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HQ 962659




NOVEMBER 22, 2000

CLA-2 RR:CR:GC 962659 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8479.50.00, 8537.10.90

Port Director of Customs
300 S. Ferry Street
Terminal Island, CA 90731

RE: Protest 2704-99-100039; Industrial Robots Imported Without End-Of-Arm Tooling

Dear Port Director:

This is our decision on Protest 2704-99-100039, filed against your classification under the Harmonized Tariff Schedule of the United States (HTSUS), of industrial robots, imported incomplete or unfinished. The entries under protest were liquidated on October 2, 1998, and this protest timely filed on December 31, 1998.

In a submission, dated November 5, 1999, counsel for the protestant presented facts and legal arguments in support of a classification position we will hereafter discuss. On January 27, 2000, counsel met with personnel in the Office of the Director, National Commodity Specialist Division, New York, which he confirmed in a letter to us, dated August, 24, 2000. Finally, at a meeting in our office on August 30, 2000, counsel presented additional facts and legal arguments in support of his position.

FACTS:

The merchandise under protest is identified on the Customs Form 6445 as the Nachi Robot models SA100, SA100AR/AR52, SA130, SA130F/F-AR, SA160, SA160F/AR/S-AR52, SA200, SA200F, SC15, SC15F, SC35, SC35F/AR, SC50, SC50F-AR/AR, and PV30-LX (the robots). Each comprises a body consisting of an articulated arm or manipulator mounted on a base, and a stand-alone process controller with a so-called “teach pendant,” a device used to program the controller. Each controller is
connected to its robot body by cable or other electrical connection. The robot bodies and controllers, however, are imported without end-of-arm tooling or “heads” which enable them to perform an end use service application.

Most of the robot models were entered under subheading 8515.31.00, HTSUS, as machines and apparatus for arc welding of metals. Other robot models dedicated to painting or sealing or to material handling applications were nevertheless entered either under subheading 8515.31.00, HTSUS, or under subheading 8479.50.00, HTSUS, as machines and mechanical appliances having individual functions, not specified or included elsewhere in Chapter 84. Robots that were not customized or configured to a particular end use service application and, therefore, could be used for several functions, were entered under subheading 8479.50.00, HTSUS. Because the robots were imported without their “heads,” your office concluded that they were capable of a variety of end use service applications and liquidated the entries under subheading 8479.50.00, HTSUS.

As imported, the robots lack welding guns, grippers or other end-of-arm tooling or “heads” and, therefore, are incomplete or unfinished articles for tariff purposes. Nevertheless, counsel maintains that each robot body and its controller are specially configured or customized to a customer’s specifications with accessories appropriate to the function it will perform when completed. Each controller has a closed loop system consisting of a CPU circuit board and motion planning circuit board, both with highly specialized software, power amplifier, and encoder interface. Software for a controller is stored on a read-only memory (ROM) computer chip. Each robot body has encoders and motors which receive and send signals to and from the closed loop system on the robot controller. Thus, this closed loop system permits the body and its controller to “communicate” with each other. Counsel concludes that, as imported, each robot body and controller has the essential character of a complete or finished good. Those robots to be principally used in welding applications should be classified in appropriate provisions of heading 8515, HTSUS; those to be principally used in material handling applications should be classified in appropriate provisions of heading 8428, HTSUS; and, robots to be principally used in painting or sealing applications should be classified in appropriate provisions of heading 8479, HTSUS.

Counsel makes the following arguments to support his essential character claim: the cost or value of the missing welding gun, in the case of spot welding machines, is only 12% of the total cost of the combined robot body and controller, while the cost or value of the welding torch, in the case of arc welding machines, is 4.5% of the total cost of the combined robot body and controller; the payload at the end-of-arm tool plate of 100 kg or more is necessary to accommodate heavy welding guns and auxiliary apparatus and, thus, dedicates a robot for use as a spot welder; in the robotics industry, the term industrial robot means a robot body with its controller. In addition,
counsel cites a court case and a Headquarters ruling purporting to support a claim as an incomplete or unfinished functional unit. Finally, as an alternative claim, counsel asserts that the robots with their controllers are composite goods under General Rule of Interpretation (GRI) 3(b), HTSUS, with their essential character being determined by the particular end use service application.

The HTSUS provisions under consideration are as follows:

8428 Other lifting, handling, loading or unloading machinery:

8428.90.00 Other machinery

8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in [Chapter 84]:

8479.50.00 Industrial robots, not elsewhere specified or included

8515 Electriclaser or other light or photon beam, ultrasonic, electron beam, magnetic pulse or plasma arcwelding machines and apparatus, whether or not capable of cutting:

Machines and apparatus for resistance welding of metal:

8515.21.00 Fully or partly automatic

Machines and apparatus for arc (including plasma arc) welding of metals:

8515.31.00 Fully or partly automatic

8537 Boards, panelsand other basesfor electric control or the distribution of electricity:

For a voltage not exceeding 1,000 V:

8537.10.90 Other

ISSUE:

Whether a robot body, as described, imported with its controller but without end-of-arm tooling, constitutes an incomplete or unfinished good of heading 8428 or 8515.

