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HQ 957929




December 21, 1995

CLA-2 RR:TC:MM 957929 LTO

CATEGORY: CLASSIFICATION

TARIFF NO.: 8415.81.00; 8415.82.00; 8415.90.80

Ms. Gail T. Cumins
Sharretts, Paley, Carter and Blauvelt, P.C. 67th Broad Street
New York, New York 10004

RE: Split-system air conditioners; indoor evaporator unit; outdoor condenser unit;
GRI 2(a); section XVI, note 2, 4; unfinished; functional unit; HQs 087077, 957130, 958018

Dear Ms. Cumins:

This is in response to your letter of March 29, 1995, to the Customs Service,
New York office, requesting the classification of split-system air conditioners and individual components thereof under the Harmonized Tariff Schedule of the United States (HTSUS):. Your letter was forwarded to this office for response.

FACTS:

The split-system air conditioners in question consist of an indoor evaporator unit and outdoor condenser unit. The indoor unit includes the evaporator (indoor heat exchanger), one or more centrifugal blowers and microprocessor-based controls. The outdoor unit includes the condenser (outdoor heat exchanger), fans, compressors and refrigerant-filled accumulator. Some of these air conditioners can also function as a heat pump.

ISSUE:

1. Whether the split-system air conditioners are classifiable, according to note 4 to section XVI, HTSUS, as other air-conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, incorporating a refrigerating
unit and/or a valve for reversal of the cooling heat cycle, under subheading 8415.81.00, HTSUS (if they can function as a heat pump), or subheading 8415.82.00, HTSUS (if they cannot).

2. Whether the indoor and outdoor units for split-system air conditioners, when imported separately, are classifiable as parts of air-conditioning machines under subheading 8415.90.80, HTSUS.

LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states, in pertinent part, that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes . . . ."

In HQ 957130, dated November 9, 1994, a condenser unit and evaporator unit for a split-system air conditioning machine were classified, according to note 4 to section XVI, HTSUS ("functional units"), under subheading 8415.83.00, HTSUS, which provides for air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, not incorporating refrigerating units. Pursuant to section 625(c)( 1 ), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057, 2186 (1993), notice of the modification of HQ 957130 was published on October 25, 1995, in the Customs Bulletin, Volume 29, Number 43.

In HQ 958018, dated October 6, 1995, which modified HQ 957130, we stated that the evaporator unit and condenser unit were components of a system designed to include a compressor, and could not function without it. This system, when complete, forms a note 4 to section XVI, HTSUS, "functional unit" ("[w]here a machine (including a combination of machines) consists of individual components... intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function"). The evaporator unit and condenser unit, when imported separately, are not described by the terms of heading 8415, HTSUS, as neither, by itself, is capable of "changing the temperature and humidity." Moreover, the units cannot be classified according to GRI 2(a) as "unfinished" air conditioning machines. See HQ 087077, dated March 27, 1991 (wherein we stated that there are no HTSUS legal notes or Explanatory Notes that provide for "unfinished" functional units). Finally, because they are not "goods included" in any chapter 84 or 85 heading, we held that the units were classifiable as parts of air-conditioning machines under subheading 8415.90.80, HTSUS. See section XVI, note 2(a)(b), HTSUS.

After reviewing our file on this matter, we have determined that HQ 958018 is dispositive on the classification of the indoor evaporator and outdoor compressor units in question. The split-system air conditioners that can function as heat pumps are classifiable under subheading 8415.81.00, HTSUS, while those that cannot are classifiable under subheading 8415.82.00, HTSUS. When imported separately, the indoor and outdoor units are classifiable, as parts, under subheading 8415.90.80, HTSUS.

Copies of the final modification notice (of HQ 957130), along with HQ 958018, are enclosed.

HOLDING:

The split-system air conditioners, which can function as heat pumps, are classifiable under subheading 8415.81.00, HTSUS, which provides for other air-conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, incorporating a refrigerating unit and a valve for reversal of the cooling/heat cycle. The corresponding rate of duty for articles of this subheading is 2% ad valorem.

The split-system air conditioners, which cannot function as heat pumps, are classifiable under subheading 8415.82.00, HTSUS, which provides for other air-conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, incorporating a refrigerating unit. The corresponding rate of duty for articles of this subheading is 2.2% ad valorem.

The indoor and outdoor units for the split-system air conditioners, when imported separately, are classifiable under subheading 8415.90.80, HTSUS, which provides for parts of air-conditioning machines. The corresponding rate of duty for articles of this subheading is 2% ad valorem.

Sincerely,

John Durant, Director
Tariff Classification Appeals
Division


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