United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2006 HQ Rulings > HQ 967488 - HQ 967737 > HQ 967552

Previous Ruling Next Ruling
HQ 967552





June 8, 2006

CLA-2 RR:CTF:TCM 967552 DSS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8477.80.0000

Port Director
U.S. Customs and Border Protection
301 E. Ocean Blvd.

Long Beach, CA 90802

Attn: CBP, Protest and Control

RE: Further Review of Protest No. 2704-04-102701; manufacturing equipment for rear projection TV lenses from Japan

Dear Port Director:

This is our decision on Protest No. 2704-04-102701, filed on behalf of the importer, Toppan Optical Products Inc. (protestant), against your classification of what is described as production equipment for lenses for rear projection television systems under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

FACTS:

The subject merchandise is described as a production line used for finishing operations on lenses for rear projection televisions. The protestant manufactures lenticular and fresnel lenses for rear projection television systems and has imported the machinery to produce them.

According to the protestant, the equipment functions as a single assembly line, and is divided into four sections: a substrate supply unit; coating fabricator; trimmer; and a stacker. All four sections were imported together in a single shipment.

According to the protestant, the instant coating fabricator essentially consists of: a sprayer; a resin tank section; a temperature controller; various control panels; robotic sections that place the acrylic sheet substrates onto a die, and after lamination, removes them, safety covers and fasteners; a bed for the die; loaders/conveyor units and emission booths; and a gantry, i.e., a raised platform.

The trimmer unit essentially consists of: a loading robot; various control panels; a robot platform; a cutting table; a laser; a cooling unit; an oscillator; safety partitions; an automatic door; unloading robot and robot hands; two conveyors; and safety partitions for the robots.

The operation of the coating system is described as follows. The stacker unit removes acrylic sheets from pallets onto the sprayer. The sprayer/coater deposits (i.e., sprays through the nozzles) resin on a metallic molded surface (the die) seated in a bed. After the spraying, a roller moves across the surface of the die to give the resin a uniform thickness. Next, the feed loader from the substrate supply unit lays the acrylic sheet onto the mold. A roller unit then presses the sheet into the mold (presumably so that the resin adheres to the acrylic sheet). The sheet is then UV-cured, which ends the lamination. The cured acrylic sheets are then removed from the mold by robot and then transferred to the trimming station.

The operation of the trimming system is described as follows. The laminated sheets are conveyed to the trimming system where a robot moves the sheet to the laser cutting table, the laser is lowered over the sheet and the edges are trimmed off. The laser oscillator discharges the laser beam. After cutting, a robot removes the trimmed sheets to another conveyor.

The protestant states that after trimming, the sheets are shipped to another area of the factory for final inspection before shipment to television manufacturers, although there is no indication whether the subject merchandise includes inspection equipment. A slightly different configuration of this production line is the subject of a companion protest, which has been reviewed in Headquarters Ruling Letter (HQ) 967565, issued on this date. The essential description of the functioning of the two production lines is the same, and these differences in configuration do not change the classification of the subject merchandise in the protest.

The protestant entered the merchandise on August 20, 2003 as follows: the coating fabricators were classified under subheading 8479.90.9495, HTSUSA, and the trimmer was classified under subheading 8428.90.0090, HTSUSA. On March 31, 2004, CBP issued a CBP Form 29 Notice of Action to the protestant stating that the coating fabricator would be classified under subheading 8424.89.7090, HTSUSA, and that classification of the trimmer would be under subheading 8456.10.8000, HTSUSA. In response to this Form 29, the protestant submitted supplemental information to the Port on July 8, 2004. CBP personnel from the Port visited the protestant’s facilities and viewed the protestant’s production line in operation. After this visit and after reviewing the supplemental information, on August 26, 2004, the Port issued a second Notice of Action Form 29 reclassifying the subject merchandise as a functional unit under subheading 8477.80.0000, HTSUSA.

The protestant claims that neither the importer nor its surety received notice of an extension of liquidation from CBP. The protestant claims that it did not receive proper notice of an extension of liquidation under 19 U.S.C. §1504(b) or under applicable CBP regulations, and, as a result, the entry was deemed liquidated at the rate and amount of duties asserted at the time of entry under 19 U.S.C. §1504. According to CBP’s Automated Commercial System, (ACS), a “Notice of Extension” was sent to the protestant and its surety on May 8, 2004, to advise that liquidation of the protested entry was extended one year.

The subject merchandise was liquidated under subheading 8477.80.00, HTSUS, which provides for “Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified elsewhere in this chapter: Other machinery.” The protestant argues that the merchandise should be classified under subheading 8428.90.00, HTSUS, which provides for “Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics): Other machinery.”

The subject merchandise was liquidated on September 10, 2004, and this protest was filed on December 9, 2004.

