CLA-2-90:OT:RR:NC:N1:105
Gary C. Cooper
247 Yale Avenue
Kensington, CA 94708
RE: The tariff classification of the Hydro X Master Controller, Thermostat Station and Humidistat Station from China
Dear Mr. Cooper:
In your letter dated August 7, 2019, on behalf of your client, J & L Hydro Supply LLC, you requested a tariff classification ruling.
The first item under consideration is identified as the HCS-1 Master Controller (Controller) which consists of a retail packaged set containing the Controller, a mounting plate, a lighting control adapter, a 4 ft. RJ12 cable, a T-shape splitter, a 12 VDC power supply, a three-in-one sensor, and sixteen foot RJ12 cable. The Controller is described as a 4” by 6” plastic enclosure containing two printed circuit board assemblies, a LCD screen, and six pushbutton switches for user interaction. On the bottom of the Controller there are four input jacks where sensors and devices are connected, a network communication port, a 12 V input socket, and a micro SD card slot. The Controller functions as a single-zone environmental systems controller where users connect external devices such as fans, thermostats, dehumidifiers, dry contact outlet adapters, etc. for the purpose of electrically controlling them directly from the Controller or remotely via the user’s smart device running the TrolMaster Application.
The second item under consideration is identified as the TS-2 Six Wire HVAC Thermostat Station. This device is designed to replace the traditional thermostat of an HVAC system and thereby facilitate constant temperature control (heat/cool, cool only, heat only, heat pump). There are desired temperature set points for day/night to control the device, thus allowing automated cooling and heating twenty-four hours a day. The product is designed for use with the TrolMaster Hydro-X Controller and can be seamlessly connected to it. One Hydro-X can use up to four thermostatic temperature controllers.
The third item under consideration is identified as the HS-1 Humidistat Station. This device is used through the Hydro-X to control commercial dehumidifiers. It is connected to the Hydro-X through a port and allows control of a day/night set point. One Hydro-X can use up to two humidity controllers.
In your letter, you suggest that the Master Controller, the Thermostat Station and the Humidistat Station should be classified within subheading 8481.80.9025, Harmonized Tariff Schedule of the United States (HTSUS), which provides for taps, cocks, valves and similar appliances, for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves; parts thereof: Other appliances: Other: Other: With electrical or electro-hydraulic actuators: Other. We disagree. Articles classified in heading 8481 function as valves or similar appliances that regulate the flow or pressure of fluids or gases by opening or closing an aperture. As the subject articles do not function as valves or appliances similar to valves, they are excluded from consideration in heading 8481.
You also suggest that the subject articles should be classified within subheading 8419.89.9585, HTSUS, which provides for machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment of heading 8514) for the treatment of materials by a process involving a change of temperature such as heating…cooling, other than machinery or plant of a kind used for domestic purposes; Other machinery, plant or equipment: Other: Other: Other: Other: For other materials. We disagree, as the articles themselves do not complete a change of temperature that treats materials. Thus, the subject articles do not meet the terms of heading 8419 and are therefore, precluded from being classified within this heading.
You also suggest the Thermostat Station should be classified within subheading 9025.80.5000, HTSUS, which provides for Hydrometers and similar floating instruments, thermometers, pyrometers, barometers, hygrometers and psychrometers, recording or not, and any combination of these instruments; parts and accessories thereof: Other instruments: Other. We disagree, as the Thermostat Station provides more functionality than simply reading the temperature. The device also controls the HVAC system to regulate the temperature. Thus, the Thermostat Station is directly provided for elsewhere and classification under heading 9025 is not appropriate.
You also suggest the HS-1 Humidistat Station should be classified under subheading 9025.80.5000, HTSUS, which provides for Hydrometers and similar floating instruments, thermometers, pyrometers, barometers, hygrometers and psychrometers, recording or not, and any combination of these instruments; parts and accessories thereof: Other instruments: Other. We disagree, as the Humidistat Station provides more functionality than simply reading the humidity. The device also controls the dehumidification system to regulate the humidity. Thus, the Humidistat Station does not meet the terms of heading and classification under heading 9025 is not appropriate.
General Rule of Interpretation (GRI) 1, HTSUS, states in part that for legal purposes, classification shall be determined according to the terms of the headings, any relative section or chapter notes and, unless otherwise required, according to the remaining GRI’s taken in order. Goods that are, prima facie, classifiable under two or more headings, are classifiable in accordance with GRI 3.
GRI 3(a) states that the heading that provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings refer to only part of the items in a composite good or set, those headings are to be regarded as equally specific in relation to the goods, even if one of them gives a more complete or precise description of the good. As such, they are regarded as equally specific and classification of the composite good or set is to be determined by GRI 3(b) or GRI 3(c) taken in the appropriate order in which they are set out in GRI 3. GRI 3(b) states in part that composite goods or sets, which cannot be classified by reference to GRI 3(a), are to be classified as if they consisted of the component that gives them their essential character.
