The tariff classification of a heat and power module from Germany

NY L85462 June 30, 2005 CLA-2-85:RR:NC:N1:112 L85462 CATEGORY: Classification TARIFF NO.: 8502.20.0080 Owen M. Duffy President, Kraft Power Corporation 199 Wildwood Avenue Woburn, MA 01801-2024 RE: The tariff classification of a heat and power module from Germany Dear Mr. Duffy: In your letter dated June 3, 2005, you requested a tariff classification ruling. The item concerned is the Combined Heat & Power (CHP) Module. It is a spark-ignited internal reciprocating industrial engine coupled to a synchronous or induction generator which also has attached heat exchangers, accessory equipment and controls. It is available in various sizes producing from 160 kW to 40 kW of electricity. The purpose of the Combined Heat & Power (CHP) Module is to produce electricity and heat; the heat is primarily used to raise the temperature of water. You proposed classification of this item in subheading 8403.10.00 of the Harmonized Tariff Schedule of the United States (HTS): Classification in the HTS is governed by the General Rules of Interpretation (GRIs). GRI 3. (b) states, “... composite goods ... shall be classified as if they consisted of the ... component which gives them their essential character ... .”. The CHP Module is a composite machine which performs both the function of providing heat and power. The one “essential” action for the fulfillment of both functions is the generation of electricity (the water temperature is raised by heat produced by the generation of electricity); that generation is the “essential character” of the Module, therefore it cannot be classified in HTS subheading 8403.10.00 as a boiler. The applicable subheading for the Combined Heat & Power (CHP) Module will be 8502.20.0080, Harmonized Tariff Schedule of the United States (HTS), which provides for Electric generating sets ...: Generating sets with spark-ignition internal combustion piston engines: Of an output exceeding 5 kW. The rate of duty will be 2%. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Richard Laman at 646-733-3017. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division