CLA-2 RR:CR:GC 965763 KBR
Mr. Kent Sunakoda
James J. Boyle & Co.
Ocean Import & Export 2525 Corporate Place, #100
Monterey Park, CA 91754
RE: Reconsideration of NY G88344; Home Theater Sound System
Dear Mr. Sunakoda:
This is in reference to a ruling, New York Ruling Letter (NY) G88344, issued to you on behalf of Onkyo USA Corporation, by the Customs National Commodity Specialist Division, on March 16, 2001, concerning the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of a home theater sound system. We have reviewed NY G88344 and have determined that the classification provided is incorrect.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice was published on July 31, 2002, in Vol. 36, No. 31 of the Customs Bulletin, proposing to modify NY G88344. No comments were received in response to this notice. This ruling modifies NY G88344 by providing the correct classification for the home theater sound system.
NY G88344 concerns the Onkyo Dolby digital/DTS 5.1ch (Model GXW-5.1) home theater speaker system. The system consists of a subwoofer and five 10 watt amplified satellite speakers. The subwoofer has a built in Dolby digital/DTS decoder and a six channel signal processor and a 25 watt amplifier. The system is designed to turn a personal computer (PC), television, DVD or portable stereo into a “surround sound” system. All the components of the system are imported, and will be sold, in the same carton.
In NY G88344, it was determined that the home theater speaker system was classifiable as loudspeakers, whether or not mounted in their enclosures, other, other, under subheading 8518.29.80, HTSUS. We have reviewed that ruling and determined that the classification of the home theater speaker system is incorrect. This ruling sets forth the correct classification.
What is the proper classification under the HTSUS of the subject home theater speaker system?
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). The systematic detail of the HTSUS is such that virtually all goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.
In interpreting the headings and subheadings, Customs looks to the Harmonized Commodity Description and Coding System Explanatory Notes (EN). Although not legally binding, they provide a commentary on the scope of each heading of the HTSUS. It is Customs practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS provisions under consideration are as follows:
8518 Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones, earphones and combined microphone/speaker sets; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof:
Loudspeakers, whether or not mounted in their
8518.21 Single loudspeakers, mounted in the same enclosure
8518.22.00 Multiple loudspeakers, mounted in the same enclosure
8518.40 Audio-frequency electric amplifiers:
8518.50.00 Electric sound amplifier sets
The Model GXW-5.1 home theater speaker system is comprised of two components, the subwoofer speaker with the built in amplifier/sound processor, and the satellite speakers. EN 85.18(E) describes the term “electronic sound amplifier set” as consisting of three articles: a microphone, an audio-frequency amplifier, and loudspeakers. The home theater sound system does not contain a microphone. Therefore, we believe that classification of the instant goods in subheading 8518.50.00, HTSUS, is incorrect.
There is no disagreement that the home theater system under consideration, Model GXW-5.1, is classified in heading 8518. The question is whether these goods form a set put up for retail sale. For the instant case, applying GRI 6 at the subheading level, two provisions at the same level of subdivision within heading 8518 describe the home theater sound system in part, amplifiers and loudspeakers. We turn to GRI 3(b) which states that when goods are prima facie classifiable under two or more (sub)headings, classification shall be effected as follows:
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a) [by reference to the (sub)heading which provides the most specific description], shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
EN (X) for GRI 3(b), states that "[f]or the purposes of this Rule, the term 'goods put up in sets for retail sale' shall be taken to mean goods which:
(a) consist of at least two different articles which are, prima facie, classifiable in different headings . . .; (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards)."
Here, the Model GXW-5.1 home theater speaker system has multiple components of different subheadings; is packaged for the specific activity of providing a sound system for a television, DVD, PC, or portable stereo; and is packaged in one box for retail sale directly to the consumer without repacking. Therefore, it qualifies as a set pursuant to GRI 3(b). See HQ 085577 (January 10, 1990).
GRI 3(b) states that sets are to be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. Under EN (VIII) to GRI 3(b), the factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
Customs has taken the position that, in an essential character analysis for purposes of GRI 3(b), the role of the constituent materials or components in relation to the use of the goods is generally of primary importance, but the other factors listed in EN (VIII) for GRI 3(b) should also be considered, as applicable (see, e.g., HQ 961095 dated July 20, 1998; HQ 962047 dated May 17, 1999).
The question is which component of the system provides the essential character to the set. The amplifier/sound processor is considered the “heart” of a home theater system. See Howstuffworks.com, “How Home Theater Works”, by Tom Harris. The amplifier/sound processor provides the power to drive the speakers and subwoofer. The amplifier/sound processor receives a signal from an input device such as a television or DVD player, interprets, decodes and amplifies the signal and sends it to the speakers, and is equipped to decode Dolby Digital, DTS and Dolby Pro-Logic inputs. It has a master volume control to determine the level of output the speakers produce.
However, the purpose of a home theater system is to provide the listener with a “movie theater” quality “surround sound”. The listener uses 5 speakers to receive sound as if that sound is occurring all around the room. The listener desires the vibrations provided by the subwoofer to get the “feel” of the action.
We find that the Model GXW-5.1 home theater speaker system does not have one essential character. Both the amplifier/sound processor and the speakers merit equal consideration. Therefore, pursuant to GRI 3(c), the Model GXW-5.1 home theater speaker system is classifiable under the subheading which occurs last in numerical order, subheading 8518.40.20, HTSUS, as an audio-frequency electric amplifier, other.
Pursuant to GRI 3(c), the Model GXW-5.1 home theater speaker system is classified in subheading 8518.40.20, HTSUS, an audio-frequency electric amplifier, other.
EFFECT ON OTHER RULINGS:
NY G88344, dated March 16, 2001, is REVOKED. In accordance with 19 U.S.C. § 1625(c), this ruling will become effective sixty (60) days after its publication in the Customs Bulletin.
Myles B. Harmon, Acting Director
Commercial Rulings Division