OT:RR:CTF:EMAIN: H341222 PF
Luis Arandia, Jr.
Partner
Barnes & Thornburg LLP
555 12th Street, N.W., Suite 1200
Washington, D.C. 20004
RE: Request for Reconsideration of NY N299871; Tariff Classification of a Magnetic Assembly from China
Dear Mr. Arandia:
This is in response to your letter, requesting reconsideration of New York Ruling Letter (NY) N299871, dated September 8, 2018 (reconsideration request) on behalf of Polaris Rare Earh Materials, LLC (Polaris). A physical sample was provided with the reconsideration request. In NY N299871, U.S. Customs and Border Protection (CBP) classified a magnetic assembly from China under the Harmonized Tariff Schedule of the United States (HTSUS) heading 8483, specifically subheading 8483.90.80, which provides for "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: Toothed wheels, chain sprockets and other transmission elements presented separately; parts: Other: Other." As a product of China, the subject merchandise was also subject to additional ad valorem duties pursuant to U.S. Note to Subchapter III, Chapter 99, subheading 9903.88.01, HTSUS. Upon review of NY N299871, we have determined the ruling to be correct. We are accordingly affirming the ruling.
NY N299871 provides the following description of the magnetic assembly:
The magnetic assembly, part number E1510008439, consists of a neodymium magnet and a stainless steel yoke. The magnetic assembly is installed onto the shaft of a rotor assembly and once the outer cylindrical magnet is radially magnetized, the inner yoke transmits torque to the rotor shaft. The cylindrically shaped article is used in motor rotors, sensor applications, and holding magnets.
The design of the subject merchandise is such that mechanical energy can be produced and transferred. The center bore of the yoke is fabricated to receive a shaft combined with bearings and gears and the magnet is shaped to sit exterior of the yoke. The yoke facilitates rotational movement. In addition, your reconsideration request indicates that the yoke provides a return path for the magnetic circuit of the permanent magnet and serves as a mechanical link of the magnetic forces to the rotor shaft to transmit torque.
According to Polaris' initial ruling request, the magnetic assembly is supplied as a component of turbocharger actuators and exhaust gas recirculation valve actuators for diesel engines. The purchaser of the magnetic assembly assembles it with a shaft, two bearings, and a gear to produce a brushless rotor for its products. The yoke transmits torque to the rotor assembly consisting of the magnet, yoke and shaft; it rotates with the rotor assembly. An attachment of Polaris' initial ruling request, entitled "Intended Use," depicts the subject magnetic assembly incorporated into a turbo-charge actuator.
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification is determined according to the terms of the headings of the tariff schedule 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, the remaining GRI may then be applied.
The HTSUS provisions under consideration in this case are as follows:
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
8505 Electromagnets; permanent magnets and articles intended to become permanent magnets after magnetization; electromagnetic or permanent magnet chucks, clamps and similar holding devices; electromagnetic couplings, clutches and brakes; electromagnetic lifting heads; parts thereof
Note 2 to Section XVI, HTSUS, provides:
2. 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:
(a) 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;
(b) 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. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HS. While not legally binding on the contracting parties, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the HS and are useful in ascertaining the classification of merchandise. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
You specifically allege that the magnetic assembly is a composite good such that the low carbon steel yoke is classified in heading 7326, HTSUS, which covers other articles of steel, and the ring magnet is classified in heading 8505, HTSUS, as a magnet. Finally, you maintain that the ring magnet imparts the essential character of the subject merchandise and therefore the entire magnetic assembly is classifiable in heading 8505, HTSUS pursuant to GRI 3. However, before applying GRI 3, we must evaluate whether the subject merchandise can be classified pursuant to GRI 1, supra, which includes Note 2 to Section XVI.
