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HQ 957129


October 21, 1994

CLA-2 CO:R:C:M 957129 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 8516.10.00

Mr. Joseph L. Giumentaro
Ameri-Can Customhouse Brokers, Inc.
Peace Bridge Plaza
Buffalo, NY 14213

RE: Dehumidifier/pool water heater; heat pump; electric instantaneous or storage water heaters and immersion heaters; goods wholly obtained or produced; composite machine; heading 8415; EN 84.15; Section XVI, Legal Note 3; NAFTA; General Note

Dear Mr. Giumentaro:

This is in response to your letter dated May 16, 1994, to Customs in Buffalo, NY, on behalf of Dryline Systems, concerning the tariff classification of the Chinook DH-15 and DHV-15 dehumidifier/pool water heater under the Harmonized Tariff Schedule of the United States (HTSUS), and applicability of preferential tariff treatment under the North American Free Trade Agreement (NAFTA). Your letter was referred to this office for a response.

FACTS:

The Chinook DH-15 and DHV-15 dehumidifier/pool water heaters are described as heat pumps which have been specially designed to remove excess humidity from indoor swimming pool enclosures and to heat the pool water at the same time. It does this by sharing or exchanging all of the available heat energy between air and water. Humid air is brought into the unit and dries as its moisture condenses on a cold evaporator coil which warms the air. A blower then redistributes the warm dry air back to the pool enclosure. Pool water is brought into the unit and passes through the water heater coil where it is heated before being returned to the pool. You also indicate that all of the components are made in Canada and the United States.

ISSUE:

Is the dehumidifier/pool water heater classifiable as air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, or as an electric instantaneous or storage water heaters and immersion heaters, under the HTSUS?

Whether the dehumidifier/pool water heater is eligible for preferential tariff treatment under the NAFTA?

LAW AND ANALYSIS:

TARIFF CLASSIFICATION:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.

The subject merchandise performs two functions: heating pool water and dehumidifying and warming the air of a pool enclosure. Heading 8415, HTSUS, provides for: "[a]ir-conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated. . ." Dehumidifiers are provided for under heading 8415, HTSUS, if they meet the criteria as set forth in the Harmonized Commodity Description and Coding System Explanatory Notes (EN) 84.15. The ENs constitute the Customs Cooperation Council's official interpretation of the HTSUS. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 FR 35127, 35128 (August 23, 1989). EN 84.15, page 1165, states that:

The heading applies only to machines:

(1) Equipped with a motor-driven fan or blower, and

(2) Designed to change both the temperature (a heating or cooling element or both) and the humidity (a humidifying or drying element or both) of air, and

(3) For which the elements mentioned in (1) and (2) are presented together.

The subject merchandise draws humid air into the unit and as the air dries its moisture condenses on a cold evaporator coil which warms the air. A motor-driven blower then redistributes the warm dry air back to the pool enclosure. This results in a change of both the temperature and the humidity. Therefore, the dehumidifier portion of the merchandise falls within the scope of heading 8415, HTSUS.

However, the merchandise also contains heat pumps which warm the water by use of a heater coil. This function is classifiable under heading 8516, HTSUS, which provides for electric instantaneous or storage water heaters and immersion heaters.

Section XVI, Legal Note 3, provides as follows:

[u]nless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted 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.

Because the merchandise performs complementary functions of a dehumidifier and warming pool water, we find that it meets the definition of a composite machine as set forth in Section XVI, Legal Note 3, HTSUS. The only remaining issue is which component performs the principal function.

EN VI to Section XVI, pages 1132-1133, provides in pertinent part:

In general, multi-function machines are classified according to the principal function of the machine.

Multi-function machines are, for example, machine- tools for working metal using interchangeable tools, which enable them to carry out different machining operations (e.g., milling, boring lapping).

Where it is not possible to determine the principal function, and where, as provided in Note 3 to the Section, the context does not otherwise require, it is necessary to apply General Interpretive Rule 3(c) . . .

GRI 3(c) states as follows:

When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

Both the dehumidifier and the heating of the pool water is important to the end-user. Neither function imparts the principal function and, therefore, GRI 3(c) should be applied. By application of GRI 3(c), the subject merchandise is provided for under heading 8516, HTSUS. It is classifiable under subheading 8516.10.00, HTSUS, which provides for: "[e]lectric instantaneous or storage water heaters and immersion heaters; . . . : [e]lectric instantaneous or storage water heaters and immersion heaters. . . ."

NAFTA ELIGIBILITY:

To be eligible for tariff preferences under the NAFTA, goods must be "originating goods" within the rules of origin in General Note 12(b), HTSUS. General Note 12(b)(i) states as follows:

[f]or the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set for in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; . . .

If, as you indicate, all of the components used in the manufacture of the dehumidifier/pool water heaters are made in Canada and the United States, under General Note 12(b)(i), HTSUS, they are eligible for preferential tariff treatment under the NAFTA.

HOLDING:

Under the authority of Section XVI, Legal Note 3, the dehumidifier/water pool heater is classifiable under subheading 8516.10.00, HTSUS, which provides for: "[e]lectric instantaneous or storage water heaters and immersion heaters; . . . : [e]lectric instantaneous or storage water heaters and immersion heaters. . .

The subject merchandise is eligible for preferential tariff treatment under the NAFTA.

Sincerely,

John Durant, Director
Commercial Rulings Division

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