CLA-2 RR:CR:GC 962354 JAS
Port Director of Customs
300 S. Ferry Street
Terminal Island, CA 90731
RE: Protest 2704-98-101887; Sony Lean Integrated Mastering System; Machinery for Making Glass Master Discs
Dear Port Director:
This is our decision on Protest 2704-98-101887, filed against your classification under the Harmonized Tariff Schedule of the United States (HTSUS), of the Sony Lean Integrated Mastering System-High Density (SLIM-HD), machinery for making metallized glass disc substrates. These discs, in turn, are used to make metal master discs called stampers, for use in the mass replication of compact discs (CDs) and digital video discs (DVDs). The entry under protest was liquidated on July 17, 1998, and this protest timely filed on September 25, 1998.
FACTS:
The SLIM-HD is an in-line system consisting of four (4) components or machines that produce digitally-encoded metal coated glass discs that will be further processed into master discs called stampers. In sequence, a recycle cleaning component removes particles of nickel and excess recording media called photoresist from glass master discs previously produced by the SLIM-HD; another component then polishes the surface of each glass disc, coats the surface with a photoresist material, and cures the disc by baking it on a hot plate; a high density laser beam code ”cutter” then utilizes a krypton or argon laser beam to burn or expose a pattern in the photoresist; and finally, a component both chemically removes the exposed portions of the photoresist to produce “pits,” which represent the digital data in the photoresist, separated by sections called “lands,” and
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also applies a thin layer of conductive nickel over the disc, in a process the industry calls sputtering. All four components of the SLIM-HD in issue are within a single glass or hard plastic enclosure designed to create positive air pressure within. This protects the operations from dirt and other outside contaminants. In subsequent operations performed by machines that are not a part of this protest, metal stampers are produced that contain the requisite digital pattern. The glass portion will be separated from the metal stamper and may be returned to the recycle cleaning machine.
The SLIM-HD was entered under a provision in HTSUS 9017, for drawing or marking-out instruments. The import specialist determined that the SLIM-HD was a composite machine under Section XVI, Note 3, HTSUS, and concluded the principal function of producing metallized glass disc substrates was not specifically described by any 4-digit heading in the HTSUS. The entry was therefore liquidated under a provision of HTSUS heading 8479, as other machine or mechanical apparatus.
The protestant now contends that the SLIM-HD is a composite good, under General Rule of Interpretation (GRI) 3(b), HTSUS, which must be classified according to it’s essential character. In this case, protestant claims the essential character is imparted by the laser beam code cutter because it is the component that represents a majority of the value of the entire system and consumes more than twice the process time of any other component. Protestant asserts this component is provided for in HTSUS heading 9010, as other apparatus and equipment for photographic laboratories, on the basis that laser beam code cutters perform a “photographic” process for purposes of heading 9010. Protestant cites judicial and administrative opinions which, he claims, support the claim under heading 9010. We agree with protestant as to the significance of the laser beam code cutter but, as will be discussed later in this decision, we disagree on its classification.
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The HTSUS provisions under consideration are as follows:
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in [chapter 84]; parts thereof:
Other machines and mechanical appliances:
8479.89.97 Other
* * * *
9010 Apparatus and equipment for photographic laboratories..., not specified or included elsewhere in [Chapter 90]...:
9010.50 Other apparatus and equipment for photographic...laboratories...:
9010.50.60 Other
* * * *
9013 ...other optical appliances and instruments, not specified or included elsewhere in [chapter 90]...:
9013.80 Other devices, appliances and instruments:
9013.80.90 Other
ISSUE:
Whether the SLIM-HD is a composite machine, as defined in Section XVI, Note 3, HTSUS; whether it is a composite good, as defined in GRI 3(b), HTSUS; whether the laser beam code cutter component is classified in heading 9010, or in another provision of Chapter 90.
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LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part
that for legal purposes, classification shall be determined
according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not
require otherwise, according to GRIs 2 through 6. GRI 3(b), HTSUS, states, in part, that composite goods consisting of different components shall be classified as if consisting of that component which gives the good its essential character.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
Section XVI, Note 1(m), HTSUS, excludes articles of
Chapter 90. Therefore, if the SLIM-HD is a good of heading 9010, or any other heading in Chapter 90, it cannot be classified in heading 8479. Relevant ENs at p. 4 state that for purposes of Rule 3 composite goods include, among other things, individual components attached to each other to form a practically inseparable whole, that are adapted one to the other and are mutually complementary, and together they form a whole which would not normally be offered for sale in separate parts. The SLIM-HD conforms to this description. As previously stated, we agree with protestant that the SLIM-HD is a composite good under GRI 3(b), which must be classified according to the laser beam coder cutter component which imparts the essential character to the whole. It is the classification of this component that is now in issue.