The Explanatory Notes to the Harmonized Tariff System, although not legally binding, provide guidance in the interpretation of the Harmonized Commodity Description and Coding System at the international level. Explanatory Note X to GRI 3(b) provides that the term "goods put up in sets for retail sale" means goods that: (a) consist of at least two different articles which are, prima facie, classifiable in different headings; (b) consist of articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without re-packing. Goods classifiable under GRI 3 (b) are classified as if they consisted of the material or component which gives them their essential character, which may be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the article.
The HCS-1 Master Controller consists of two or more articles that are, prima facie, classifiable in different headings. The HCS-1 Master Controller also consists of articles put up together to carry out a specific activity (i.e., the electrical control of environmental control devices). Finally, the articles are put up in a manner suitable for sale directly to users without repacking. Therefore, the set in question is described within the meaning of "goods put up in sets for retail sale."
In accordance with GRI 3(b), which states in part that goods put up in sets for retail sale, that cannot be classified by reference to GRI 3(a), are to be classified as if they consisted of the component which gives them their essential character. In our view, the Controller is the article which imparts the essence of the retail packaged HCS-1 Master Controller and is classified accordingly.
The applicable subheading for the HCS-1 Master Controller will be 8537.10.9170, HTSUS, which provides for “Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of 8535 or 8536, for electric control or the distribution of electricity…: For a voltage not exceeding 1,000 V: Other: Other: Other.” The general rate of duty will be 2.7 percent ad valorem.
The applicable subheading for the TS-2 Six Wire HVAC Thermostat Station will be 9032.10.0060, HTSUS, which provides for “Automatic regulating or controlling instruments and apparatus; parts and accessories thereof: Thermostats: For air conditioning, refrigeration or heating systems: Other.” The general rate of duty will be 1.7 percent ad valorem.
The applicable subheading for the HS-1 Humidistat Station will be 9032.89.6070, HTSUS, which provides for “Automatic regulating or controlling instruments and apparatus; parts and accessories thereof: Other instruments and apparatus: Other: Other: Process control instruments and apparatus: Other: Humidity control instruments.” The general rate of duty will be 1.7 percent ad valorem.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). See also “Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (June 20, 2018, 83 F.R. 28710). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 8537.10.9170, 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., 9903.88.03, in addition to subheading 8537.10.9170, HTSUS, listed above.
Products of China classified under subheadings 9032.10.0060 and 9032.89.6070, 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 subheadings 9032.10.0060 and 9032.89.6070, HTSUS, listed above.
In your submission, you also request that the HCS-1 Master Controller, the TS-2 Six Wire HVAC Thermostat Station, and the HS-1 Humidistat Station be considered for duty-free treatment as agricultural or horticultural machinery under subheading 9817.00.50, HTSUS, which provides for machinery, equipment and implements to be used for agricultural or horticultural purposes. Subheading 9817.00.50, HTSUS, is an actual use provision. To fall within a special classification, a three-part test must be met. First, the subject merchandise must not be excluded from the heading under Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2, HTSUS. Secondly, the terms of the headings must be met in accordance with GRI 1, which provides that classification is determined according to the terms of the headings and any relative section or chapter notes. Thirdly, the article must comply with the actual use regulations under Section 10.131 through 10.139, Customs Regulations (19 CFR 10.131 through 10.139).
With regard to subheading 9817.00.50, HTSUS, the subject merchandise is classifiable under 8537.10.9170, 9032.10.0060 and 9032.89.6070, HTSUS. Subheading 8537.10.9170, HTSUS, is specifically excluded from classification under heading 9817 by operation of Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2(u), HTSUS. However, subheadings 9032.10.0060 and 9032.89.6070 are not excluded from classification in 9817 by operation of Section XXII, Chapter 98, Subchapter XVII, U.S. Note 2, HTSUS.
The second part of the test calls for the unit to be included within the terms of the subheadings. Subheading 9817.00.50, HTSUS, as required by GRI 1, states the unit must be "machinery”, “equipment" or "implements" used for "agricultural or horticultural purposes". It is this office’s opinion that the subject merchandise is "equipment" which fulfills the requirement of a horticultural pursuit.
As a result of the foregoing, the TS-2 Six Wire HVAC Thermostat Station and the HS-1 Humidistat Station are afforded the secondary classification under subheading 9817.00.50, HTSUS, if the actual use conditions and requirements of Sections 10.131 through and including 10.139, Customs Regulations, are met. Please note that the additional duties imposed by headings 9903.88.01, 9903.88.02, 9903.88.03, and 9903.88.04 do not apply to goods for which entry is properly claimed under a provision of chapter 98 of the HTSUS, except for goods entered under headings 9802.00.40, 9802.00.50, 9802.00.60, and 9802.00.80.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
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.
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 Jason Christie at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division