OT:RR:CTF:EMAIN H323434 SKK
TARIFF NOs.: 8479.89.94; 8479.90.94; 8483.40.10; 9903.88.01; 9903.88.03
Center Director Machinery Center of Excellence and Expertise U.S. Customs & Border Protection
One World Trade Center
Suite 50.200
New York, NY 10007
Attn: Marlon Vinueza, Import Specialist; Lily Chow, Supervisory Import Specialist
Re: Application for Further Review of Protest No. 4601-20-122338; Classification of vertical and single shaft recycling shredder machines from China; Size reduction machines; granulator machine parts (rotors and screens); Hydraulic couplings
Dear Center Director:
This is our decision regarding the Application for Further Review (AFR) of Protest No. 4601-20-122338, filed on behalf of Cable Management LLC (Protestant). The Protest and AFR concern the classification of vertical and single shaft shredding machines, hydraulic couplings, and granulator machine parts identified as rotors and screens under the Harmonized Tariff Schedule of the United States (HTSUS), as well as the applicability of Section 301 trade remedies. No samples were provided for examination. The AFR was forwarded to this office for consideration.
Attorneys from this office participated in a teleconference with counsel on October 20, 2022. This decision takes into consideration information presented in both Protestant’s written and oral submissions.
FACTS:
The subject articles are manufactured by Genox Recycling Tech (China) Co., Ltd., and described as a vertical shredder (model Z1500), a single shaft shredder (model V600), single shaft shredder parts (hydraulic couplings), and granulator shredding machine parts (rotors and screens).
The subject merchandise was entered on May 20, 2019, and liquidated as entered on April 17, 2020, under heading 8477, HTSUS, specifically subheading 8477.80.00, HTSUS, which provides for “[M]achinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter; parts thereof: other machinery.” The subject rotors, screens and hydraulic couplings were entered under subheading 8477.90.85, HTSUS, which provides for, inter alia, “other” parts. As products of China, the merchandise was subject to additional duties imposed by subheading 9903.88.01, HTSUS.
The Genox Z Series Vertical Shredders (including the subject model Z1500) are described on the manufacturer’s website (www.genoxtech.com/en/index.html, site last visited July 8, 2022) as follows:
Typical Applications Include:
ELV’s (End of Life Vehicles) – Pre-shredded vehicle bodies
Scrap Steel – Pre-shredded steel sheets, metal drums etc.
Electronic Scrap – WEEE Directive Materials, meatballs.
C&D Waste – Concrete, Timber, Plastics etc.
Paper Industry Waste – Ragger tails
Timber Waste – Pallet wood etc.
Z series large vertical shredders are mostly recommended for applications processing pre-shredded metal scrap from twin shaft shredding systems. These machines aggressively size reduce and densify pre-shredded material whilst liberating the various different fractions, allowing for better separations and reduced transportation costs. The breakers in the upper part of the chamber smash the material until it is small enough to enter the gap between the milling rings and chamber liners. When the material enters the second stage the milling rings impact, grind and roll the material into clean, dense nuggets. When milled in to small enough pieces, the balled-up material falls into the lower chamber and is ejected by the discharge paddles. The three above stages create a product which is both clean and of high bulk density suitable for transportation. [emphasis added]
The Genox V Series Single Shaft Shredders (including the subject model V600) are described on the manufacturer’s website as follows:
V Series Single Shaft Shredders are small - medium size reduction machines suitable for processing a wide range of materials to a uniform particle size. The output products created can often be sold as is, or be sent for further processing through additional equipment (granulators briquetters etc). Throughputs typically range between 300kg/hr – 5,000kg/hr+ depending on the machine model, material type, screen size and application. [emphasis added]
Typical Applications Include:
Plastics – Mouldings, Purging/Lump, Profiles, Films etc.
Timber/Wood – Pallets, Joiners Waste, Green Waste etc.
Paper/Cardboard–Confidential Documents, Production Waste, Packaging Materials etc.
Copper Cable – Household, Telecoms and Industrial Cables including S.W.A
Aluminum – Used Beverage Cans (UBC’s), Swarf, Cables etc.
Textiles – Carpet (Rolls & Tiles), Garments etc.
Security Destruction – Counterfeit Items, Faulty Goods, Out of Date Stock etc.
Foam – Production Waste etc.
ISSUES:
What is the proper classification of the subject shredders, granulator rotors and screens, and hydraulic couplings?
Whether the subject articles are subject to additional duties per subheadings 9903.88.01 and 9903.88.03, 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 13, 2020, within 180 days of liquidation, pursuant to 19 U.S.C. § 1514(c)(3). Further Review of Protest No. 4601-20-122338 is properly accorded pursuant to 19 CFR § 174.24(b), as the decision against which the protest was filed is alleged to involve matters not previously ruled upon by Customs and Border Protection (CBP) or 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 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 following HTSUS (2019) provisions are under consideration:
8477 Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter; parts thereof:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof:
8483 Transmission shafts (including camshafts and crankshafts) and cranks; bearing housings, housed bearings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints); parts thereof:
Headings 8477, 8479 and 8483 all fall with Section XVI of the Harmonized System (HS). Note 2 to Section XVI provides, in pertinent part:
Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:
Parts which are goods included in any of the headings of chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;
Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate….
