CIT Denies Importer Challenge to Tariff Classification of HVAC Valve Motors
The Court of International Trade denied an importer’s challenge to CBP’s tariff classification of its valve motors for heating, ventilation, and air conditioning (HVAC) systems. Belimo Automation said a microchip added to the electric motors that allows for some independent action means the product is classifiable as a regulating and controlling instrument. But the court affirmed CBP’s finding that the product is still an electric motor because it doesn’t measure the variable it’s regulating.
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Belimo imported the valve motors in 2007. They consist of an electric motor, gears, and two printed circuit boards, one of which is an application specific integrated circuit. The valve motors are used in HVAC systems to control the flow of water and air. A central control unit measures the temperature of a room, and directs the valve motors to allow more or less air or water to pass through to regulate temperature or airflow. The integrated circuits allow for more accuracy by checking to see if the valve is in the exact position decided by the central control unit. If the valve is in the wrong position, the integrated circuit actuates the motor to move it back into the right place. This allows the HVAC unit to perform more efficiently.
CBP liquidated the valve motors under Harmonized Tariff Schedule heading 8501 as electric motors, dutiable at 4.4%. Belimo protested, arguing the valve motors should instead be classified under heading 9032 as automatic regulating and controlling instruments, dutiable at 1.7%. CBP denied the protest, and later issued a ruling on the issue in 2009 (HQ H044560 (here)). Belimo subsequently filed suit at CIT.
The court challenge hinged on the interpretation of a chapter note on classification under heading 9032. Note 7(a) to Chapter 90 says heading 9032 applies to:
“Instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlling temperature, whether or not their operation depends on an electrical phenomenon which varies according to the factor to be automatically controlled, which are designed to bring this factor to, and maintain it at, a desired value, stabilized against disturbances, by constantly or periodically measuring actual value … .”
Belimo said its valve motor thus qualified as a regulating and controlling instrument because it controls a variable (airflow) by automatically controlling a factor (the position of the valve).
The court said Belimo was reading the note wrong. The terms “variable” and “factor” in the note refer to the same thing, so in order to be classified under heading 9032 a device has to regulate a variable through measurement of that same variable. In this case, that would mean regulating the airflow by measuring the flow of air and deciding, based on the measurement, how to position the valve to achieve the desired flow of air. The microchip in Belimo’s product, on the other hand, simply makes sure that it’s correctly fulfilling the correct function as decided by the central controller. As such, Belimo’s valve motor isn’t classifiable as an automatic regulating or controlling instrument under heading 9032.
However, the valve motors are still classifiable as electric motors under heading 8501 even with the added microchip, said the court. Heading 8501 is an eo nomine provision (it directly describes the article by name), which means it applies to all forms of that article, including those with added functions. The principal function of the valve motors is still an electric motor designed to move valves, CIT said. The efficiency-improving microchip is a secondary function that helps the valve motor perform its main task more effectively, said the court. Belimo’s valve motors are thus classified under heading 8501 as electric motors, ruled the court.
(Belimo Automation A.G. v. U.S., dated 11/26/13, public version 12/10/13, Judge Barnett)
(Attorneys: Robert Silverman of Grunfeld Desiderio for plaintiff Belimo Automation A.G.; Stuart Delery for defendant U.S. government)