CLA-2 OT:RR:CTF:TCM H003733 HkP
Nancy A. Fischer, Esq.
Ada Loo, Esq.
Pillsbury Winthrop Shaw Pittman LLP
2300 N Street, NW
Washington, D.C. 20037-1128
RE: Revocation of NY M80558; XM PAL/Rocky Boombox
Dear Ms. Fischer and Ms. Loo:
This is in response to your letter of November 20, 2006, in which you requested reconsideration of New York Ruling Letter (“NY”) M80558, issued to you on March 28, 2006, on behalf of your client, XM Radio Satellite, Inc. (“XM”). At issue in that ruling was the classification of the PAL/Rocky Convertible Boombox™ (“Boombox”) docking station under the Harmonized Tariff Schedule of the United States (“HTSUS”). In NY M80558, CBP classified the docking station under heading 8543, HTSUS, as electrical machines and apparatus, having individual functions, not specified or included elsewhere in Chapter 85. For the reasons set forth below, we hereby revoke NY M80558.
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 was published on August 28, 2008, in the Customs Bulletin, Volume 42, Number 36. One comment was received from your firm in response to this notice regarding the proposed revocation of NY M80558. A discussion of the comment and CBP’s reasoning is found in the “Law and Analysis” section below.
FACTS:
The merchandise at issue, in its imported condition, consists of a package for retail sale containing the Boombox and an associated wireless remote control unit. The Boombox is a portable, waterproof device with the following features:
A docking station specifically designed to cradle an XM PAL or Rocky receiver.
A satellite radio antenna for receiving satellite radio transmissions from the ether.
Two loudspeakers, audio amplification capability and volume control.
A headphone jack for connecting headphone speakers.
A power source (batteries or an attached power cord).
The Boombox is imported packaged together with a wireless remote control (collectively, the “Boombox kit”). The XM PAL or Rocky receiver is not imported with the Boombox.
You have told us that the Boombox’s antenna receives radio waves broadcast over the ether by XM’s satellites and terrestrial repeaters and converts those radio waves into a small electric current, that is, a radiofrequency (“RF”) signal. When a receiver is inserted into the Boombox the RF signal produced by the antenna passes to the receiver through the antenna module located inside the receiver. That signal is then selected, amplified, detected and recorded and ultimately heard through the speakers as XM programming.
U.S. Customs and Border Protection (“CBP”) previously classified the Boombox as “other” electrical machines and apparatus not specified or included elsewhere, in subheading 8543.89.9695, HTSUSA. We note that pursuant to the 2007 changes to the HTSUS, the goods of subheading 8543.89.96, HTSUS, have been transferred to subheading 8543.70.96, HTSUS, among other subheadings. It is your belief that the proper classification of this merchandise is under heading 8529, HTSUS, as a part suitable for use solely or principally with satellite radio receivers. In addition, you state that the Boombox with wireless remote is a set for classification purposes and that the Boombox imparts the essential character of the set.
ISSUE:
What is the correct classification of the Boombox under the HTSUS?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is 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 2 through 6 may then be applied in order.
The 2008 HTSUS provisions under consideration are as follows:
8504 Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof:
8504.40 Static converters:
8504.40.95 Other…..
8518 Microphones and stands therefore; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof:
Loudspeakers, whether or not mounted in their enclosures:
8518.22.00 Multiple loudspeakers, mounted in the same enclosure …..
8529 Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528:
8529.10 Antennas and antenna reflectors of all kinds; parts suitable for use therewith:
8529.10.90 Other …..
8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:
8543.70 Other machines and apparatus:
Other:
Other:
8543.70.96 Other …..
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
You contend that the Boombox qualifies as a part suitable for use with the XM PAL and Rocky satellite radio receivers because it is directly related to the satellite receivers and is dedicated solely for use with these receivers. CBP previously found that the Boombox was an accessory rather than a part because the receivers do not need the Boombox to operate. In doing so, you claim that CBP failed to apply relevant court precedents when classifying the merchandise at issue.