Counsel for the protestant made these arguments in a memorandum of law attached to its Application for Further Review of the protest and in a meeting on January 19, 2006. At the meeting, counsel for the protestant also stated that the protestant would no longer be pursuing the claim that the protest and its surety were never notified that the entry was extended, and that it should be deemed liquidated. Counsel for the protestant submitted additional material in an April 26, 2006, letter, in support of protestant’s claimed classification.

ISSUE:

Whether the subject merchandise is classified under heading 8428, HTSUS, as other lifting or handling machinery, or under heading 8477, HTSUS, as machinery for the processing of plastics.

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed and that the classification made at the port of entry is protestable (see 19 U.S.C. § 1514(a)(2) and (5)).

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.

The HTSUS provisions under consideration (2003) are as follows:

8428 Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics): 8428.90.00 Other machinery.
8456 Machine tools for working any material by removal of material, by laser or other light or photon beam, ultrasonic, electro-discharge, electro-chemical, electron-beam, ionic-beam or plasma arc processes: Operated by laser or other light or photon beam processes: Other:
Other.

8477 Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter; parts thereof: 8477.80.00 Other machinery.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUSA and are thus useful in ascertaining the classification of merchandise under the System. The Bureau of Customs and Border Protection (CBP) believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

Legal Note 4 to Section XVI, HTSUS, states that: "[w]here a machine (including a combination of machines) consists 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 chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function."

In pertinent part, General Explanatory Note VII to Section XVI, states that:

[f]or purposes of this Note, the expression “intended to contribute to a clearly defined function” covers only machines and combinations of machines essential to the performance of the function specific to the functional unit as a whole, and thus excludes machines or appliances fulfilling auxiliary functions and which do not contribute to the function of the whole [emphasis added].

The protestant argues that the instant production line is correctly classified as a functional unit under heading 8428, HTSUS, which provides for other lifting, handling, loading or unloading machinery. Alternatively, if the production line is not considered a functional unit, the protestant would still classify the components under heading 8428, HTSUS, except for the sprayer and the laser.

The protestant makes the following arguments in support of the claimed classification: that the machines of heading 8477, HTSUS, do not include any large-scale conveyor systems; that the instant coating and trimming line is a functional unit as defined in Note 4 to Section XVI; that the functional unit is classified under heading 8428, HTSUS, as other lifting or handling machinery, whose principal purpose is to transport lenses during finishing operations. Alternatively, the protestant argues that if the subject merchandise is not treated as a functional unit, that the merchandise would still fall under heading 8428, HTSUS, except for the sprayer and the laser. The protestant claims that the spraying unit and laser could be removed and that a functioning conveyor system would remain. In that event, the protestant claims that the laser, its control panel, the oscillator and cooler would fall under subheading 8456.10.80, HTSUS, which provides for, “Machine tools for working any material by removal of material, by laser or other light or photon beam, ultrasonic, electro-discharge, electro-chemical, electron-beam, ionic-beam or plasma arc processes: Operated by laser or other light or photon beam processes: Other: Other.”

EN 84.28, states, in pertinent part, that heading 8428: “covers a wide range of machinery for the mechanical handling of materials, goods, etc. (lifting, conveying, loading, unloading, etc.). They remain here even if specialized for a particular industry, for agriculture, metallurgy, etc.” The EN also states that “industrial robots specifically designed for lifting, handling, loading or unloading” are within the scope of this heading.

While we agree that the subject merchandise is a functional unit, its “clearly defined function” does not fall within the terms of heading 8428, HTSUS. The court in Mitsubishi International Corporation v. United States, 5 F.Supp.2d 991 (Ct. Int’l Trade 1998), upheld the CBP position that the scope of heading 8428, HTSUS, covers a wide range of machinery for mechanical handling of materials, goods, people and other items. Citing technical sources, CBP has maintained that heading 8428, HTSUS, covers material handling equipment that are devices that transport, position and store raw materials and finished goods for industrial and commercial operations. Id. at 1005.

Based on the information in the file, the subject merchandise does not meet the terms of heading 8428, HTSUS, because the main function of the components is not to transport, position and store materials. The main function of the line is the coating of the acrylic plastic sheets, which makes them useable. The other robots and conveyors simply contribute to these functions by moving the sheets to, from and between the units. Therefore, classification under heading 8428, HTSUS, is precluded by the terms of the heading and by Note 4 to Section XVI. The subject merchandise is not classified under heading 8456, HTSUS, either. The trimming of the lenses by the laser is an important part of the process, but it is clearly secondary to the working of the lenses during the coating because the resin and UV-coating are necessary for the proper operation of the finished lenses, while the trimming is just a finishing operation.

It is important to note that heading 8477, HTSUS, provides not only for machines that manufacture products from rubber or plastics but also for machines for working rubber or plastics. EN 84.77 states in pertinent part, “The heading covers machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this Chapter.” Heading 8477, HTSUS, by the plain and ordinary meaning of its terms, in conjunction with the examples provided in and the rationale of the ENs, is intended to include machinery “not specified or included elsewhere in this Chapter [84].” The subject merchandise is not specified or included in heading 8428, HTSUS, as explained above. The subject merchandise works acrylic sheets by coating and trimming them into a useable form for rear projection televisions. Therefore, the subject merchandise is classified in heading 8477, HTSUS.

