CLA-2 RR:CR:GC 966072 DBS
Ms. Debbie Kassebaum
Largan Inc.
2432 West Peoria Avenue, Building 9
Phoenix, AZ 85029
RE: Revocation of NY I84955; Digital cameras
Dear Ms. Kassebaum:
This is in reply to your request of November 21, 2002, for reconsideration of New York Ruling Letter (NY) I84955, issued to Largan Inc., on August 22, 2002, concerning the classification of a multi-functional digital camera and accompanying goods under the Harmonized Tariff Schedule of the United States (HTSUS). In NY I84955, Customs classified the “Largan Chameleon Mega Camera” in subheading 8525.40.80, HTSUS, which provides for other still image video cameras, video camera recorders and digital cameras. We have reviewed NY I84955 and have determined the ruling to be incorrect for the reasons set forth below. A sample was submitted. We regret the delay in responding.
In your request for reconsideration, you cited several rulings which appear to be inconsistent. We have reviewed those rulings and have determined that NY I84563, dated August 2, 2002, is incorrect, and NY I86730, dated October 22, 2002, is, in part, incorrect. The reconsideration of these rulings will be addressed in HQ 966531 and HQ 966530, respectively.
Pursuant to section 625(c), 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, 2186 (1993), notice of the proposed revocation of the above identified ruling was published on July 23, 2003, in the Customs Bulletin, Volume 37, Number 30. No comments were received in response to the notice.
FACTS:
You describe the subject digital camera as the “Largan Chameleon Mega 1.3 Megapixel Digital Camera.” In NY I84955, the digital camera was described as a composite good with multiple functions. Largan Inc.’s website, descriptive materials, and packaging state that the camera is a “4-in-1 camera,” with digital still image, video, TV, and PC camera functions.
The basic components in the camera, all of which are incorporated into a rectangular housing (approximately 3.48 inches x 2.26 inches x 0.81 inches), are as follows: a CCD (charged-coupled device) image sensor, 16 MB internal flash memory, a fixed-focus lens, a data-conversion device for converting analog data from the CCD into digital data format for transmission by the Universal Serial Bus (USB) cable, USB and TV connector, optical viewfinder, LCD (liquid crystal display) function menu, synchronized flash, tripod mount, and battery compartment.
This digital camera captures live images in real time (i.e., for videoconferencing) with audio capacity and records digital still images and images in sequential order at 15 frames per second (fps) from 35-90 seconds (i.e., video clips) without audio. It operates independently of a computer, recording approximately 120 photos on 1280 x 1024 (high) resolution, or 228 photos on 640 x 480 VGA mode (low) resolution which can be stored in the camera’s internal flash memory. When connected to a television, it can capture television-generated still images and sequential images.
The camera’s LCD displays only the function menu. The LCD menu provides the following functions: a) delete stored photos individually, or all at once; b) high/low resolution control; c) photo counter; d) photos remaining; e) flash status; f) video recording; g) battery power; h) NTSC/PAL -TV system; i) sound/silent control; j) self-timer; and k) continuous snap shot/single snap shot control. The LCD does not provide a view of recorded images or act as a viewfinder. To view recorded images and clips, the digital camera must be connected to an automatic data processing (ADP) machine, such as a personal computer, or to a television.
This digital camera is packaged, imported and advertised for sale together with: 1) 2 AAA 1.5 volt batteries; 2) camera strap; 3) USB cable with connectors; 4) TV cable with connectors; 5) instruction manual; 6) user’s guide; 7) tripod; 8) leatherette camera case; and 9) CD-ROM installation software.
You claim that the digital camera is classifiable in subheading 8525.30.90, HTSUS, which provides for television cameras, or in the alternative, in subheading 8525.40.40, HTSUS, which provides for digital still image video cameras.
ISSUES:
1) Whether digital cameras are within the scope of the term “digital still image video cameras” of subheading 8525.40.40, HTSUS.
2) Whether the camera and accompanying merchandise are classifiable as “a set put up for retail sale” under the HTSUS.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined 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 understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are generally indicative of the proper interpretation of these headings. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The HTSUS provisions under consideration are as follows:
Transmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras; still image video cameras and other video camera recorders; digital cameras:
Television cameras:
8525.30.90 Other
* * *
Still image video cameras and other video camera recorders; digital cameras:
Digital still image video cameras
* * *
8525.40.80 Other
NY I84955, Customs stated that this digital camera is a composite good. A composite good is a good which is prima facie classifiable, in part only, in more than one heading. This digital camera is not a composite good, but rather a machine whose functions all fall within the scope of heading 8525, HTSUS. Thus, classification at the heading level is not in dispute. To determine in which subheading this digital camera is classified, we must employ GRI 6, which permits the comparison of same-level subheadings within a heading, in part by application of Rules 1 through 5, applied by the appropriate substitution of terms. Only subheadings at the same level are comparable, so we must first address the 6-digit level.