When imported on its own, the permanent ring magnet of the subject magnetic assembly may be an article of heading 8505, HTSUS; however, in its condition as imported the magnet is assembled together with a steel yoke to form a rotor. The yoke is the component that provides a mechanical link from the instant assembly to a rotor shaft. The yoke transmits torque to the rotor shaft, converting electrical energy to mechanical energy by way of the outer magnetic ring to which it is bonded. The subject magnetic assembly is not simply a permanent magnet, but a specifically designed article that serves as a rotor and mechanical connector that provides a physical connection to a shaft. Only after the permanent magnet and yoke are combined is the assembly capable of completing its intended function of rotating a shaft that is later fitted with additional components such as bearings and gears. In other words, the subject magnetic assembly's function is not merely to provide a magnetic field, but to function as a rotating element in a magnetic gearbox.
EN 85.05 also supports that the subject magnetic assembly is not classifiable in heading 8505, HTSUS and states that:
This heading covers electro-magnets, those electro-magnet operated appliances specially listed in the heading, permanent magnets and permanent magnet work holders.
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(2) Permanent magnets and articles intended to become permanent magnets after magnetisation.
Permanent magnets consist of pieces of hard steel, special alloys or other materials (e.g., barium ferrite agglomerated with plastics or synthetic rubber) which have been rendered permanently magnetic. Their shape varies according to the use for which they are designed. To reduce the tendency to de-magnetise, horseshoe-shaped magnets are often furnished with a bar of iron (the keeper) adhering to the two poles. Permanent magnets remain classified here whatever their use, including small magnets used, inter alia, as toys.
Articles intended to become permanent magnets after magnetisation are recognisable as such by their shape and composition, generally being cubes or discs (tags) of metal or of agglomerated ferrite (e.g., barium ferrite)....
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The heading does not cover:
* * * * *
(b) Electro-magnets, permanent magnets or magnetic devices of this heading, when presented with machines, apparatus, toys, games, etc., of which they are designed to form part (classified with those machines, apparatus, etc.).
Based on the foregoing, the subject magnetic assembly does not meet the terms of heading 8505, HTSUS, and is not classifiable in heading 8505, HTSUS. Therefore, it would be incorrect to classify the instant assembly under this provision per Note 2(a) to Section XVI, supra.
You rely on Headquarter Ruling (HQ) H305588 (March 3, 2022) and HQ 954291 (Sept. 27, 1993) to support the subject magnetic assembly's classification in heading 8505, HTSUS. HQ H305588 concerned magnetic sleeves and collars which were marked as accessories for screwdrivers. Since the sleeves and collars were not parts of another article but accessories, they were not classified pursuant to Note 2 to Section XVI. Here, the subject magnetic assembly is a part because it is specifically designed to be used in, and integral to the function of, a rotor assembly. The subject magnetic assembly is also distinguishable from HQ 954291, a ruling concerning a "Magnet Pole Hsg Assy", which was described as two permanent magnets connected by a metal spacer. The role of the metal spacer was to keep the permanent magnets at a certain distance apart, a subsidiary role in the use of the assembly. In the subject magnetic assembly, the yoke serves as a hub that holds a shaft combined with bearings and gears and facilitates rotational movement.
As the subject merchandise cannot be classified under heading 8505, HTSUS, pursuant to Note 2(a) to Section XVI, we must determine whether it can be classified as a part of another article, parts of transmission shafts of heading 8483, HTSU, pursuant to Note 2(b).
On this point, you argue in your reconsideration request that CBP did not classify the magnetic assembly in its imported form, but rather considered the post-imported form of the product after it had been incorporated into an automotive motor rotor. However, in your initial ruling request (Aug. 8, 2018), the magnetic assembly is depicted as being incorporated into a turbo charge actuator. CBP considered the intended use of the magnetic assembly as presented by Polaris.
In addition, you maintain that the imported magnetic assembly (which consists of a neodymium magnet and a stainless-steel yoke) cannot transmit torque or power and that "only after post-importation processing and assembly by a U.S. customer does the magnetic assembly then become an item that can transmit torque or power." You also state that the ring magnet is magnetized in the post importation assembly process and in its imported form, the magnet is not yet magnetized. For these reasons, you allege that the magnetic assembly is not classifiable in heading 8483, HTSUS.
