CLA-2 RR:CR:GC 966608 KBR
Mr. John P. Donohue
Donohue & Donohue
232 South Fourth Street
Philadelphia, PA 19106
RE: Reconsideration of NY I87338; Karaoke Systems
Dear Mr. Donohue:
This is in reference to New York Ruling Letter (NY) I87338 issued by Customs National Commodity Specialist Division, New York, on November 4, 2002, with respect to the Singer Machine Co., Inc. That ruling concerned the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of karaoke systems imported from China. You have requested that we reconsider this ruling. We have reviewed NY I87338 and determined that the classification provided for the karaoke systems is incorrect.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), 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 March 10, 2004, Vol. 38, No. 11 of the Customs Bulletin, proposing to revoke NY I87338. Two comments were received in response to this notice.
FACTS:
NY I87338 concerned CDG Karaoke Systems models STVG-500 and SMVG-600, imported from China. Model STVG-500 is a device that allows the user to sing along with background music and on-screen lyrics, either alone or with a group of people, for entertainment. This floor standing device is composed of speakers, a 5.5 inch black and white video monitor capable of accepting a video signal from a VCR, a CD+Graphics player, a single cassette player/recorder, a CD-ROM, and a wired microphone, all configured in a wooden cabinet. Also included are the electrical cables necessary for connection to a power source and to a television. Along with the normal controls for the monitor, cassette player/recorder and CD player, the cabinet also has microphone volume, echo and auto voice controls and a pitch control.
The SMVG-600 is a portable karaoke machine composed of self contained speakers, a black and white monitor, a CD and CD+Graphics player, a wired microphone, a built-in video camera, a CD-ROM, all included in one housing. Also included are the necessary cables for connection to a power source and/or television. As with the STVG-500 model, along with the normal controls for the monitor, cassette player/recorder and CD player, the housing also has microphone volume, echo and auto voice controls.
You state that while karaoke systems were first introduced in the 1970’s, video monitors were not added to karaoke systems until almost 30 years later. You state that the video monitor in upper level karaoke machine models comprises no more than
8 - 10% of the production costs. For lower level karaoke machine models, you state the video monitor comprises no more than 18 - 20% of the production costs.
In NY I87338, it was determined that the karaoke machines were classified in subheading 8528.22.00, HTSUS, as reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: video monitors: black and white or other monochrome. We have reviewed that ruling and determined that the classification is incorrect. This ruling sets forth the correct classifications.
ISSUE:
What is the classification under the HTSUS, of karaoke machines, models STVG-500 and SMVG-600?
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). Under GRI 1, merchandise is classifiable 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 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 (ENs). 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:
8519 Turntables, record players, cassette players and other sound reproducing apparatus, not incorporating a sound recording device:
Other sound reproducing apparatus:
8519.99.00 Other
* * * * *
8520 Magnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device:
Other magnetic tape recorders incorporating sound reproducing apparatus:
8520.33.00 Other, cassette type
* * * * *
8528 Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors:
Video monitors:
8528.22.00 Black and white or other monochrome
* * * * *
8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:
Other machines and apparatus:
Other:
Other:
Other:
8543.89.96 Other
The articles at issue are two models of karaoke machines imported by The Singing Machine Co., Inc., models STVG-500 and SMVG-600. The devices are intended to allow the user to sing along with background music and view the lyrics for singing on the device’s video monitor. There is a microphone which allows the user’s voice to be transmitted and amplified to play through the device’s speakers along with the background music. Noteworthy distinctions between the two models are that model STVG-500 contains a cassette player/recorder which allows the user to record his performance and model SMVG-600 contains a built in video camera but no recording capability. Taken individually, the different functions of the components of the karaoke machine would be classified in different headings of Chapter 85, HTSUS.
Because of the machines’ multiple components, NY I87338 cited GRI 3 to determine the classification of the karaoke machines. However, we must first consider classification of these multi-function articles of Chapter 85, HTSUS, pursuant to
GRI 1. See HQ 966530 (September 4, 2003), HQ 966531 (September 4, 2003) and
HQ 966072 (September 4, 2003). To classify the articles according to GRI 1, we must first look to the relevant section and chapter notes. HTSUS 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.