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System 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). In its description of goods covered under heading 8483, HTSUS, EN 84.83 states, in pertinent part:
(E) GEAR BOXES AND OTHER SPEED CHANGERS, INCLUDING TORQUE CONVERTERS
These provide a range of speeds which can be varied, either by hand or automatically, according to the requirements of the machine. They include, inter alia:
* * * * *
(3) Variable speed fluid couplings, including hydraulic torque converters. Variations are obtained by the rotation of vanes of the driving element in a fluid (generally oil) against fixed or movable vanes of the driven element. Power is transmitted either by pressure (hydrostatic changers) or by flux (hydrodynamic changers or torque converters).
The heading does not cover gear boxes or other variable speed changers combined with a motor; these are classified in the same heading as the motor.
In support of this request, Protestant argues that classification of the subject shredders under subheading 8479.89.94, HTSUS, is incorrect as they are principally used for working plastics and are therefore provided for in heading 8477, HTSUS, specifically subheading 8477.80.00, HTSUS. In support of the argument that the subject shredders are classified under subheading 8477.80.00, HTSUS, Protestant states that the vertical shredders “are principally used on plastic materials... [T]hey are sold and marketed as such... [W]hile the single shaft shredder can be used on metals, it is principally used by recycling companies to recycle plastics.” Protestant cites to Additional U.S. Rule of Interpretation 1(a), which provides, “[I]n the absence of special language or context which otherwise requires -- (a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.” Protestant further submits that according to the product literature and documentation provided, and considering the factors developed by the court in United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, 377 (1976), cert. denied, 429 U.S. 979 (1976) to aid in determining a product’s principal function (i.e., general physical characteristics, expectation of the ultimate purchaser, channels of trade, environment of sale, use in the same manner as merchandise which defines the class, economic practicality, and economic recognition in the trade), the principal function of the shredders is for working plastics.
Protestant does not provide specific information demonstrating that the subject shredders are principally used for working plastic. On the contrary, Protestant submitted with its protest a prior request with the Office of the U.S. Trade Representative (USTR) to exclude the subject merchandise from coverage under the Section 301 measures on certain products of China. This request contains product information describing the Vertical Shredders as “machines… which provide an avenue for shredding products of multiple materials including pre-shredded vehicle bodies, scrap steel/pre-shredded steel sheets, metal drums and similar, electronic scrap, WEEE Directive materials, concrete, timber, plastics, paper industry waste and timber waste such as pallet woods.” [emphasis added]. That same document states that Protestant “has experienced an explosion of demand for the Non-Ferrous Recycling Plants which feature the Vertical Shredder.” It is noted that non-ferrous describes metal scrap other than iron or steel. This information indicates that the Vertical Shredders are specifically designed and imported to process and recycle non-ferrous scrap metals. Protestant’s submission also includes this same language in a second exclusion request to the USTR pertaining to Single Shaft Shredders and describes them as “… machines… which provide an avenue for the shredding of products of multiple materials including plastics, timber/wood, paper and cardboard, copper cable, aluminum cans, textiles, and foam.” It is further noted that the manufacturer’s website (www.genoxtech.com, site last visited July 8, 2022) describes the Z series models (which includes the Z1500 at issue in this Protest) as large vertical shredders “mostly recommended for applications processing pre-shredded metal scrap from twin shaft shredding systems.” [emphasis added]. The manufacturer describes the V series Single Shaft Shredders (which includes the V600 model at issue) as “small - medium size reduction machines suitable for processing a wide range of materials to a uniform particle size.” The manufacturer describes typical applications for the V series as for plastics, timber/wood, paper/cardboard, copper cable, aluminum, textiles and foam.” [emphasis added].
Protestant cites to the following CBP rulings in support of classification of the subject shredders in heading 8477, HTSUS, on the basis of principal use:
Headquarters Ruling Letter (HQ) H128416 (Feb. 19, 2017), in which CBP applied Carborundum factors to determine the principal function of a multi-function printing and cutting machine (heading 8443, HTSUS);
HQ H300063 (Dec. 11, 2019), in which CBP stated that “courts have determined that principal use under the HTSUS is defined as the use which ‘exceeds all other uses.’" See Lenox Collections v. United States, 20 C.I.T. 194, 196 (1996);
HQ W968223 (Jan. 12, 2007), in which CBP classified a composite mobile telecommunications device that integrated several wireless technologies (heading 8525, HTSUS);
HQ 966270 (Jun. 3, 2003), in which CBP classified a composite machine that functions both as an ADP machine monitor and a video monitor (heading 8528, HTSUS);
HQ H293457 (Apr. 29, 2019), in which CBP classified a combination recycling machine with heat exchanger (heading 8477, HTSUS);
New York Ruling Letter (NY) D84411 (Nov. 24, 1998), in which CBP classified a pelletizing machine used in the recycling of plastic scrap (heading 8477, HTSUS); and
NY N252726 (May 22, 2014), in which CBP classified a shredder-feeder-extruder combination machine for use on post-industrial or post-consumer plastic waste (heading 8477, HTSUS).