In issuing ruling NY N299497, CBP considered the function of the subject magnetic assembly which is to serve as a mechanical coupling device that transmits power to other power transmitting mechanisms. CBP acknowledges that the magnet is not magnetized until after importation; however, that does not detract from its function, which is to serve as a mechanical link to transmit torque. The subject magnetic assembly is structurally engineered to transmit mechanical energy. The center bore of the yoke is fabricated to receive a shaft, and the magnet is shaped to sit exterior of the yoke. The yoke provides a return path for the magnetic circuit of the permanent magnet and serves as a mechanical link of the magnetic forces to the rotor shaft to transmit torque. Therefore, in considering the design of the magnetic assembly and the documentation presented, the magnetic assembly completes a power transmitting function.
Heading 8483, HTSUS provides for shaft couplings that transmit power. This understanding comports with the ENs to 8483, HTSUS, which explain that goods covered by this heading are mainly:
i) Certain mechanical parts which are used in the transmission of power from an external power unit to one or more machines.
ii) Certain internal parts of a machine, used to transmit power to the various parts of the same machine
The subject magnetic assembly falls within the scope of heading 8483, HTSUS and the ENs to heading 8483, HTSUS. The magnetic assembly functions as a power transmitting mechanism. The magnet actuates the yoke and the yoke functions as a mechanical coupling that transmits power to other power transmitting mechanisms, such as a shaft and gear. In addition, the subject magnetic assembly is principally designed and used as a component in a rotor assembly and is neither a part of general use nor provided for more specifically in another tariff provision. The magnetic assembly is an integral component of the rotor assembly. Therefore, the magnetic assembly is classifiable as a "part" under subheading 8483.90.80, HTSUS by application of Section XVI Note 2(b).[1]
Our decision is consistent with NY I88147 (Nov. 27, 2002), where CBP classified a magnetic coupling in heading 8483, HTSUS. The magnetic coupling consisted of a driver magnet assembly and a rotor assembly. The driver magnet assembly contained a permanent magnet and was designed to mount on the shaft of a motor or a driver shaft. The rotor assembly also contained permanent magnets mounted in a metal shaft. While in operation, the rotor assembly and the driver magnet assembly were coupled together and transmitted torque by means of the attraction of the permanent magnets. Similar to the magnetic coupling device in NY I88147, the subject magnetic assembly is designed to transmit torque by magnetic force.
Moreover, in HQ 953352 (April 5, 1993), CBP reviewed the classification of a steel yoke forging. The yoke was used in the fabrication of constant velocity joints, otherwise known as shaft couplings. Once assembled to a receiving shaft coupling, the yoke transmitted torque. CBP noted that the yoke functioned as a shaft coupling and classified the yoke in heading 8483, HTSUS. While the yoke in HQ 953352 did not incorporate a magnet, the ruling highlights the use of mechanical yokes as power transmitting couplings.
By application of GRIs 1 (Note 2(b) to Section XVI) and 6, the subject merchandise is properly classified in heading 8483, HTSUS, specifically subheading 8483.90.80, which provides for "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: Toothed wheels, chain sprockets and other transmission elements presented separately; parts: Other: Other." The general, column one rate of duty is 2.8 percent ad valorem.
Pursuant to U.S. note 20 to Subchapter III to Chapter 99, HTSUS, products of China classified under subheading 8483.90.80, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8483.90.80, HTSUS, listed above. The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by U.S. note 20, supra.
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 on the World Wide Web at https://hts.usitc.gov/current.
Based on the foregoing, we hereby affirm NY N299871, dated September 4, 2018.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
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[1] Polaris contends that the magnetic assembly is not a part because it is a separate and distinct commercial entity. Polaris also claims that the ring magnet can be used for rotation sensors for rotating devices and for holding applications, however, Polaris has not provided actual examples of how they are used in these applications. Instead, the documentation provided suggests that the magnetic assembly is specifically designed for an exact application - as a component of a rotor assembly.