LAW AND ANALYSIS:

Under General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS), goods are to be classified according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6. GRI 2(a), HTSUS, states in part that incomplete or unfinished articles are to be classified as if complete or finished provided that, as imported, they have the essential character of the complete or finished article. GRI 3(b), HTSUS, states in part that composite goods made up of different components shall be classified as if consisting of the component which gives them their essential character.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. Though not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System. Customs believes the ENs should always be consulted. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Section XVI, Note 4, HTSUS, covers machines consisting of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapters 84 or 85. The whole, in such cases, is classified in the heading appropriate to that function.

It is clear that, as imported, the robot bodies and their controllers with “teach pendants” require a functional unit analysis. However, these importations lack appropriate end-of-arm tooling or “heads.” Consequently, they are incomplete or unfinished articles. In this regard, Customs has consistently ruled that the classification of goods or apparatus as an incomplete or unfinished functional unit is not supported by any HTSUS legal note or by the ENs. See HQ 963029, dated July 7, 2000, and numerous cases cited therein. For example, NY C80699, dated November 7, 1997, in part classified industrial welding robots, each consisting of an articulated arm on a base and a process controller, in subheading 8515.21.00, HTSUS,
as machines and apparatus for resistance welding of metal. This was despite the fact the robots were imported without welding heads which were added after importation. Subsequently, however, HQ 962945, dated September 17, 1999, modified NY C80699 with respect to certain of the models in that decision, and separately classified the articulated arm and the controller, in subheadings 8479.50.00, HTSUS, and 8537.10.90, HTSUS, respectively. Because Section XVI, Note 4, HTSUS, neither authorizes nor contemplates a de minimis analysis, the fact that a welding torch or equivalent end-of-arm tool may constitute a small percentage of the total value of the complete system is not legally relevant

General Explanatory Note (VII) to Section XVI, Note 4, on p. 1228, states that component parts not complying with the terms of Note 4 fall in their own appropriate headings. See HQ 960632, dated October 27, 1997, which states in part on p.5 “Either an importation of components constitutes a complete functional unit, or each component is separately classifiable in its own appropriate heading.” For this reason, there is no legal authority under which we can proceed to a GRI 2(a), HTSUS, analysis. For the same reason, we are unable to accede to counsel’s claim as a composite good under GRI 3(b), HTSUS. HQ 963029, supra.

Counsel cites a Headquarters ruling and a court case that purport to sanction the concept of incomplete or unfinished functional units. First, HQ 961289, dated March 30, 1998, concerned the IRIS thermal imaging system used by firefighters to enhance vision in total darkness and through dense smoke. The system consisted of a focal plane array sensor, processor/power module, cable, a helmet-mounted display and rechargeable battery. The IRIS was found to be a functional unit classifiable in subheading 9013.80.90, HTSUS, as other optical appliances and instruments, notwithstanding the fact that the helmet-mounted display and battery were not included. The decision noted that the focal plane array sensor incorporated optical elements such as prisms, mirrors and lenses. It was these optical elements, together with the processor/module and cable, which constituted the optical appliance or instrument of heading 9013. This is consistent with the statement on p. 4 of HQ 963029 that “[a] finding that an entire importation fails the functional unit test does not negate the possibility that two or more components within the importation might constitute a functional unit, if the requirements of Section XVI, Note 4, HTSUS, are met.” Second, in ABB Power Transmission v. United States, Slip Op. 95-141 (Ct. Int’l Trade, decided August 4, 1995), a thyristor module consisting of six thyristor elements connected in series, heatsinks, voltage divider circuits and electronic firing circuitry, all mounted on a frame of epoxy resin and aluminum, was held to be a functional unit classifiable in subheading 8541.30.00, HTSUS, a provision for thyristors. The Court noted that after importation the modules
were used in high voltage direct current conversion stations to invert direct (“DC”) current electricity to alternating (“AC”) electricity or to rectify AC to DC current. The Court noted further, however, that as imported a thyristor module cannot rectify or invert current. From this, counsel concludes that classification as a functional unit obtained despite the fact that, as imported, the thyristor modules were incomplete or unfinished. In our opinion, counsel’s interpretation does not negate the Court’s functional unit analysis. In equating “function” to “activity,” the ABB Court made the explicit finding that “The components of a thyristor module contribute to the clearly defined “activity” of a thyristor as a semiconductor device (allowing current to pass in one direction when a controlled pulse initiates conductivity) and, therefore, are properly classifiable in the heading appropriate to that function, HTSUS heading 8541.”

Consistent with our position on functional units, the ENs under (3) on p.1506 include within heading 8537 apparatus using a programmable memory for the storage of instructions for implementing specific functions such as logic, sequencing, timing, counting and arithmetic, to control through digital or analog input/output modules, various types of machines. In this case, a controller and programming pendant are individual components connected by a cable that contribute together to the function of electric control or the distribution of electricity appropriate to heading 8537.

HOLDING:

Under the authority of GRI 1 and Section XVI, Note 4, HTSUS, each process controller and teach or programming pendant constitute a functional unit provided for in heading 8537. They are classifiable in subheading 8537.10.90, HTSUS. Under the authority of GRI 1, the articulated arms or manipulators are machines or mechanical appliances provided for in heading 8479. They are classifiable in subheading 8479.50.00, HTSUS.

The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the
entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John Durant, Director
Commercial Rulings Division

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