CBP has classified a range of machinery under heading 8477, HTSUS. In NY H86511, dated December 20, 2001, robots with end of arm tooling that enabled them to trim excess plastic from molded parts were classified under subheading 8477.80.00, HTSUS. In HQ 951859, August 4, 1992, extrusion pullers were classified under heading 8477, HTSUS, because their principal function was working rubber. In HQ 960374, dated August 8, 1997, machinery for mixing rubber was classified under heading 8477, HTSUS.

From the information provided and CBP’s viewing of the protestant’s facility and the operation of the production line, the principal function of the subject merchandise is the working of plastic, in this instance, acrylic plastic sheets. Because the acrylic substrates are a plastic material (other than hard plastic), the line is classified under subheading 8477.80.00, HTSUS, in accordance with the terms of the heading and Note 4 to Section XVI. The trimming section is essential to the overall process but clearly secondary to the coating function. The coating is necessary for the functioning of the lenses. The handling equipment is also essential to the movement of the lenses from station to station, but is also secondary to the coating function provided by the unit.

CBP has classified numerous other production lines as a functional unit, including two under heading 8477, HTSUS. In NY 866881, dated October 2, 1991, CBP classified oriented film production systems from Canada under heading 8477, HTSUS. In NY 866881, CBP stated that the systems encompassed “all components from extruder through caster-quencher, longitudinal and transverse stretchers, transporter to carry stretched film to winder, as well as digital control system and waste recycler.” Similarly, in NY B82646, dated March 26, 1997, CBP classified a preform production machinery system under heading 8477, HTSUS. In NY B82646, CBP noted the imported machinery was used to assist in the manufacture of large reinforced plastic structural components (such as truck bodies) or performs, which serve as reinforcements during the component molding process.

In the alternative, the protestant argues that the coating fabricator unit’s principal function is to laminate the UV resin to the acrylic sheets, rather than spraying. The protestant claims that the finishing system involves two operations – a cutting and a trimming function, and a robotic handling function. In support of its claimed classification, counsel for the protestant cites several rulings: NY J80139, dated February 5, 2003; NY K82447, dated February 17, 2004; and NY D89632, dated March 25, 1999. In an April 26, 2006, letter, counsel for the protestant also cites HQ 967823, dated December 20, 2005, in support of protestant’s claimed classification.

In NY J80139, CBP classified a handling robot for silicon wafers under subheading 8428.90.00, HTSUS. In this instance, however, no wafer processing equipment is included in the subject merchandise. In NY J80139, the robot at issue moved silicon wafers from transport pods to process chambers in semiconductor process machines, which were imported separately. In NY K82447, CBP classified a gantry robot system used to move castings from machining center to machining center under heading 8428, HTSUS. However, the ruling clearly stated that the request only covered the gantry robot system, not the machining center modules. In that ruling, only the gantry robot system, which is used to move the cylinder head castings from machining center to machining center, was being imported. In NY D89632, all the components of the laser cutting machine at issue were contained within a single housing. There are no relevant similarities between the machine at issue in NY D89632 and the subject merchandise.

In HQ 967823, CBP classified a pilot wafer plant (plant) that produced ice cream sandwich wafers under several different subheadings of the HTSUS. After determining that the plant was not a composite machine under Note 3 to Section XVI, CBP applied Note 4 to Section XVI to the plant. As CBP stated in HQ 967823, in relevant part:

The purpose of the pilot wafer plant is producing ice cream sandwich wafers. The function of the machine is baking and food preparation. Producing ice cream wafers is not a function recognized in Chapter 84 or 85, HTSUSA. As such, the components must be separately classified. ...

In HQ 967823, the pilot wafer plant at issue had two functions: food preparation and baking. The subject merchandise works acrylic sheets into a useable form for rear projection televisions. The production line under protest, as discussed above, has one function – working plastic – which falls under heading 8477, HTSUS. Therefore, we find the rulings cited by counsel are not persuasive in classifying the subject merchandise.

Based upon the foregoing analysis, the subject merchandise is classified under heading 8477, HTSUS.

HOLDING:

By application of GRI 1 and Section XVI, Note 4, the production line is a functional unit provided for in heading 8477, HTSUSA. It is classified under subheading 8477.80.0000, HTSUSA, which provides for “Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this chapter; parts thereof: Other machinery.” The 2003 column one, general rate of duty is 3.1 percent ad valorem.

Duty rates are provided for convenience only and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts.

The protest should be DENIED in full. In accordance with the Protest/Petition Processing Handbook (CIS HB, June 2002, pp. 18 and 21), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,


Previous Ruling Next Ruling

See also: