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HQ 961387




March 20, 1998

CLA-2 RR:CR:GC 961387

CATEGORY: CLASSIFICATION

TARIFF NO.: 9028.90.00

Mr. Edward F. Juliano, Jr.
360 Massachusetts Avenue, Suite 105
Acton, MA 01720

RE: Electric Meter Module; NY B84956; HQ 089989; Chapter 90, note 2;
NAFTA; General Notes 12(b) and 12(t)/90.66; 9029.10.80

Dear Mr. Juliano:

This is in response to your letters of January 8, 12, 20, and 27, 1998, to the National Commodity Specialist Division of Customs, New York, and those of March 2, 17, and 18, 1998, to this office, on behalf of Jabil Circuit, Inc., and CellNet Systems, Inc., concerning the applicability of the North America Free Trade Agreement (NAFTA) to and the classification of electric meter modules under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The merchandise consists of electric meter modules which will be incorporated into electric meters once imported into the U.S. The modules measure consumers' electric power usage and allow electric utility companies to remotely read their meters. Each module reads an electric meter by counting the rotations of the meter disk via an optically interrupted system. The module then, periodically, transmits the collected information to the utility's controller unit using a short-range radio frequency via a spread spectrum modulation technique. The modules consist of printed circuit board assemblies (PCBAs) incorporating a variety of electronic components, including resistors, capacitors, diodes, integrated circuits, inductors, switches, fuses, and screws.

The electric meter modules will be manufactured in Mexico. The manufacturing process of each module will include the following: placement of electronic and electrical components on the bare printed circuit board (PCB) using automatic insertion equipment; manual insertion of certain electronic and electrical components; soldering of components to a PCB by wave soldering machine; separation of individual PCBAs from a multiboard unit; testing; assembly of a finished PCBA into plastic housing with screws; application of product and FCC labels; and packing for shipment.

You claim that the plastic housing and metal radio frequency shields for each module are products of the U.S. However, you state that the origin of all the other components for each module is unknown at this time; therefore, you request that we treat these components as non-originating for NAFTA purposes.

ISSUE:

Whether the electric meter modules are classifiable under subheading 9028.90.00, HTSUS, as parts or accessories of gas, liquid, or electricity supply or production meters, or under subheading 9029.10.80, HTSUS, as other counters.

Whether the electric meter modules are eligible for preferential treatment under the NAFTA.

LAW AND ANALYSIS:

CLASSIFICATION

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

The HTSUS provisions under consideration are as follows:

9028 Gas, liquid or electricity supply or production meters, including calibrating meters thereof; parts and accessories thereof:

9028.90.00 Parts and accessories.

9029 Revolution counters, production counters, taximeters, odometers, pedometers and the like; speedometers and tachometers, other than those of heading
9014 or 9015; stroboscopes; parts and accessories thereof;

9029.10 Revolution counters, production counters, taximeters, odometers, pedometers and the like:

9029.10.80 Other.

In NY B84956, dated May 30, 1997, Customs held a similar electronic module assembly to be classifiable under subheading 9028.90.00, HTSUS. In the ruling, the description of the module was set forth as follows:

[t]he Electronic Module Assembly (EMA) is an electronic device designed to be attached to most standard North American electric watt-hour meters. Once attached to the meter it provides utility companies with the ability to remotely read electric meters. This is accomplished through the EMA's ability to record, store, and transmit power consumption data over the electrical power distribution lines by optically sensing the electric meter's disk rotation. By counting the number of revolutions made by the disk, the EMA determines the amount of electric energy consumed and stores this data in a non-volatile memory for later down loading (sic) to a central point by the utility company.

Based upon the information you have provided, the subject electric meter modules operate in a similar fashion to the EMA in NY B84956, except that the subject modules transmit the collected information using a radio frequency, and the EMA transmits the collected information through electrical power distribution lines. Therefore, as with the EMA in NY B84956, because the electric meter modules will be incorporated into electric meters of heading 9028, HTSUS, once imported into the U.S., we find they meet the term "parts and accessories" of heading 9028, HTSUS, and are described under subheading 9028.90.00, HTSUS.

