ENT-1-RR:IT:EC 114459 GOB
5001 Baum Blvd.
Pittsburgh, PA 15224
RE: Internet; Importation; General Note 16(b), HTSUS; Software
modules and products; 19 CFR 141.4(b)(1)
Dear Mr. Lozev:
This ruling is in response to your letter of August 12,
You ask whether software modules and products which are
brought into the United States via the Internet are subject to
duty. You describe the pertinent facts as follows:
We plan to outsource some of our development to
software companies in Eastern Europe and/or India. We
plan to purchase from them software modules (source
code and/or binary code) which we will incorporate into
our products or will sell without any modification to
individual users and organizations. Both the importing
and the selling will be done over the Internet.
In a telephone conversation you confirmed that the product
will be imported via the Internet (i.e., this is not a situation
where the sale will be made over the Internet and the product
will be shipped separately).
You ask: "Is the import of software modules and products as
described above subject to any customs duties/fees?"
Whether software modules and products which are brought into
the United States by the Internet are subject to entry and the
payment of duty.
LAW AND ANALYSIS:
19 U.S.C. 1401(c) provides:
The word "merchandise" means goods, wares, and chattels
of every description, and includes merchandise the
importation of which is prohibited, and monetary
instruments as defined in section 5312 of Title 31.
Black's Law Dictionary (6th ed., 1990) defines merchandise
as "[a]ll goods which merchants usually buy and sell, whether at
wholesale or retail; wares and commodities such as are ordinarily
the objects of trade and commerce."
Black's Law Dictionary, supra, defines "goods, wares, and
merchandise" as "[a] general and comprehensive designation of
such chattels and goods as are ordinarily the subject of traffic
Your letter indicates that the software modules and
products will be purchased by Intellectronix and sold by
Intellectronix. It appears clear from the facts that the subject
software modules and products will be the objects of trade and
commerce in the ordinary course of their use.
Accordingly, we find that the subject software modules and
products are "merchandise" and "goods" within the meaning of the
In Loblaw Grocetarias, Inc. v. United States, 22 C.C.P.A.
479 (1935), the court stated:
It must be held that within the ordinary meaning of the
word "import," this merchandise was imported from
Canada. "Importation * * * consists in bringing an
article into a country from the outside." Cunard S.S.
v. Mellon, 262 U.S. 100. 122. See, also, The
Conqueror, 49 Fed. 99, 102; United States v. Estate of
Boshell, 14 Ct. Cust. Appls. 273, T.D. 41884. Its
meaning is the opposite of "export." Kidd v. Flagler,
54 Fed. 367, 369.
We further find that the transmission of software modules
and products to the United States from a foreign country via the
Internet is an importation of merchandise into the customs
territory of the United States in that the software modules and
products are brought into the United States from a foreign
country. The fact that the importation of the merchandise via
the Internet is not effected by a more "traditional vehicle"
(e.g., transported on a vessel) does not influence our
determination. The essential facts are that merchandise in a
foreign country is brought into the United States.
Requirement of Entry and Duty
General Note 1, Harmonized Tariff Schedule of the United
States ("HTSUS") provides that "[a]ll goods provided for in this
schedule and imported into the customs territory of the United
States from outside thereof ... are subject to duty or exempt
therefrom as prescribed in general notes 3 through 14, inclusive,
and general note 16."
General Note 16, HTSUS, provides in pertinent part:
Exemptions. For the purposes of general note 1-
(b) telecommunications transmissions,
are not goods subject to the provisions of the tariff
In Ruling 960179 dated April 17, 1997, Customs stated:
With regard to software entered via electronic
transmissions, General Note 16(b), HTSUS, exempts
telecommunications transmissions from the general rule
that all goods provided for in the HTSUS are subject to
duty. Therefore, no duty is owed if software is
entered via electronic transmissions.
19 CFR 141.4 provides in pertinent part:
141.4 Entry required.
(a) General. All merchandise imported into the United
States is required to be entered, unless specifically
(b) Exceptions. The following are the exceptions to
the general rule:
(1) The exemptions listed in General Note 16 to the
Harmonized Tariff Schedule of the United States
Pursuant to the authorities detailed above, the software
modules and products which are imported into the United States by
the Internet are not subject to duty, nor are they required to be
The software modules and products, which are imported into
the United States via the Internet, are not subject to duty, nor
are they required to be entered.
Entry Procedures and Carriers