CLA-2-85:OT:RR:NC:N4:112
Darrell Schmidt
DSE Technologies
375 New Wehdem
Brenham, TX 77833
RE: The tariff classification of a hybrid generator skid from Lebanon
Dear Mr. Schmidt:
In your letter dated February 18, 2017, you requested a tariff classification.
The merchandise under consideration are components of an electrical generating system consisting of an electric motor, an AC generator, and an electrical control cabinet which are each permanently mounted to a steel frame you refer to as a skid. The electric motor is stated to have a maximum output of 2.9 kW and is affixed to the AC generator, which has a maximum output of 7.5 kVA, via a coupler. The electrical cabinet houses the various control apparatus for the entire hybrid generator system which includes fuses, switches, contactors, a programmable control unit, and the inverters. You state that the solar panels and batteries are being sourced domestically and are not imported as part of the skid. However, in order to understand the function of the skid and its components within the system, it would be beneficial to establish a brief description of the complete hybrid generator system.
The complete hybrid generator system is described as an array of 320 W solar panels, two banks of valve-regulated gelled-elecrolyte batteries, and the skid containing the motor, generator, and electrical control cabinet. The solar panels and batteries are connected by cabling to the electrical control cabinet where the batteries are charged and the inverters convert the DC electricity generated by the solar panels to reliable AC electricity for the electrical load or grid. When the panels stop producing sufficient electricity, the controller switches over to the electric motor, which receives its power from the bank of batteries, and produces AC electricity via the generator. Thus, the hybrid generator system provides power to the load or grid during daylight hours via the solar panels and by night via the battery bank and motor/generator.
Section XVI, Note 3, of the Harmonized Tariff Schedule of the United States (HTSUS) states: “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.”
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System (HS) at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The subject skid consists of two distinct composite machines mounted on a single metal base: a DC electric motor coupled with an AC generator and a cabinet containing electrical control and conversion apparatus. Section XVI, Note 3, HTSUS, which governs the classification of goods in headings 8501, 8502, and 8537, among others, directs us to determine the principal function of the skid assembly and classify according to that function.
Based on the material you provided, the purpose of the complete hybrid generating system is to provide usable AC electricity to the grid or load. The cabinet, however, controls the switching operations between the solar array, the motor/generator, and the grid or load. Conversely, the motor/generator produces usable AC electricity by the motor turning the electrical generator. As the Hybrid Generator Skid is accurately described as a composite machine within Section XVI, Note 3, HTSUS, it will be classified as if consisting of that component or as being that machine which performs the principal function. In this regard, the principal function of the Hybrid Generator Skid is to provide electrical AC power to the grid and/or an electrical load. Based on the skid’s description and function, the motor/generator, for its part, produces the AC for use and thus imparts the principal function of the skid assembly.
However, concerning the generation of electricity, we would note that the electricity used to operate the DC electric motor is derived from the solar panels via the batteries, and that the AC generator is simply converting the DC power supplied by the batteries into usable AC electricity that is then applied directly to the grid or load. EN 8502 provides guidance when considering electrical generators, generator sets, and rotary converters. EN 8502 excludes generator sets where the prime mover is an electric motor. However, the text further describes electric rotary converters as “a combination of an electric generator and a prime mover consisting of an electric motor permanently mounted on a common base”… which “are used to transform the nature of the current (to convert from AC to DC or vice versa) or to change certain characteristics such as the voltage, frequency or phase of alternating current (to convert, for example, the frequency of 50 to 200 cycles or to transform single phase to three phase current). Another type of rotary converter (sometimes known as a rotary transformer) is used to convert DC from one voltage to another.” Therefore, based on the aforementioned, we find that the motor/generator assembly is classifiable as a rotary converter in subheading 8502.40, HTSUS.
The applicable subheading for the Hybrid Generator Skid will be 8502.40.0000, HTSUS, which provides for “Electric generating sets and rotary converters: Electric rotary converters.” The general rate of duty will be 3% 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 on World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Karl Moosbrugger at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division