We find that the subject karaoke machines are composite machines within the meaning of Note 3. We further find that the principal function of the karaoke machines is as a sound reproduction device. The reason a person would use the instant karaoke machines is to reproduce sounds to sing along to. The additional features of a monitor which displays the words, a cassette deck to record the performance, and a built-in camera to record the performance, are all ancillary to the main function of allowing a person to sing to reproduced music. The additional features were developed well after karaoke machines were first sold. A person could, and conceivably would, fully use the instant machines for their intended purpose without using the additional features.
Customs has previously found that a basic karaoke machine (one without a cassette recorder, a monitor, or a built-in video camera) is classified in subheading 8519.99.00, HTSUS. See NY C88162 (June 9, 1998) and NY J82864 (April 3, 2003) (involving another model of “Singing Machine”). Customs also classified karaoke machines in this same provision when they included components such as cassette players, monitors or cameras. See NY J84858 (June 4, 2003) (karaoke machine with a cassette player), NY J88831 (September 22, 2003) (karaoke machine with a monitor) and NY I83939 (July 11, 2002) (karaoke machine with a video camera). In NY I85748 (September 5, 2002), Customs ruled that the most important component of a karaoke machine with a live action camera was determined by the sound reproducing equipment of the karaoke machine, not the accessory feature of the live action camera.
Conversely, in NY H80326 (May 3, 2001) (involving karaoke machines with several additional components notably an AM/FM radio) and NY J80054 (January 21, 2003) (involving a combination karaoke machine, color television and VCR (video cassette recorder)), Customs found that the articles were not classified pursuant to GRI 3(b) under heading 8519, HTSUS, but were classified pursuant to GRI 3(c). See
NY F82080 (February 2, 2000) (classifying karaoke machines, AM/FM radio and cassette player/recorder similarly but without GRI 3 analysis). GRI 3(c) states that when a composite good cannot be classified pursuant to GRI 3(a) or (b) it must be classified under the heading which occurs last in numerical order among those headings which equally merit consideration. With respect to the goods in NY H80326,
NY J80054, and NY F82080, the AM/FM radio feature and the color television/VCR allow a user to use the device for a purpose other than as a karaoke machine – simply as a radio or television or video player. This is distinguishable from the instant karaoke machines because there is not one principal function for these other articles. The instant karaoke machines will realistically only be used for their karaoke ability.
Therefore, pursuant to GRI 1 and Section XVI, Note 3, we find that the principal function of the instant karaoke machines is determined by their sound reproducing function. Model SMVG-600 is classified under subheading 8519.99.00, HTSUS, as turntables, record players, cassette players and other sound reproducing apparatus, not incorporating a sound recording device, other sound reproducing apparatus, other. However, heading 8519, HTSUS, specifically excludes articles with a sound recording device. Therefore, because it has recording capability, Model STVG-500 is not classified under heading 8519, HTSUS.
You believe that heading 8520, HTSUS, should be the appropriate classification for the instant karaoke machines. However, heading 8520, HTSUS, which involves magnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device, is also not appropriate for the Model STVG-500 karaoke machine. Although one component of the karaoke machine may be classified in heading 8520, HTSUS, as we have stated above, the principal function of the article is as a sound reproducing apparatus. To classify the article in heading 8520, HTSUS, would be to classify the article as if its principal function was that of a recording device, which is not the case here. Because there is no heading which eo nomine provides for sound reproducing apparatus with recording capability, Model STVG-500 is classified in subheading 8543.89.96, HTSUS, as electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter, other machines and apparatus, other, other, other, other.
HOLDING:
Karaoke machine Model SMVG-600 is classified under subheading 8519.99.0060, HTSUS, as turntables, record players, cassette players and other sound reproducing apparatus, not incorporating a sound recording device, other sound reproducing apparatus, other, other. The 2004 tariff General duty rate is “Free”. Model STVG-500 is classified in subheading 8543.89.9695, HTSUS, as electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter, other machines and apparatus, other, other, other, other, other. The 2004 tariff General duty rate is 2.6% ad valorum. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
EFFECT ON OTHER RULINGS:
NY I87338 dated November 4, 2002, is REVOKED. In accordance with 19 U.S.C. §1625(c), this ruling will become effective sixty (60) days after publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division