CLA-2 CO:R:C:M 952673 MBR

Mr. Richard Brown
Yamato Customs Brokers USA, Inc.
1180 McLester St., Suite 1
Elizabeth, NJ 07201

RE: Sega Of America, Inc.; Sega CD; Mega CD; Genesis; Video Game Equipment; Compact Disc; Read Only Memory; ROM

Dear Mr. Brown:

This is in reply to your letter of September 21, 1992, requesting classification of the Genesis video game component called the "SEGA CD" or "MEGA CD," under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The "SEGA CD" or "MEGA CD" (hereafter "Sega CD") is described as a high intensity CD-ROM (compact disc read only memory) machine to be used in conjunction with the Genesis video game system. The submitted literature states that the Sega CD "is a complete system that lets you enjoy outstanding audio, video, and games on compact disc. It connects to your Sega Genesis to play sharp, clean sound and brilliant graphics with up to 64 colors from a palette of 512 colors on your TV. You can even enjoy rich stereo sound by adding headphones, a portable cassette player or stereo speakers." The Sega CD contains a 16 bit processor that operates in conjunction with the 16 bit processor in the Genesis system. Each compact disc contains 500 times the amount of information as one regular game cartridge.

The Sega CD also includes 5 compact discs (3 game CDs, 1 music CD with graphics, and one music only CD).

ISSUE:

What is the classification of the Sega CD video game and compact disc player imported with compact discs, under the Harmonized Tariff Schedule of the United States (HTSUS)?

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LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) to the HTSUS 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 Sega CD is a video game and a music compact disc player. Therefore, it is a multi-function machine that is prima facie classifiable under the following provisions:

* * * * * * * * * * * * * *

8519 Turntables, record players, cassette players and other sound reproducing apparatus, not incorporating a sound recording device:

8519.99.00 Other sound reproducing apparatus: Other

* * * * * * * * * * * * * *

9504 Articles for arcade, table or parlor games, including pinball machines:

9504.10.00 Video games of a kind used with a television receiver and parts and accessories thereof

The Harmonized Commodity Description Coding System Explanatory Notes (ENs) to the HTSUS, regarding multi-function machines, page 1132, state in pertinent part: "[i]n general, multi-function machines are classified according to the principal function of the machine." The Sega CD is designed and marketed principally for its video game function. It has special connections for the Genesis system, and its control functions are primarily operated by viewing on a television screen. Thus, while the Sega CD is capable of playing standard music compact discs, it is Customs opinion that the principal function is that of the video game function. This is not akin to a standard music CD player that would be purchased principally for music CD operation.

Chapter 85, Legal Note 6, provides as follows: "[r]ecords, tapes and other media of heading 8523 or 8524 remain classified in those headings, whether or not they are entered with the apparatus for which they are intended." Therefore, the compact discs that are imported with the Sega CD are classifiable separately in subheading 8524.90.40, HTSUS, which provides for: "[r]ecords, tapes and other recorded media for sound or other similarly recorded phenomena...: [o]ther: [o]ther."

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HOLDING:

The Sega CD multi-function video game system and music compact disc player is classifiable in subheading 9504.10.00, HTSUS, which provides for: "[a]rticles for arcade, table or parlor games, including pinball machines: [v]ideo games of a kind used with a television receiver and parts and accessories thereof." The rate of duty is 3.9 percent ad valorem.

The compact discs that are imported with the Sega CD are classifiable separately in subheading 8524.90.40, HTSUS, which provides for: "[r]ecords, tapes and other recorded media for sound or other similarly recorded phenomena...: [o]ther: [o]ther." The rate of duty is 9.7 cents per square meter of recording surface.

Sincerely,

John Durant, Director