As the modules meet the term "parts and accessories", chapter 90, note 2, HTSUS, is applicable. It states that:

[s]ubject to note 1 above, parts and accessories for machines, apparatus, instruments or articles of this chapter are to be classified according to the following rules:

(a) Parts and accessories which are goods included in any of the headings of this chapter or of chapter 84, 85 or 91 (other than heading 8485, 8548 or 9033) are in all cases to be classified in their respective headings;

(b) Other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of heading 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind;

(c) All other parts and accessories are to be classified in heading 9033.

It has been suggested that the subject modules are counters of heading 9029, HTSUS, specifically classifiable under subheading 9029.10.80, HTSUS. If such is the case, then because the modules would then be goods included in a heading of chapter 90, HTSUS, chapter 90, note 2(a), HTSUS, would be applicable, and the modules would be classifiable in heading 9029, HTSUS. The holding in HQ 089989, dated November 23, 1991, is cited as precedent for classifying the subject modules in heading 9029, HTSUS.

In HQ 089989, we held an electromechanical counter assembly, which was to be incorporated into another counting device, to be classifiable under subheading 9029.10.80, HTSUS. We stated that because the assembly was in and of itself a counting device, it was a good of heading 9029, HTSUS, and not classifiable as a "part and accessory" in heading 9028, HTSUS.

However, it is our position that the subject electric meter modules are distinguishable from the electromechanical counter assembly in HQ 089989. Based upon a review of the factual information in HQ 089989, the assembly was merely a counter; unlike the subject modules, it did not possess equipment to transmit the collected information from the counter to a remote location. We find that the capability of the modules to transmit such information is beyond the scope of the goods classifiable in heading 9029, HTSUS. Therefore, as it is our position that the subject modules are not in the class or kind of merchandise classifiable in heading 9029, HTSUS, they are precluded from classification therein.

Based upon a GRI 1 analysis, as the electric meter modules are not goods included in the headings of chapters 84, 85, 90, or 91, chapter 90, note 2(a), HTSUS, is inapplicable. However, as noted, the modules are described in the "parts and accessories" provision of heading 9028, HTSUS, specifically under subheading 9028.90.00, HTSUS. As it is our understanding that the modules are solely or principally used with electric meters of heading 9028, HTSUS, based upon chapter 90, note 2(b), HTSUS, they are classifiable under subheading 9028.90.00, HTSUS.

NAFTA APPLICABILITY

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, which, in part, states that:

[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 forth 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; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that --

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note; *****

Because the electric meter modules contain components from countries other than Mexico, Canada and/or the U.S., general note 12(b)(i), HTSUS, does not apply. Therefore, we must resort to general note 12(B)(ii)(A), HTSUS.

General note 12(t)/90.66, HTSUS, states:

[a] change to subheading 9028.90 from any other heading.

Therefore, for the electric meter modules to be originating for NAFTA purposes, all non-originating components of the modules must be classifiable in any heading other than heading 9028, HTSUS.

You have provided a bill of material of the components of each module listed with the HTSUS provisions in which you claim the components are classifiable. Based upon an analysis of this bill of material, it appears that none of the non-originating components are classifiable in heading 9028, HTSUS. Consequently, if, as you claim, all the non-originating components of the subject modules are classifiable in headings other than 9028, HTSUS, they undergo the required tariff shift to subheading 9028.90, HTSUS, and the electric meter modules satisfy the requirement of general note 12(t)/90.66, HTSUS, and qualify as originating goods for NAFTA purposes.

HOLDING:

The electric meter modules are classifiable under subheading 9028.90.00, HTSUS, as parts or accessories of gas, liquid, or electricity supply or production meters.

Based upon your claims concerning the classification of the components of each module, and the information you have provided, the electric meter modules are eligible for preferential treatment under the NAFTA.

Sincerely,

John Durant, Director
Commercial Rulings Division

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