Laser beam code cutters, or laser transfer machines or encoders, as they are sometimes referred to in the industry, consist of a laser, a signal processor, an optical modulator, recording optics, and a turning and sledding mechanism. The
ion-type laser uses argon or krypton gas on a 413 nm wavelength to encode data in digital format onto the photoresist coating of the glass substrate. The signal processor converts the digital
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source data to the appropriate compact disc format and sends this data to the Acoustic-Optic Modulator (AOM). The AOM transforms the laser’s continuous wave into a pulsed beam which exposes a pattern in the photoresist-coated glass that represents the digitally-formatted information. The recording optics direct the beam through a series of optical lenses that reduce the laser beam’s diameter to the appropriate size to make the pits. Finally, the turning and sledding mechanism moves the glass disc into and out of position under the laser and spins the disc during the pit forming operation.
Protestant cites one judicial decision and two Headquarters rulings to support the claim that the code cutter performs a “photographic” function for purposes of heading 9010. In
QMS, Inc. v. United States, 19 CIT 551 (1995), color ink sheet rolls for use in thermal transfer printers were found to be classified in HTSUS heading 3702 as photographic film in rolls, on the basis of the Court’s broad interpretation of the term “photographic” as including a “process which permits the formation of visible images directly or indirectly by the action of light or other forms of radiation on sensitive surfaces.” In the present case, the Court’s conclusions are at best dictum, because the merchandise and tariff provisions were different. There was no discussion either of heading 9010, or the scope of term “laboratories” in that heading. HQ 083123, dated December 18, 1989, held that subheading 9010.20.60, HTSUS, other apparatus for photographic laboratories, was sufficiently broad to encompass machines for developing presensitized aluminum printing plates. The ruling stated “Although the word ‘laboratory’ does limit heading 9010 to some extent, it is sufficiently broad to encompass the instant developing apparatus.” This ruling concedes limitations on heading 9010 but does not explain the extent of those limitations. For this reason, and because it classifies merchandise with no demonstrated similarity to a laser beam code cutter, HQ 083123 is not authority for classifying this component. Finally, protestant cites HQ 087315, dated September 10, 1991, for the proposition that if a photoresist material is classifiable in heading 3707, as a chemical preparation for photographic uses, then the machines which use the photoresist must perform a “photographic” function. A laser beam code cutter neither applies the photoresist nor uses the photoresist; the laser beam code cutter acts on the photoresist. In our opinion, there is no demonstrated similarity between the legal notes and tariff provisions in HQ 087315 and those in this case, so that the cited ruling is of little probative value here.
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In HQ 962939, dated July 8, 1999, laser beam code cutters or laser transfer machines were held to be classifiable in subheading 9013.80.90, HTSUS, as other optical appliances or instruments. The principles of HQ 962939, and decisions cited, are incorporated by reference in this decision. In concert with HQ 956839, dated March 28, 1996, which HQ 962939 cited with approval, it is our opinion that the laser beam code cutter or laser transfer machine is an optical appliance or instrument which does not contain significant electrical or mechanical features, and in which the optics clearly are not subsidiary. Laser beam code cutters or laser transfer machines are classifiable in subheading 9013.80.90, HTSUS.
In reaching this decision, we recognize that numerous apparatus that incorporate lasers, laser beam code cutters, and/or other optical elements may not be classified as optical instruments or appliances in Chapter 90 because they possess “significant electrical or mechanical features.” Therefore, this decision relates only to the classification of the SLIM-HD. It is not authority for classifying other instruments and appliances that contain optical components.
HOLDING:
Under the authority of GRI 3(b), HTSUS, the SLIM-HD is provided for in heading 9013. It is classifiable in subheading 9013.80.90, HTSUS. Because the rate of duty under this provision is more than the liquidated rate, you should reclassify the
SLIM-HD as indicated, and DENY the protest.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision
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the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division