Customs tariff in simple terms: "mechanical and electric appliances" of chapters 84 and 85
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The mechanical engineering industry has a problem. Or more specifically the customs specialists at the respective companies. The departments of these companies can cooperate so well with each other and provide each other with important information for everyday work, but the customs tariff is and remains a sticking point. Simply because there is little background knowledge about it and also the limited offer of further education often focuses on the customs tariff in general. This is also one of the reasons why ERP master data around foreign trade is often not correctly maintained.
Even during my training as a Swiss customs officer in 2006, the two most important customs tariff chapters for mechanical engineering, chapters 84 and 85, were rather neglected. Simply because there is often a lack of in-depth technical know-how. Of course, I do not just bring that with me. I acquired it especially during my activities in the private sector. And today it is still a constant learning process.
In this article, I try to offer an overview and selective deepening in these two chapters.
Clarification of the term "machinery"
What exactly does the customs tariff mean by machinery? It is simple. Under HS note 5 to section XVI, I learn that the tariff defines "machinery" as it is described in the wordings under the first 4 digits (also named "HS heading") of the customs tariff number in terms of its function.
For example, for a "diaphragm pump" I first look for the appropriate functional description in chapters 84 and 85 at the 4-digit tariff number level.
I search for it using the search function of my web browser. I first call up chapter 84 and enter the word "pump".
I find the word "pump" in heading "8413 - Pumps for liquids, whether or not fitted with a measuring device; liquid elevators". Even if the diaphragm pump is not mentioned there one-to-one, it still represents a "pump for liquids".
Next I check if there are any exclusions from this chapter. For this, I call up the notes to section XVI.
Machines with different functions: what now?
Using the diaphragm pump as an example, I ask myself the following: what happens now if this diaphragm pump is equipped with all kinds of components such as valves or an electric motor? Valves are mentioned for example in HS heading 8481, the electric motor in HS heading 8501. Which heading do I choose in this case?
This is explained in note 3 to section XVI. In the case of machines composed of various components that form a whole and for which there are separate headings in the customs tariff, I must determine the main function of these machines. When I look at the diaphragm pump, it is clear to me that the main function of the diaphragm pump is clearly covered by the tariff text at 8413 "Pumps for liquids (...)". The other components are just parts of the whole pump.
If the valves and/ or electric motor are separately sold as spare parts and shipped loose later than the machine itself, they are of course also classified under their intended headings.
The heart of chapters 84 as well as 85 are the (exclusion) notes to section XVI.
Before I take a closer look at the headings of chapters 84 and 85, I ask myself: does the machine/ spare part even belong in one of those two chapters?
The very first note of section XVI, to which both chapters 84 and 85 belong, as well as the first notes to both chapters are dedicated to spare parts, which are not classified in these chapters. The following exclusions may be relevant to the mechanical engineering industry:
- conveyor belts and transmission belts made of plastics (3926), rubber (4010) or textiles (5910)
- seals made of plastics (3926) or rubber (4016)
- machine parts made exclusively of EPDM, NBR, SBR (4016)
- pipe fittings made mainly of steel (7307) or plastics (3917)
- simple pipes made of plastics (3917) or steel (7303-7306), not manufactured as an assembly
- steel chains (7315)
- bolts, nuts, cotter-pins, washers of steel (7318) or plastics (3926)
- steel (helical) springs (7320)
- interchangeable tools for machines (8207)
- non-electric hand tools with working part of steel, for example grease guns (chapter 82)
- flexible tubing made of metal (8307)
- measuring instruments such as flow meters or pressure gauges generally belong in chapter 90
- ceramic machine parts (6909)
- brushes as machine parts (9603)
Classification of other machine parts
After looking at the exclusion notes according to the above chapter, the question remains as to what else should be considered machine parts or spare parts. Note 2 to section XVI describes these, but in such a complex way that I almost fail to understand. Therefore, here it is in simple terms.
Classification in own HS heading of chapter 84, 85 or 90: components purchased from a supplier with "own" functionalities
If a machine part is mentioned by a heading in chapter 84 or 85, I classify it there and not in the (sub)heading (at the 6-digit level) of the manufactured machine. For example, valves of a coffee machine do not belong to subheading 8516.90, but to heading 8481.
I recommend going through all headings once and crossing out for yourself what is relevant. Often you can also say that if you buy electrical parts or components with "own intelligence" or functionalities from a supplier who is specialized in this field, you will usually find them under a specific heading in chapters 84, 85 or 90.
Classification in the corresponding (sub)heading of machine parts: components manufactured according to CAD drawing
What remains then? Mostly stamped parts or injection-molded parts, which are purchased from a corresponding supplier according to CAD drawing. These then only fit into the particular machine for which they are intended. These parts must be classified in the appropriate "part (sub)headings". For example, an injection-molded housing part of a coffee machine belongs in subheading 8516.90, while the finished appliance itself belongs in subheading 8516.71.
Classification in the appropriate material chapter: general, regular geometrical stamped and injection molded parts
Stamped as well as injection-molded parts with regular shapes such as rectangles, profiles, roundels and the like are not considered "suitable for use solely or principally with a particular kind of machine", even if they were manufactured according to drawings. I classify these parts in the corresponding material chapter.
- chapter 39: plastics
- chapter 40: rubber
- chapter 73: steel
As a rule of thumb, a well-informed layperson should be able to tell without much research whether or not a machine part is considered suitable for use solely or principally with a particular kind of machine.
Which technical data of machines are needed for a proper classification?
When I found a heading for the machines in chapters 84 and 85, I still have to determine the remaining local digits of the customs tariff number, i.e. the so-called subheadings. It is worthwhile to know the technical characteristics of the machine exactly. This may not be easy, especially with machines from suppliers, if data sheets are missing in the ERP system (I can tell you a thing or two about it).
Besides the functionality of the machine, which I need to know for almost every number, these parameters are required for the following numbers:
- steam turbines (8406): power in MW
- internal combustion engines (8407): cylinder capacity in cm3
- hydraulic turbines (8410): power in kW
- turbojet engines (8411): thrust in kN, power in kW
- electric motors (8501): output in W and kVA
- electric generating sets (8502): output in kVA
- electric transformers (8504): power handling capacity in kVA
- electric resistors (8533): power handling capacity in W
- Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits: voltage in V
- electric incandescent lamps and discharge lamps, LED lamps (8539): power in W, voltage in V
- electric cables (8544): voltage in V