OT:RR:CTF:EMAIN H336964 JRG
TARIFF NOS.: 8504.40.40; 9903.88.67
Center Director
Electronics Center of Excellence and Expertise
U.S. Customs and Border Protection
1 World Trade Center, Suite 741
Long Beach, CA 90831
ATTN: Christopher P. Cisneros, Supervisory Import Specialist
RE: Application for Further Review of Protest No. 209523117254; Classification; Applicability of Section 301 Trade Remedies on Certain Speed Drive Controllers
Dear Center Director:
This is our decision regarding an Application for Further Review (AFR) of Protest No. 209523117254 filed on September 27, 2023, on behalf of Siemens Industry Inc., Digital Industries (Protestant). The Protest and AFR concern the applicability of Section 301 trade remedies on certain speed drive controllers from China. The AFR was forwarded to this office for consideration. This decision also takes into consideration supplemental information provided on behalf of Protestant, dated March 1, 2024.
FACTS:
The "SINAMICS DCM DC Converter and Control Module," is a four-quadrant speed drive controller designed to control electric motors, including elevator motors. Four-quadrant operation allows the speed drive controllers to operate in both directions of rotation by having a driving (motoring) and braking (regenerative) mode. When braking, the power generated is converted into electricity and returned into the source.
The subject speed drive controllers were entered in sixty entries from May 12, 2022, to October 28, 2022. The speed drive controllers were liquidated from April 7, 2023, to September 22, 2023, under statistical reporting number 8504.40.4000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for "Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof: Static converters: Speed drive controllers for electric motors." As products of China, the computer cases were subject to an additional 25 percent ad valorem duty imposed by U.S. Notes 20(a) and (b) to Chapter 99, Subchapter III, HTSUS, and their liquidation under the corresponding subheading 9903.88.01, HTSUS, which provides for "[A]rticles the product of China, as provided for in U.S. note 20(a) to this subchapter and as provided for in the subheadings enumerated in U.S. note 20(b) [to this subchapter]."
On September 27, 2023, Protestant filed the instant Protest and AFR. Protestants agrees that the speed drive controllers are appropriately classified under statistical reporting number 8504.40.4000, HTSUSA. Protestant, however, contends the speed drive controllers are entitled to relief from Section 301 duties under U.S. Note 20(ttt)(i)(59) of Chapter 99, Subchapter III, HTSUS, which provides for "Regenerative speed drive controllers for controlling speed of electric motors for elevators (described in statistical reporting number 8504.40.4000)," and its corresponding subheading 9903.88.67, HTSUS.
ISSUES:
Whether the speed drive controllers qualify for relief from Section 301 duties under U.S. Note 20(ttt)(i)(59) of Chapter 99, HTSUS.
LAW & 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 September 27, 2023, within 180 days of the entry's liquidation, pursuant to 19 U.S.C. 1514(c)(3). Further Review of Protest No. 209523117254 is properly accorded pursuant to 19 CFR 174.24(b).
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation (GRIs) and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation (ARIs). GRI 1 provides that the classification of goods shall be "determined according to the terms of the headings and any relative section or chapter notes." If the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, GRIs 2 through 6 may be applied in order.
Chapter 99, Subchapter III, U.S. Note 20(ttt)(i)(59) covers "Regenerative speed drive controllers for controlling speed of electric motors for elevators (described in statistical reporting number 8504.40.4000)," and corresponds to subheading 9903.88.67, HTSUS.
The scope of each exclusion from Section 301 duties is governed by the product descriptions set forth in the Annex, i.e., the text in Chapter 99, Subchapter III, HTSUS, and not by product descriptions set forth in a particular request for exclusion. See 84 FR 38718 (August 17, 2019).
There is no dispute concerning the classification of the speed drive controllers under statistical reporting number 8504.40.4000, HTSUSA. The only contention is whether the speed drive controllers satisfy the exclusion criteria of U.S. Note 20(ttt)(i)(59). The subject speed drive controllers are clearly designed to control the speed of electric motors for elevators, as evidenced by the product overview provided by Protestant. Therefore, the central inquiry regards whether the speed drive controllers are "regenerative."
The term "regenerative" is not defined in the HTSUS. In the absence of a statutory definition, a tariff term is construed according to its common and commercial meaning, which are presumably identical. Tyco Fire Products v. United States, 841 F.3d 1353, 1357 (Fed. Cir. 2016). Dictionaries and other lexicographic authorities may be utilized to determine a term's common meaning. See Mast Indus., Inc. v. United States, 9 C.I.T. 549 (1985), aff'd, 786 F.2d 1144 (Fed. Cir. 1986). Among the sources that are regularly consulted pursuant to this maxim is industry literature, which may inform a term's commercial meaning. See Rocknell Fastener, Inc. v. United States, 267 F.3d 1354, 1361 (Fed. Cir. 2001) (citing ANSI specifications as industry standards indicative of commercial designation); see also Well Luck Co., Inc. v. United States, 208 F. Supp. 3d 1364 (Ct. Int'l Trade 2017); and Specialty Commodities, Inc. v. United States, 190 F. Supp. 3d 1277, 1285-1286 (Ct. Int'l Trade 2016) (both citing industry references in defining tariff terms at issue).
Based on Siemens' "ABC of Drives," an index for various terms pertaining to its Converters for DC Drives, four-quadrant operation entails possessing regenerative capabilities in braking mode. See Siemens AG, ABC of Drives Converters for Three-Phase AC and DC Drives 31 (2009). Specifically, when a four-quadrant drive is braking "the mechanical power that is generated is converted into electric power and fed back into the source (this is generally the line supply)," which corresponds with the index's definition for "regenerative braking." Id. at 31, 58. Furthermore, Siemens' definition of "four-quadrant operation," which states it necessarily entails regenerative capabilities, is consistent with the industry's broader understanding of four-quadrant operation. See Four Quadrant Operation of DC Motor, https://circuitglobe.com/four-quadrant-operation-of-dc-motor.html (last visited Apr. 15, 2024) ("A motor drive capable of operating in both directions of rotation and of producing both motoring and regeneration is called a Four Quadrant variable speed drive."); Four Quadrant Operations of DC Motor, https://www.electronicshub.org/four-quadrant-operations-of-dc-motor/ (last visited Apr. 15, 2024). Therefore, given the subject speed drive controllers have four-quadrant operation, they possess regenerative capabilities and are entitled to relief under U.S. Note 20(ttt)(i)(59) as "Regenerative speed drive controllers for controlling speed of electric motors for elevators (described in statistical reporting number 8504.40.4000)."
HOLDING:
By application of GRIs 1 and 6, the speed drive controllers are classified under statistical reporting number 8504.40.4000, HTSUSA, which provides for "Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof: Static converters: Speed drive controllers for electric motors." The general, column one rate of duty is Free.
Pursuant to U.S. note 20 to subchapter III, chapter 99, HTSUS, products of China classified under subheading 8504.40.40, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty under 9903.88.01, HTSUS. However, as the subject merchandise falls under the scope of the aforementioned exclusion set forth under U.S. Note 20(ttt)(i)(59) of Chapter 99, Subchapter III, it is eligible for classification under subheading 9903.88.67, HTSUS.
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.
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 GRANT 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