H312425

HQ H312425 December 31, 2020 OT:RR:CTF:VS H312425 RMC CATEGORY: Classification Griselda Valenzuela R.L. Jones Customhouse Brokers, Inc. 1778 Zinetta Rd. Suite A Calexico, CA 92231 RE: Tariff Classification and USMCA Eligibility of Residential and Commercial Solar Panels Dear Ms. Valenzuela: This is in response to your correspondence dated July 1, 2020, in which you request rulings on the tariff classification of SunPower residential and commercial solar panels and on the eligibility of those products for duty-free treatment under the United States-Mexico-Canada Agreement (“USMCA”). Your requests, submitted as electronic ruling requests, were consolidated and forwarded to this office from the National Commodity Specialist Division for response. FACTS: According to the information provided, the residential units are SunPower model E20-327-C-AC solar panels. The units “include a factory-integrated SunPower microinverter” and “provide a revolutionary combination of high efficiency, with reliability, and module-level DC-to-AC power conversion.” Each finished solar panel will consist of a framed sheet of 96 photovoltaic solar cells, a junction box, and a microinverter. The technical specifications indicate that the nominal power of the residential units is 327 watts with a maximum output of 0.420 kilovolt amperes (“kVA”). You assert that the residential units will be classified under subheading 8501.61.0010, Harmonized Tariff Schedule of the United States (“HTSUS”). The information provided indicates that the commercial units are SunPower E-Series model E20-435-COM solar panels. Each commercial unit contains a framed sheet of 128 solar cells and a junction box. Unlike the residential units, the commercial units do not include a microinverter to convert the direct current electricity into alternating current. Accordingly, you state that the commercial units are incapable of being connected directly to external devices or a grid. Instead, they are intended to to be connected to other solar modules to create a larger panel. The technical specifications indicate that the nominal power of the commercial units is 435 watts with a maximum output of 0.470 kVA. You assert that the commercial units will be classified under subheading 8541.40.6015 HTSUS. The assembly of both the residential and the commercial units will take place at SunPower’s facility in Mexicali or Ensenada, Mexico, using both originating and non-originating components. Your submission includes a schematic of the assembly operations, including descriptions and photographs of all steps, and complete bills of materials including the originating status, tariff classification, and value of all materials used in the production of the residential and commercial units. The assembly of the residential units in Mexico involves cutting of the encapsulant material, washing and inspection of the anti-reflective glass, assembly of the strings of solar cells, alignment of the strings of solar cells, lamination of the various components to create the solar sheets, trimming of the product, installation of the frame, installation of the junction box, testing of the product, and installation of the microinverter. The assembly of the commercial units in Mexico involves similar steps, except that no microinverter is installed. You assert that both the residential and commercial units will be eligible for preferential tariff treatment under the USMCA. ISSUES: Whether the residential solar panels will be properly classified under subheading 8501.61.0010, HTSUS, and the commercial solar panels will be properly classified under subheading 8541.40.6015, HTSUS. Whether the residential solar panels and the commercial solar panels will be eligible for USMCA preferential tariff treatment when they are imported from Mexico into the United States. LAW AND ANALYSIS: Classification Classification of goods under the HTSUS is governed by the General Rules of Interpretation (“GRI”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. Residential Units CBP has classified merchandise similar to the SunPower residential units in heading 8501, HTSUS. For example, in New York Ruling (“NY”) N160415, dated May 6, 2011, we considered the classification of a solar panel with an integrated power modulator to convert the direct current produced by the panel into alternating current electricity. We rejected the proposed classification of 8541.40.60, HTSUS, which provided for “Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes: Other diodes: Other; Solar cells: Assembled into modules or made up into panels,” as the merchandise did not consist simply of photovoltaic cells arranged into a solar panel, but rather of a solar panel with a power module attached. Therefore, in its condition as imported, the solar panel was capable of supplying power to an external load, and classification under 8541.40.60, HTSUS, was improper. Instead, we concluded that the merchandise was properly classified under subheading 8501.61, HTSUS, as “Electric motors and generators…: AC generators: Of an output not exceeding 75 kVA.” Here, as in NY N160415, the merchandise consists of a solar panel with a power modulator (or “microinverter”) attached. This microinverter allows the unit to convert the direct current electricity generated by the solar panels into alternating current electricity that is capable of supplying power to an external load. The technical specifications of the residential units indicate that the electrical output does not exceed 75 kVA. Accordingly, by operation of GRI 1, the residential units will be properly classified under 8501.61.0010, HTSUS, as “Electric motors and generators…: AC generators: Of an output not exceeding 75 kVA: Photovoltaic generators of a kind described in statistical note 9 to this chapter.” Commercial Units CBP has classified merchandise similar to the SunPower commercial units in 8541.40.60, HTSUS. For example, in Headquarters Ruling (“HQ”) H250768, dated December 2, 2016, CBP held that certain solar panels that were designed to be connected to other solar panels were properly classified in subheading 8541.40.60 of the 2013 HTSUS, which provided for “Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels …: Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up in panels …: Other diodes.” We noted that “per the [Explanatory Notes], panels or modules without elements that supply the power directly to an external load, are classified in heading 8541, HTSUS, and cannot be classified in heading 8501, HTSUS.” Although the subject merchandise contained a junction box, connectors, and bypass diodes that protected the solar cells from overheating, these features were not elements that supplied power directly to an external load. Therefore, the merchandise was properly classified in subheading 8541.40.60, HTSUS. See also NY N047472, dated January 9, 2009 (holding that modules that could only connect to other solar modules to create a single solar panel and could not connect to external devices or an electrical grid were classified in 8541.40.60, HTSUS). Here, unlike the residential units, the commercial units do not contain a microinverter to convert the direct current electricity generated by the panels into alternating current electricity. Moreover, the technical specifications indicate that the commercial units do not contain any element that allows the panels to supply power to an externa

ClassificationClassification of goods under the HTSUS is governed by the General Rules of Interpretation (“GRI”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.Residential UnitsCBP has classified merchandise similar to the SunPower residential units in heading 8501, HTSUS. For example, in New York Ruling (“NY”) N160415, dated May 6, 2011, we considered the classification of a solar panel with an integrated power modulator to convert the direct current produced by the panel into alternating current electricity. We rejected the proposed classification of 8541.40.60, HTSUS, which provided for “Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes: Other diodes: Other; Solar cells: Assembled into modules or made up into panels,” as the merchandise did not consist simply of photovoltaic cells arranged into a solar panel, but rather of a solar panel with a power module attached. Therefore, in its condition as imported, the solar panel was capable of supplying power to an external load, and classification under 8541.40.60, HTSUS, was improper. Instead, we concluded that the merchandise was properly classified under subheading 8501.61, HTSUS, as “Electric motors and generators…: AC generators: Of an output not exceeding 75 kVA.”Here, as in NY N160415, the merchandise consists of a solar panel with a power modulator (or “microinverter”) attached. This microinverter allows the unit to convert the direct current electricity generated by the solar panels into alternating current electricity that is capable of supplying power to an external load. The technical spe