CLA-2 CO:R:C:G 086400 MBR
Mr. Kenneth H. Keefe
Sandler, Travis & Rosenberg, P.A.
5200 Blue Lagoon Drive
Miami, Florida 33126-2022
RE: Scientific-Atlanta B-MAC integrated receiver/decoder for the
transmission of encrypted audio and data communications
Dear Mr. Keefe:
This is in reply to your letter of April 20, 1990, on behalf of
Scientific-Atlanta, requesting classification of B-MAC integrated
receiver/decoder, under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA).
FACTS:
The B-MAC Integrated Receiver/Decoder (hereafter "IRD") is a
single integrated unit, combining both a receiver and a decoder.
The IRD is used for closed circuit video/audio transmissions.
These are private video networks used for business purposes,
hence the need to ensure security and addressability for closed
circuit applications. The IRD is designed to receive satellite-
delivered, C- or Ku-band video signals at the L-band frequencies
(950-1450 MHz) with a 22 MHz IF filter as the standard. The IRD
receives an encoded signal from a satellite, amplifies it,
decodes it and then transmits the decoded signal to a monitor for
reception and viewing. The IRD will only unscramble an encoded
signal assigned to a particular subscriber.
ISSUE:
What is the classification of the B-MAC Integrated
Receiver/Decoder under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA)? Is the appropriate
classification 8528.10.80.55, HTSUSA, which provides for other
television receivers not having a picture tube, or is it
classifiable under 8525.10.20.20, HTSUSA, which provides for
transmission apparatus for television...whether or not
incorporating reception apparatus...decoders... designed for
cable or closed circuit television applications?
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) to the HTSUSA
govern the classification of goods in the tariff schedule. GRI 1
states, in pertinent part:
...classification shall be determined according to the terms
of the headings and any relative section or chapter notes...
The IRD is a single unit which is an integrated receiver and a
decoder. In this regard, Section XVI, Legal Note 3, provides
guidance:
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.
It is Customs position that the principal function of the IRD
is the decoding function. Clearly, the IRD would not be
purchased by a business or individual who only required a
receiver. This machine is designed exclusively for high security
satellite transmissions for cable and closed circuit television
systems, thus the need for encoding and decoding.
Further, the IRD is "[t]ransmission apparatus...for
television." The term "apparatus" has been defined by the courts
as a combination of articles and materials which are intended,
adapted and necessary for the accomplishment of some purpose.
The Deseret Co., v. United States, ___CIT___, Slip. Op. 86-93
(1986). The IRD is clearly a combination of articles and
materials which are intended, adapted and necessary for the
transmission of an intelligible signal to the television monitor.
Therefore, the IRD is properly classifiable under
8525.10.20.20, HTSUSA, which provides for: "transmission
apparatus for television...whether or not incorporating reception
apparatus...decoders... designed for cable or closed circuit
television applications."
HOLDING:
The B-MAC Integrated Receiver/Decoder is classifiable under
8525.10.20.20, HTSUSA, which provides for: "transmission
apparatus for television...incorporating reception
apparatus...decoders... designed for cable or closed circuit
television applications." The rate of duty is 3.6% ad valorem,
when originating in Canada.
Sincerely,
Jerry Laderberg
Acting Director
Commercial Rulings Division