Imported Hydrogen Fuel Cell Components Are 'Parts,' Not 'Water Gas Generators,' DOJ Argues
CBP correctly classified a supermodule for use in hydrogen fuel-cell powerplants as parts of electric generators rather than as a water gas generator, DOJ argued in a March 15 motion at the Court of International Trade (HyAxium v. United States, CIT # 21-00057).
HyAxium's imported PC50 supermodule, when incorporated into HyAxiom's Model 400 hydrogen fuel-cell powerplant, "neither generates a 'water gas' nor operates as a 'water gas generator,'" DOJ said in its heavily redacted brief. By itself, the PC50 cannot generate gas "or function whatsoever in its imported state," DOJ said, arguing against HyAxium's preferred classification in Harmonized Tariff Schedule heading 8504.
Even when incorporated into a Model 400, the PC50 does not generate a water gas, defined by the explanatory notes as a mixture of carbon monoxide and hydrogen produced by passing air and steam over burning fuel. Instead, it is the combined reactions of other parts that are required to produce a hydrogen-rich fuel to generate electricity, heat, and water, DOJ argued.
CBP's classification under HTS heading 8503 as "parts suitable for use solely or principally with the machines of heading 8501 or 8502" was correct, DOJ argued, saying that the PC50 is dedicated solely for use with the Model 400 and can't function unless incorporated into a completed assembly. The PC50 isn't an incomplete electric generator of heading 8501 because CBP has consistently ruled that the essential character of fuel cell electric generators is the fuel cell stacks, DOJ added.
The case was brought in 2021 after CBP denied a protest seeking reliquidation of two PC50s brought in through the Port of New York/Newark in 2018. The entry automatically liquidated in November 2019 under subheading 8405.10.00 In January 2020, CBP issued HyAxiom a Notice of Action, which rate-advanced and reclassified the entry at issue under subheading 8503.00.95, dutiable at 3%.
In its December motion for summary judgment, HyAxiom asked the court to reinstate the original liquidation subheading of 8405.10.00 and order CBP to refund nearly $6,000 in duties, plus interest.