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Classification Case

Generally, I worry about any court opinion that requires its own table of contents, but in my effort to fill the gaps in my recent blogging, I will jump into ENI Technologies v. United States.

The merchandise involved is RF generators that take AC electricity, convert it to DC and then produce electrical current at specific frequencies and power. The frequencies are high enough to be in the range of radio energy, but the output is just electrical current at a certain wattage. In this case, the wattage is in the order of thousands of watts. The output is used to create plasma useful in the production of semiconductors, to which it is integral. Although there are other applications, semiconductor production appears to be the primary use.

Customs classified the merchandise as static converters. The importer had a number of alternative classifications starting with parts of plasma processing systems. This required an analysis of Section XVI, Note 2, which controls the classification of parts of goods in Chapters 84 and 85. Under the note, goods classifiable in Heading 8466 remain there even if used used solely or principally with a particular kind of machine. Tariff item 8466.93.85 covers parts of machines for plasma etching. That means that if the RF generators are parts for plasma etching systems, they are classifiable in Heading 8466.

The Court then engaged in a thorough analysis of the meaning of the term "part" and concluded that parts act on and affect the operation of the article of which they are a part. In other words, parts must have a direct relationship to the primary article. Based on this, the Court found that the RF generators are parts of plasma etching systems. However, any RF generators that have other principal uses are not classifiable in 8466 and may be classified with the machines with which they are solely or principally used.

Still with me?

The Government's position was that the RF generators are static converters of Heading 8504. Although the Explanatory Notes define static converters, in part, as an apparatus used to convert electrical energy in order to adapt it to further use, the Court declined the Government's invitation to rely on this broad definition. Rather, the Court looked to other examples of static converters and found that found that the term does not encompass apparatus that convert AC to DC and then back to AC at higher frequencies.

The remaining possibilities were for machines for processing semiconductor materials and electrical machines having individual functions not specified elsewhere. The Court applied the Carborundum factors plus its finding that the principal use of the RF generators is to process semiconductor material in 8479.89.84 if they are used in a process other than plasma etching of 8466.93.85.

Thus, the Court denied the Government's motion for summary judgment and granted the importer's motion to the extent the principal use of the merchandise is known. The Court then ordered the parties to work out the details.

And that, my friends, is a short summary of a 49 page opinion. I'm sure those familiar with the case will say I missed the important points, but you take what you can get for free. Right?

And with that, I say, "Good night from Minnesota."

Full post as published by Customs Law on September 09, 2009 (boomark / email).