We do not find these rulings persuasive in the instant matter, as the products at issue in those rulings are not substantially similar to the subject shredders. The subject shredders are neither composite machines, machines designed to perform two or more complementary or alternative functions, nor specifically designed to pelletize plastic or to work on plastic waste.
On the basis of the foregoing, the subject shredders are not classified in heading 8477, HTSUS, as they are not principally used to work plastics or to manufacture plastic products, nor are they specifically provided elsewhere in chapter 84. Rather, the subject articles are designed to shred a variety of materials and are classified in heading 8479, HTSUS, specifically subheading 8479.89.94, HTSUS (2019), as machines having individual functions, not specified or included elsewhere in this chapter. This finding is consistent with HQ H300870 (Jan. 15, 2020), in which CBP affirmed classification of a size reduction machine that shredded various materials under subheading 8479.89.94, HTSUS.
In a supplemental submission emailed to CBP on August 22, 2022, Protestant states that the subject rotors, screens, and hydraulic fluid couplings are all designed principally for use with the single shaft shredder. The steel screen allows specific-size material to exit the machine. The steel rotor contains blades that perform the size-reducing function of the shredder. As the subject rotors and screens are suitable for use principally with the single shaft shredders , they are classified as parts of machines of heading 8479, HTSUS, specifically under subheading 8479.90.94, HTSUS (2019), which provides for “[M]achines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other.”
In Protestant’s supplemental documentation, the subject coupling is described as a “hydrodynamic coupling” that operates based on Föttinger’s principle. Internet resources describe couplings that employ the Föttinger principle as operating by circulating fluid to transmit a rotary movement. See https://www.jbj.co.uk/engineering-definitions.html#:~:text=Fottinger%20Principle%3B%20The%20F%C3%B6ttinger%20principle,a%20rotary%20movement%20(a%20 (site last visited February 28, 2023). The coupler consists of an outer and inner wheel, with the space between the wheels partially filled with operating fluid. The movement of the operating fluid allows for mechanical energy to be converted into potential and kinetic energy and then into mechanical energy. Based on the information presented, and guidance set forth in EN 84.83 (E)(3) supra, the subject hydraulic-fluid coupler is a torque converter and specifically provided for in heading 8483, HTSUS. As the subject hydraulic-fluid couplers were entered separately, unattached to a motor, they are classified under subheading 8483.40.10, HTSUS, which provides for “[T]ransmission shafts (including camshafts and crankshafts) and cranks; bearing housings, housed bearings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints); parts thereof: Gears and gearing, other than toothed wheels, chain sprockets and other transmission elements entered separately; ball or roller screws; gear boxes and other speed changers, including torque converters: Torque converters.”
As classification of the subject shredders is proper under subheading 8479.89.94, HTSUS (2019). No applicable Section 301 exclusions cover the subject merchandise.
HOLDING:
By application of GRIs 1 and 6, the subject Vertical Shredder (Genox model Z1500) and Single Shaft Shredder (Genox model V600) are classified under heading 8479, HTSUS, specifically subheading 8479.89.94, HTSUS (2019), which provides for “[M]achines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and mechanical appliances: Other: Other: Other.” The 2019 column one, general rate of duty was 2.5% ad valorem. Pursuant to U.S. Note 20(f) to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8479.89.94, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty under subheading 9903.88.03. At the time of importation, an importer must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8479.89.94, HTSUS, noted above, for products of China. No applicable Section 301 exclusion exists that describe the subject shredders.
By application of GRIs 1 (Note 2(b) to Section XVI) and 6, the subject rotors and screens are classified under heading 8479, specifically subheading 8479.90.94, HTSUS (2019), which provides for “[M]achines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other.” The 2019 column one, general rate of duty is free. Pursuant to U.S. Note 20(b) to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8479.90.94, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty under subheading 9903.88.01. At the time of importation, an importer must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8479.90.94, HTSUS, noted above, for products of China. No applicable Section 301 exclusion exists that describe the subject rotors and screens.
By application of GRIs 1 (Note 2(a) to Section XVI) and 6, the subject hydraulic-fluid couplers, as entered separately and unattached to a motor, are classified under heading 8483, specifically subheading 8483.40.10, HTSUS (2019), which provides for “[T]ransmission shafts (including camshafts and crankshafts) and cranks; bearing housings, housed bearings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints); parts thereof: Gears and gearing, other than toothed wheels, chain sprockets and other transmission elements entered separately; ball or roller screws; gear boxes and other speed changers, including torque converters: Torque converters.” The 2019 column one, general rate of duty is free. Pursuant to U.S. Note 20(b) to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8483.40.10, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty under subheading 9903.88.01. At the time of importation, an importer must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8483.40.10, HTSUS, noted above, for products of China. No applicable Section 301 exclusion exists that describe the subject hydraulic fluid couplings (torque converters).
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 should also exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, including information on exclusions and their effective dates, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
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