CIT Rules Against CBP, Finds Bioreactor Systems Are HTS 8479 Machinery
In Applikon Biotechnology, Inc. v. U.S., the Court of International Trade ruled against U.S. Customs and Border Protection's classification of certain Bioreactor Systems under HTS heading 8419 as machinery that treats materials through temperature change. The CIT held instead that the Bioreactor Systems are classified as other machinery under heading 8479 because their principal function is to grow cells, not to regulate temperature, and this function is not specified elsewhere in Chapter 84.
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Applikon Challenged CBP's Classification of Bioreactor Systems in HTS 8419
Applikon challenged CBP's classification of its "BioBundle Cell Culture Bioreactor Systems" and "ez-Control Cell Culture BioBundle Bioreactor Systems" (both referred to as the Bioreactor Systems) under subheading 8419.89.95 (4.2%) as other machinery for the treatment of materials by a process involving a change of temperature. Applikon contended they were classifiable under subheading 8479.82.00 (duty-free) as mixing or stirring machines.
Systems' Are Used to Culture Cells and Include Temperature Control Features
The Bioreactor Systems' primary function is to maintain an aseptic and homogenous environment in which to culture cells by continuous mixing or stirring. Cells are grown in the Bioreactor Systems for various applications in research or process development (such as for biopharmaceuticals, vitamins, food additives, etc.).
In addition to other equipment, the Systems include equipment used to control mixing and optional functions, such as control of temperature, pH, dissolved oxygen, and level/anti-foam. However, when any of these optional functions are utilized, the mixing function must be used or else the cells will die. While the Systems as imported include temperature control features, after importation, Applikon separately procures an electric blanket in the U.S. which is packaged with them. The blanket is plugged into the Systems and its heating function is triggered when the cell medium’s temperature drops by as little as 0.1 degree Celsius.
CIT Rules in Favor of Applikon for Three Main Reasons
The CIT ruled that the Bioreactor Systems are correctly classified under subheading 8479.82.00 for the following reasons:
Principal function is to grow cells, not regulate temp. While the Bioreactor Systems can control the temperature of the cell medium, that function is subsidiary to the overall function of the Systems as they can operate without the heating blanket, which is not included upon importation and is not permanently attached to the Systems. Additionally, the Systems' temperature control capability is not used by every process for which they are suitable. The Systems can grow cells without the blanket and are not designed to change the temperature at which the cell culturing is performed but to maintain a constant temperature. As such, any temperature change is minor on the order of 0.1°C. The automatic maintenance of temperature by the heating blanket, although used and necessary in some applications, is subsidiary to the primary function of the Bioreactor Systems, which is to maintain an aseptic and homogeneous environment for the growth of cells. The heat control function is not essential to achievement of this purpose.
HTS 8419 excludes machines w/ subsidiary temp function. Note 2(e) to Chapter 84 states that heading 8419 does not cover machinery or plant designed for mechanical operation in which a change of temperature, even if necessary, is subsidiary. CBP contended this exclusion did not include the Bioreactor Systems, which CBP argued were laboratory equipment. However, the CIT stated it is clear that the Systems constitute "machines" as the term is understood in common meaning. Therefore, according to Note 2(e), the Systems are excluded from classification in heading 8419.
Principal function is not specified elsewhere. Note 7 to Chapter 84 provides that a machine that is used for more than one purpose is to be treated as if its principal function were its sole purpose. A machine with a principal function that is not described in any heading is to be classified in heading 8479. Pursuant to Note 7, the CIT holds the Systems fall under heading 8479 because their principal function is to grow cells, a function which is not described in any heading in Chapter 84.
(Applikon and CBP also disagreed over the correct application of Notes 3 and 4 to HTS Section XVI. However, because the Bioreactor Systems are excluded from heading 8419 by Chapter 84 Note 2(e) and because cell growth is their primary function, the CIT stated that determining whether mixing or heating more clearly define the Systems' function within the ambit of Notes 3 or 4 was unwarranted.)
(Slip Op. 11-154, dated 12/12/11)