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HQ 957025




December 30, 1994

CLA-2 CO:R:C:M 957025 KCC

CATEGORY: CLASSIFICATION

TARIFF NO.: 8504.23.00

Assistant District Director
U.S. Customs Service
Commercial Operations Division
35 W. Service Road
Champlain, New York 12919

RE: Protest 0712-94-100698; shunt reactor; EN 84.05; transformer; inductor; TCR 431.24 A; CFTA; 9905.85.15

Dear Assistant District Director:

This is in regards to Protest 0712-94-100698, concerning the tariff classification power shunt reactors under the Harmonized Tariff Schedule of the United States (HTSUS). Literature describing the shunt reactor was submitted for our examination.

FACTS:

The article under consideration is the power shunt reactor. The protestant states that the voltage classification of the shunt reactor is 362 kV(voltage).75 MVA(reactive power). The shunt reactor is used in conjunction with transformers on long distance transmission lines used to carry high voltage electrical power from the generating station to the load (city, factory, etc.). The shunt reactor creates an effect which absorbs or offsets the capacitive effect along a transmission line which enables long distance transmission at high kilovoltage levels. The shunt reactor consists of a core, winding, electrical connections, tank, oil (i.e., liquid dielectric), bushings, cooling equipment, and an oil conservator.

The entries of the shunt reactor were liquidated on March 25, 1994, under subheading 8504.50.00, HTSUS, as other inductors. In a protest timely filed on June 23, 1994, the protestant contends that the shunt reactor is classified under subheading 8504.23.00, HTSUS, as liquid dielectric transformers, having a power handling capacity exceeding 10,000 kVA. The protestant contends that the shunt reactor is, additionally, classified under subheading 9905.85.15, HTSUS, as transformers exceeding 10,000 kVA having an individual voltage classification of 765 kV or greater.

The subheadings at issue are as follows:

8504 Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof...

8504.23.00 Liquid dielectric transformers...Having a power handling capacity exceeding 10,000 kVA....

8504.50.00 Other inductors.

9905.85.15 Goods originating in the territory of Canada under general note 3(c)(vii) of the tariff schedule...Auto-transformers having an individual base MVA exceeding 100 MVA but not exceeding 300 MVA, regardless of voltage classification, and transformers, other than auto-transformers, having an individual base MVA exceeding 50 MVA but not exceeding 275 MVA, regardless of voltage classification, and transformers exceeding 10,000 kVA having an individual voltage classification of 765 kV or greater (provided for in subheading 8504.23.00).

ISSUE:

1. Is the shunt reactor classified under subheading 8504.23.00, HTSUS, as liquid dielectric transformers, having a power handling capacity exceeding 10,000 kVA, or under subheading 8504.50.00, HTSUS, as other inductors?

2. If the shunt reactor is classified under subheading 8504.23.00, HTSUS, is it classifiable under subheading 9905.85.15, HTSUS, as transformers exceeding 10,000 kVA having an individual voltage classification of 765 kV or greater.

LAW AND ANALYSIS:

The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation (GRI's). GRI 1, HTSUS, 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...."

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System ENs may be utilized. The ENs, although not dispositive, provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the HTSUS. See, T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). EN 85.04 (pgs. 1337-1340) states, in pertinent part, that:

(I) ELECTRICAL TRANSFORMERS

Electrical transformers are apparatus which, without having any moving parts, transform, by means of induction and using a preset or adjustable system, an alternating current into another alternating current of different voltage, impedance, etc. These usually consists of two or more coils of insulated wire wound on laminated iron cores, although in some cases (e.g., radio-frequency transformers) there may be no magnetic core, or the core may be of agglomerated iron dust, ferrite, etc. An AC in one coil (the primary circuit) induces an AC usually at different values of current and voltage in the others (the secondary circuit)....

The heading covers all transformers. They vary from small types used in wireless sets, instruments, toys, etc., to large types enclosed in oil tanks or equipped with radiators, fans, etc., for cooling purposes. The large types are used in electricity stations, stations for interconnecting mains, distributing stations or sub-stations. The frequency may vary from mains frequencies up to very high radio frequencies.

The power-handing capacity of a transformer is the kilovolt-ampere (kVA) output based on continual use at the rated secondary voltage (or amperage, when applicable) and at the rated frequency without exceeding the rated temperature limitations....

(III) INDUCTORS

These consist essentially of a single coil of wire which, inserted in an AC circuit, limits or prevents by its self-induction the flow of the AC. They vary from small chokes used in wireless circuits, instruments, etc., to large coils often mounted in concrete, used in power circuits (e.g., for limiting the flow of current in the event of a short circuit).

Inductors or inductances obtained in the form of individual components by a printing process remain classifiable in this heading.

We note that in TCR 431.24 A (April 18, 1966), Customs classified a shunt reactor, which limited the flow of current in the electrical circuits in the event of a short, in item 682.60, Tariff Schedules of the Untied States (TSUS) (the precursor provision to subheading 8504.50.00, HTSUS), as inductors. However, the shunt reactors under consideration do not appear to be described as transformers or inductors in EN 85.04. Moreover, the IEEE Standard Dictionary of Electrical or Electronic terms, Fourth Edition (1988), defines shunt reactor as:

Shunt reactor (power and distribution transformer). A reactor intended for connection in shunt to an electric system for the purpose of drawing inductive current.

Based on the submitted information and the IEEE definition, we are of the opinion that the shunt reactor is considered to be a transformer by the electric power industry. The protestant's information states that the shunt reactor in this case has a liquid dielectric with a power handling capacity exceeding 10,000 kVA. Therefore, the shunt reactor is classified under subheading 8504.23.00, HTSUS, as liquid dielectric transformers, having a power handling capacity exceeding 10,000 kVA.

Additionally, the protestant states that the shunt reactor is classifiable under subheading 9905.85.15, HTSUS. To be classified under subheading 9905.85.15, HTSUS, the shunt reactor must first be considered an "originating good" for purposes of the United States-Canada Free Trade Agreement (CFTA) pursuant to General Note 3(c)(vii), HTSUS. Although no information was provided regarding CFTA eligibility, we assume a determination was made that the shunt reactor is eligible for CFTA preferential treatment pursuant to General Note 3(c)(vii), HTSUS. This assumption is based on the liquidation duty rate of 1.5 % ad valorem under subheading 8504.50.00, HTSUS, the special duty rate for CFTA goods.

Assuming that the shunt reactor is "[g]oods originating in the territory of Canada under general note 3(c)(vii)...", we may proceed to whether it is classifiable under subheading 9905.85.15, HTSUS. The protestant states that the voltage classification of the shunt reactor is 362 kV.75 MVA. However, the protestant has not provided any additional information in support of this classification. Based on the information contained in the protest, it does not appear that the shunt reactors are described in subheading 9905.85.15, HTSUS.

HOLDING:

The shunt reactor is classified under subheading 8504.23.00, HTSUS, as liquid dielectric transformers, having a power handling capacity exceeding 10,000 kVA. The shunt reactors are not described in and, therefore, are not classifiable under subheading 9905.85.15, HTSUS.

The protest should be GRANTED IN PART and DENIED IN PART, as described above. In accordance with section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to the mailing of the decision. Sixty days from the date of this decision, the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and to the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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