTA parts exception to the change in tariff classification under 19 C.F.R. Part 181, Appendix, Part II, Section 4(4)(b) would apply. HQ 562196 concluded that, “heading 8501, HTSUS, does not provide for both the good and its parts. Rather, a separate heading (heading 8503) is provided for parts suitable for use solely or principally with the goods of heading 8501. Therefore, the exception to the change in tariff classification provided by 19 C.F.R. part 181, app. § 4(4)(b) does not apply.”

The instant matter is identical. As explained above in the tariff classification portion of this ruling, each actuator is an electric motor equipped with additional components (PCBA, plunger sub-assembly consisting of control spring and drive screw, position control circuitry and, in the case of the 4WD actuator, a shift fork mechanism). The actuators’ electric motor converts electric energy into mechanical force while its additional components complement this function by directing the motor’s force for various automotive applications. Both the actuator assembly (electric motor with its components) and the Chinese motor are classified as “electric motors and generators” of heading 8501, which only provides for the good and does not provide for both the good and its parts as explained in HQ 562196, supra. As a result, the claimed exception for parts set out in GN 12(b)(iv) and Section 4(4)(b)(ii) does not apply, and the subject actuators do not qualify for preferential tariff treatment under NAFTA.

HOLDING:

By application of GRIs 1 and 6, the subject actuators are classified in heading 8501, HTSUS, specifically under the subheadings that correspond to their specific wattage as follows:

The subject 30.282 W actuators are classified under subheading 8501.10.60, HTSUS, which provides for “[E]lectric motors and generators (excluding generating sets): Motors of an output not exceeding 37.5 W: Of 18.65 W or more but not exceeding 37.5 W.” The 2018 column one, general rate of duty is 2.8% ad valorem.

The subject 39.98 W and 49.18 W actuators are classified under subheading 8501.31.20, HTSUS, which provides for “[E]lectric motors and generators (excluding generating sets): Other DC motors; DC generators: 8501.31 Of an output not exceeding 750 W: Motors: Exceeding 37.5 W but not exceeding 74.6 W.” The 2018 column one, general rate of duty is 2.8% ad valorem.

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/.

The subject actuators do not qualify for preferential tariff treatment under NAFTA.

You are instructed to DENY the protest, except to the extent reclassification of the merchandise as indicated above results in a net duty reduction and partial allowance.

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