HQ 0088013 - Generating Set - United States International Trade Commision Rulings

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HQ 088013

NOVEMBER 21 1991

CLA-2:CO:R:C:M 088013 JAS

CATEGORY: CLASSIFICATION

TARIFF NO: 8502.30.0000, HTSUSA

Philip Yale Simons, Esq.
Freeman, Wasserman & Schneider
90 John Street
New York, N.Y. 10038

RE: Generating Set

Dear Mr. Simon:

In your letter of December 1, 1989, as supplemented, on behalf of Asea Brown Boveri, Inc., North Brunswick, N.J., you inquired as to the tariff classification of steam turbines and generators to be transferred to the Customs territory from a foreign trade zone.

At a meeting held in our office on July 10, 1990, it was agreed that additional information would be required relative to the issues we discussed. You provided this information in the form of two letters, both dated July 26, 1990. Our ruling follows.

FACTS:

This ruling request covers two types of turbine-generator combinations, designated ATPS and VAX. In either case, the turbines will be disassembled prior to exportation for ease in shipment but all components will be shipped together. These turbines and generators are said to be designed and manufactured as matched pairs (i.e., matched bearings, KvA, circuits, etc.). Each generator and unassembled turbine will be be entered into the zone separately, then withdrawn for consumption at the same time with final assembly performed on-site. Certain oil tanks and hydraulic pumps may also be imported into the zone, or they may be sourced domestically. This auxiliary equipment is not further described and is not a part of this ruling request.

The ATPS will consist of one steam turbine, one alternating current (AC) generator and an oil lubrication system, all mounted on a raised fabricated steel frame, which we presume will be sourced domestically. The turbine rotor is designed to rotate at speeds of between 5,500 and 11,000 rpm and the generator rotor is designed to operate at exactly 3,600 rpm. A gear reduction box connects the two rotors. A quill shaft connects the high pressure turbine to one side of the box while another solid shaft connects the other side of the box to the generator. A single lubrication system and electrical control panel service the combined units.

The VAX consists of one AC generator and a high and low pressure steam turbine, all to be installed on a series of reinforced concrete pillars designed to withstand vertical stresses at specific points. Attached to these pillars are pedestal-like steel feet called sole plates, which are bolted to a concrete floor. The concrete pillars and sole plates will be sourced domestically. The high pressure turbine's rotor is designed to rotate at 6,045 rpm while the generator's rotor is designed to rotate at 3,600 rpm. The rotors are connected by a gear reduction unit. A specially designed quill shaft connects the turbine rotor to one side of the reduction unit while another solid shaft connects the other side of the reduction unit to the generator. The low pressure turbine's rotor is designed to rotate at the same rate as the generator. The rotors or shafts are connected by means of a flexible shaft which you indicate allows for the thermal expansion of the low pressure turbine rotor. A common lubrication system supplies cooled and filtered oil to the thrust and journal bearings of both units and to the reduction gear as well.

In both the ATPS and VAX, you state the connecting shafts are specially designed and manufactured for these particular generating set models and cannot be used with other sets. You state further that the oil lubrication system consisting of tank, pumps, filters and pipes, provide complex structural and physical integration.

It is your position that upon withdrawal from the zone for consumption, the turbine and generator components of each model are classifiable under the provision for other electric generating sets, in subheading 8502.30.0000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

In addition to the classification issue, you ask whether each turbine and generator entered separately into a foreign trade zone may be aggregated in the zone and withdrawn for consumption in a single entry.

ISSUE:

Whether the turbine-generator combinations, or either of them, are generating sets for tariff purposes; whether the components in each combination may be withdrawn from the zone in a single entry.

LAW AND ANALYSIS:

Merchandise is classifiable under the HTSUSA in accordance with the General Rules of Interpretation (GRIs). GRI 1, HTSUSA, states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided the headings or notes do not otherwise require, according to GRIs 2 through 6. GRI 2 states that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. GRI 2 also applies to incomplete or unfinished articles presented unassembled provided they are to be treated as complete or finished articles by virtue of the first part of the rule.

The Explanatory Notes (ENs) constitute the Customs Cooperation Council's official interpretation of the Harmonized System. While not legally binding, they provide a commentary on the scope of each heading of the Harmonized System, and are thus useful in ascertaining classification under the System. Customs believes they should always be consulted. See T.D. 89- 80.

Relevant ENs indicate that for purposes of heading 8502 the expression "generating sets" applies to the combination of an electric generator and any prime mover other than an electric motor and that generating sets consisting of the generator and its prime mover, which are mounted (or designed to be mounted) together as one unit or on a common base (see the General Explanatory Note to Section XVI), are classified [in heading 85.02] provided they are presented together.

Turbines and generators of the ATPS and VAX types are machines whose rotors or shafts are connected by means of a gear reduction unit or box. The connection between the units is a precision mechanical fit designed to insure that both shafts rotate at identical speeds. The design of these units is such that in addition to shaft rotation, their vibrational behavior, bearing loads, etc., must be matched. Moreover, at
least in the VAX type, the generator is used as a motor to start the turbine. The ATPS is mounted on a rectangular steel frame or base that rests on a concrete floor.

It has been suggested that the cited General Explanatory Note may support the proposition that there must be substantial physical integration of the turbine and generator for these units to constitute a set for tariff purposes, and that a mere coupling of the shafts is insufficient in this regard. In our opinion, the note is inconclusive in imposing this requirement on the turbine and generator types in issue here and, in any event, there is substantially more integration of these units than a mere coupling of the shafts. This note, therefore, should not be interpreted in such a way as to contravene the otherwise clear scope of heading 8502.

Because the units in issue here are commonly bought and sold together, are commercially regarded as generating sets, and possess design features that indicate they will be permanently attached to one another, we conclude that they are designed to be mounted together as one unit for purposes of heading 8502.

HOLDING:

When transferred from the foreign trade zone to the Customs territory, turbines and generators of the ATPS and VAX types are provided for in heading 8502, under the authority of GRI 1, HTSUSA. They are classifiable as other generating sets, in subheading 8502.30.0000, HTSUSA. The rate of duty is 3 percent ad valorem.

Under section 81c, Tariff Act of 1930, as amended (19 U.S.C. 81c), it is permissible to make separate zone entries for the purpose of aggregating the components for withdrawal.

Sincerely,

John Durant, Director
Commercial Rulings Division

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