Subheading 8525.30, HTSUS, in pertinent part, provides for “television cameras.” Subheading 8525.40, HTSUS, in pertinent part, provides for “still image video cameras and other video camera recorders; digital cameras.” You claim that the digital camera is classifiable at GRI 3(a), applied at the 6-digit level by GRI 6, which requires the good be classified according to the most specific description. However, we do not reach GRI 3. According to GRI 1, applied through GRI 6, we must first look to the relevant section and chapter notes.
Section XVI, Note 3, provides:
“Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed 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.” (2003) [Emphasis added.]
EN 85.25, section (C), describes television cameras as including, for example, “television cameras for television studios or for reporting, those used for industrial or scientific purposes or for supervising traffic.” Customs has classified PC cameras, which are those designed to be connected to ADP machines, used for videoconferencing, and for the capture of still images and moving images that do not contain internal or removable storage media as television cameras of subheading 8525.30.90, HTSUS. See e.g., HQ 964973, dated July 17, 2002. PC cameras are designed to transmit video images to an ADP machine for processing or for direct transmission over the Internet, transmitting live image as television cameras do. Therefore, whether this camera transmits real time images directly to a television set, video monitor for surveillance, or to a computer or other device, it performs the function of a category of cameras that fall within the term “television cameras” of subheading 8525.30, HTSUS. See HQ 964973; see also HQ 966172, dated June 4, 2003; HQ 965097, dated July 19, 2002; HQ 958632, dated January 25, 1996; NY A84032, dated May 31, 1996; NY B81818, dated February 13, 1997; NY A81240, dated March 18, 1996; NY F88315, dated June 29, 2000.
The PC videoconferencing function transmits live video images captured by the camera’s CCD to an automatic data processing machine (ADP) monitor via a USB cable attached to the USB connector on the camera’s left side. This live videoconferencing function is supported by the threaded mount in the digital camera’s base and fitted to a tripod for placement on top of an ADP machine’s monitor. Therefore, the camera’s functions are provided for in part by subheading 8525.30, HTSUS.
In the Information Technology Agreement (ITA), which went into effect on July 1, 1997 by Presidential Proclamation No. 7011 (62 FR 35909, June 30, 1997), the U.S. notified the other signatories that it would classify “digital still image video cameras” in subheading 8525.40.40, HTSUS. The intent of the provision was to provide duty-free treatment to a class of digital cameras which have both prior to and since the ITA been provided for in subheading 8525.40, HTSUS. See, e.g., NY 817941, dated January 14, 1996; HQ 960384, dated April 1, 1999 (classifying Casio QV-10 digital cameras entered in 1995); HQ 960664, dated April 20, 1999 (classifying Olympus Digital Still Camera model # D-200L entered in 1995); NY F86533, dated May 17, 2000; and NY G86928, dated February 9, 2001.
The term “digital cameras” was added to the text of heading 8525, HTSUS, and subheading 8525.40, HTSUS, as a result of the 2002 amendment in the HTSUS, effective January 10, 2002. That amendment was intended to clarify that the provisions included cameras that are commonly and commercially known as “digital cameras.” The addition of this term was not intended to change the scope of the heading or subheading level. Generally, digital cameras perform still image capture and limited sequential image capture, but they are not those cameras commonly and commercially known as camcorders.
The legal text to subheading 8525.40, HTSUS, both before and after the 2002 amendment, describes the cameras of the subheading as "recorders." EN 85.25 (3rd Edition, 2002) indicates that the cameras of this category "record images" or "record sequential images." That is, these cameras have the ability to record and store still images or video on permanent or removable media within the camera (e.g., random access memory (RAM), flash memory cards, memory sticks or magnetic tape, as with certain camcorders), such that the images can be retrieved and viewed at a time subsequent to the time they are captured. See HQ 966307, dated June 6, 2003.
In addition to videoconferencing capabilities, the digital camera captures still images and sequential images (up to 90 seconds of video) through a CCD and stores them in the internal flash memory. Though it operates independently from an ADP machine or TV, it must be connected to an ADP machine for viewing and processing, or to a television set for viewing. In addition, it can capture 16 continuous still frames from the television as it can receive NTSC signals and record them. The recording of digital images and the ability to view and process them via ADP machine and TV are functions are provided by subheading 8525.40, HTSUS.
