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HQ 960691

SEPTEMBER 10, 1997

CLA-2 RR:TC:MM 960691 JAS


TARIFF NO.: 8504.50.00

Ms. Mary Hashim
Asea Brown Boveri, (A.B.B. Inc.)
1600 Montee Ste Julie
Varennes, PQ J3X 1S4

RE: HQ 957025 Revoked; Power Shunt Reactor, Electrical Apparatus Used With Transformers on Long Distance Transmission Lines; Liquid Dielectric Transformer, Subheading 8504.23.00, Inductor; Apparatus for Offsetting the Capacitive Effect of Electrical Current in Power Transmission Lines; Composite Machine, Principal Function, Section XVI, Note 3

Dear Ms. Hashim:

On June 23, 1994, Asea Brown Boveri, (A.B.B. Inc.) filed administrative protest 0712-94-100698 with Customs officials in Champlain, New York, contesting the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of certain power shunt reactors.

HQ 957025, issued to the Assistant District Director of Customs, Champlain, New York, on December 30, 1994, granted this protest under subheading 8504.23.00, HTSUS, a provision for liquid dielectric transformers having a power handling capacity exceeding 10,000 kVA, but denied the protest with respect to a claim for duty-free status under subheading 9905.85.15, HTSUS, which prescribes a free rate for originating goods under the North American Free Trade Agreement (NAFTA). We have reconsidered HQ 957025, and now believe that it is incorrect.

Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of HQ 957025 was published on August 6, 1997, in the Customs Bulletin, Volume 31, Number 32.


The merchandise in protest 0712-94-100698, a power shunt reactor or shunt reactor, essentially consists of a reactor, also called an inductor, within which are four bushing current transformers which step down or reduce the current. Other auxiliary devices include a hot oil thermometer, gauges, valves and relays. The shunt reactor was described in HQ 957025 as being used in conjunction with transformers on long distance transmission lines that carry high voltage electrical power. They are installed "in shunt" or parallel to high voltage electrical transmission lines. The function of shunt reactors is to create an effect which absorbs or offsets the capacitive effect along the power transmission line. This eliminates unacceptable deviations from the required voltage of the network. This is the only way that large blocks of power at high KV can be transmitted, relatively unimpeded, over long distances.

The provisions under consideration are as follows:

8504 Electrical transformers, static converters (for example, rectifiers) and inductors; power supplies for automatic data processing machines or units thereof of heading 8471; parts thereof:

Liquid dielectric transformers:

8504.23.00 Having a power handling capacity exceeding 10,000 kVA...2.1 percent ad valorem/Free under subheading 9905.85.15 as an originating good under NAFTA

8504.50.00 Other inductors...3 percent ad valorem/0.3 percent as an originating good under NAFTA


Whether power shunt reactors are inductors of heading 8504.


Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.

Section XVI, Note 3, HTSUS, which governs the classification of goods in heading 8504, among others, states that unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.

The decision in HQ 957025 classifying power shunt reactors in subheading 8504.23.00, HTSUS, as liquid dielectric transformers, was based in part on Customs belief that power shunt reactors are considered by the electric power industry to be transformers. This is not the case. The power shunt reactors in issue, each consisting of an inductor and multiple bushing current transformers, qualify under Section XVI, Note 3, HTSUS, as composite machines that are to be classified as if consisting of that component or as being that machine which performs the principal function. The available evidence indicates that the electric power industry recognizes shunt reactors with bushing current transformers to be inductors, and that by function and design, the transformers are auxiliary or accessory devices to the reactors' primary function of inductance. This warrants the conclusion that power shunt reactors are classifiable as inductors.


Under the authority of GRI 1, power shunt reactors are provided for in heading 8504. They are classifiable in subheading 8504.50.00, HTSUS.

HQ 957025 reflects a final determination with respect to a particular protest. As such, Customs recognizes that it cannot be modified or revoked with respect to the disposition of the entries in that protest. However, for the reasons stated above, the legal principles set forth in HQ 957025 are hereby revoked - 4 -
and no longer represent the position of the Customs Service with respect to the classification of power shunt reactors.

In accordance with 19 U.S.C. 1625(c)(1), this ruling will become effective 60 days after its publication in the Customs Bulletin. Publication of rulings or decisions pursuant to 19 U.S.C. 1625(c)(1) does not constitute a change of practice or position in accordance with section 177.10(c)(1), Customs Regulations (19 CFR 177.10(c)(1)).


John Durant, Director
Tariff Classification

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