As the digital camera performs functions that are covered by subheadings 8525.30, HTSUS and 8525.40, HTSUS, it is a multifunctional camera designed for the purpose of performing two or more complementary or alternative functions. As such, it is a composite machine, classified according the camera’s principal function, pursuant to Section XVI, Note 3, HTSUS.
The instant camera contains no feature that predominates over any other feature to suggest that one capability constitutes the principal function. In fact, all of the digital camera’s capabilities are advertised equally on the good’s packaging and in the owner’s manual. As such, we are unable to determine the digital camera’s principal function.
General EN (VI) to Section XVI provides that, “[w]here it is not possible to determine the principal function, and where as provided in Note 3 to the Section, the context does not otherwise require, it is necessary to apply General Interpretative Rule 3(c)….” GRI 3(c) provides that “When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.”
Subheadings 8525.30, HTSUS, and 8525.40, HTSUS, merit equal consideration for the reasons stated above. Thus, the digital camera is classified in subheading 8525.40, HTSUS.
Because the 2002 legal text amendment did not change the scope of subheading 8525.40, we find that the scope of subheading 8525.40.40, HTSUS, which provides for “digital still image video cameras,” also did not change. Subheading 8525.40.40, HTSUS, still provides for those articles commonly and commercially referred to as digital cameras. Therefore, subheading 8525.40.80, HTSUS, is not considered. Accordingly, this digital camera is classified in subheading 8525.40.40, HTSUS.
NY I84955 applied GRI 3(c), through Section XVI, Note 3 and GRI 6, to the eight-digit subheading level rather than the six-digit level, as discussed above. Therefore, NY I84955 is incorrect.
The other components that are imported with the camera are each described under a different heading. As such, they cannot be classified according to GRI 1. GRI 2(b) provides that “[t]he classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.”
GRI 3 provides, “when, by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
Insofar as two or more headings each refer to part only of these goods GRI 3(a) does not apply. However, GRI 3(b) provides, in pertinent part:
. . . goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
The EN to GRI 3(b) indicates that to meet the criteria of a set put up together for retail sale, articles must:
consist of at least two different articles, which are, prima facie, classifiable in different headings;
consist of products or articles put up together to meet a particular need or carry out a specific activity; and
are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).
All of the articles are prima facie classifiable in different headings (leatherette case - 4202; plastic tripod/stand – 3926; user’s guide and instruction manual – 4901; batteries – 8506; CD-ROM – 8524; USB and TV cables – 8544; camera strap – 6307).
They are all contribute to the use of the functions of the digital camera, including videoconferencing and capturing, recording, viewing, editing and processing digital images. The digital camera is imported and packaged together for direct sale with the above-listed articles. This is confirmed by information from Largan Inc.’s Internet website, the camera’s packaging, instruction manual, and user’s guide.
Under these facts, the subject goods meet all three criteria of the GRI 3(b) EN, and therefore, form a set put up for retail sale. Thus, the goods are to be classified according to the component that imparts the “essential character” of the set. EN VIII to GRI 3(b) provides that the characteristic which gives a set its “essential character” 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.
It is clear that the digital camera is the most important article in the set. The digital camera is the most valuable article in terms of marketability, for the importer, and in terms of utility, for the consumer. As such, we conclude that the digital camera imparts the “essential character” of the set.
Chapter 85, Legal Note 6, HTSUS, provides that, “[r]ecords, tapes, and other media of heading 8523 or 8524 remain classified in those headings when entered with the apparatus for which they are intended.” However, the note “does not apply to such media when they are entered with articles other than the apparatus for which they are intended.” The CD-ROM installation software is used in an ADP machine, not in the camera. However, it is part of this digital camera set. General EN (B)(1) to Chapter 85, HTSUS, directs that if recorded media presented with apparatus for which it is not intended is part of a set for retail sale, it is classified pursuant to GRI 3(b). Therefore, the instant CD-ROM need not be classified separately; it is subsumed in the set.
HOLDING:
At GRI 3(b), the Largan 1.3 megapixel digital camera set for retail sale is classified in subheading 8525.40.40, HTSUS, which provides for, in pertinent part, “Transmission apparatus for radiotelephony . . . television cameras; still image video cameras and other video camera recorders; digital cameras: Still image video cameras and other video camera recorders; digital cameras: Digital still image video cameras.”
EFFECT ON OTHER RULINGS:
NY I84955, dated August 22, 2002, is hereby REVOKED. In accordance with
19 U.S.C 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division