In our proposed ruling, we stated that the courts have considered the nature of “parts” under the HTSUS and two distinct though not inconsistent tests have resulted. (See Bauerhin Technologies Limited Partnership, & John V. Carr & Son, Inc. v. United States, (“Bauerhin”) 110 F.3d 774 (“We conclude that these cases are not inconsistent and must be read together.” At 779)). The first, articulated in United States v. Willoughby Camera Stores, (“Willoughby Camera”) 21 C.C.P.A. 322 (1933) requires a determination of whether the imported item is “an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article.” At 324. The second test of whether an article is a part is applied to imported articles dedicated to a specific use and “must be determined from the nature of the article as it is applied to that use.” United States v. Pompeo, (“Pompeo”) 43 C.C.P.A. 9, 14 (1955). Explaining further and using the reasoning in United Stated v. Carl Zeiss, Inc., 24 C.C.P.A. (Customs) 145, T.D. 48624, (concerning the classification of view finders for cameras) as an example, the court in Pompeo noted that, “[t]he court did not consider whether the involved finders were parts of cameras in vacuo, but whether they were parts of cameras when they were applied to their intended use on the cameras.”
We also stated that we did not dispute that the subject merchandise is dedicated solely for use with XM satellite receivers. However, after applying the test in Pompeo to this merchandise, we did not agree with your contention that the Boombox is a “part” of the satellite receivers because, we reasoned, whether or not the Boombox is applied to its specific use, the receivers still function as receivers. Instead, we found that the Boombox was an “accessory”, as that term is defined in Rollerblade, Inc., v. United States, 116 F. Supp. 2d 1247, (citations omitted) (Ct. Int’l Trade 2000) because it is “of or to another thing” (internal quotation marks omitted), at 1253, cited with approval in Rollerblade, Inc., v. United States (“Rollerblade”), 282 F.3d 1349, 1351 (Fed. Cir. 2002). As heading 8529, HTSUS, does not provide for accessories, we found that classification of the Boombox under that heading was precluded.
In the comment submitted, it was argued that both Willoughby Camera and Pompeo have been superseded by the Court of Appeals for the Federal Circuit’s decisions in Bauerhin and Rollerblade. In light of this comment, we reviewed both these cases again. We now conclude that we erred when we proposed to apply this line of cases to the good at issue because these cases do not concern the classification of composite machines, as is the good in this case. Further, these cases do not provide any instruction on the classification of composite machines. In Bauerhin, the court considered whether a canopy was a part of a car seat. In Rollerblade, the court considered whether “protective gear” (including elbow pads, knee pads and wrist guards) were parts of or accessories to in-line skates. Because these cases are not instructive on the classification of composite machines, we will not address further the arguments made in the comment concerning these cases.
In our proposed ruling, we stated that the Boombox is a composite good, the essential character of which is imparted by the loudspeakers by virtue of their bulk, quantity, weight and value in relation to the other components. As such, we proposed classification under heading 8518, HTSUS, by virtue of a GRI 3 analysis. However, Note 3 to Section XVI 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.
Note 5 to Section XVI provides, “For the purposes of these notes, the expression “machine” means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of chapter 84 or 85.”
The Boombox consists of loudspeakers, classified under heading 8518, an antenna, classified under heading 8529, and a power supply, classified under heading 8504, HTSUS. Therefore, under the principle of GRI 1, by application of Notes 3 and 5 to Section XVI, the Boombox is a composite machine because it is two or more machines fitted together to form a whole. However, after considering the nature and function of the Boombox, we are unable to determine its principal function because the loudspeakers, antenna and power supply all perform important functions and all contribute to how the machine is used. The General EN to Section XVI provides, in relevant part:
(VI) MULTI FUNCTION MACHINES AND COMPOSITE MACHINES
(Section Note 3)
Where 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); such is the case, for example, in respect of multi function machines potentially classifiable in several of the headings 84.25 to 84.30, in several of the headings 84.58 to 84.63 or in several of the headings 84.69 to 84.72.
GRI 3(c) provides, “When goods cannot be classified by reference to GRI 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.” Accordingly, the Boombox is classified under heading 8529, HTSUS, as an antenna, by application of GRI 1 and Note 3 to Section XVI.
With regard to our previous classification of your merchandise in heading 8543, HTSUS, we note that because the Boombox is provided for in heading 8529, HTSUS, it cannot be classified under heading 8543. By the terms of heading 8543, HTSUS, electrical machines and apparatus that are provided for elsewhere in Chapter 85 are precluded from classification in heading 8543.
Finally, you argue that the Boombox kit should be classified under one HTSUS item. We agree. We find that the subject articles imported together are a set for classification purposes under GRI 3(b), which states that goods put up in sets for retail sale shall be classified as if they consisted of the material or component which gives them their essential character. The items are classifiable in different headings (the Boombox in heading 8529 and the remote controller in heading 8543), are “put up together” to enable a user to operate the Boombox by remote control, and are offered for sale directly to users without repacking. Consequently, the items may not be classified separately under their respective classifications. Furthermore, CBP finds that the item which imparts the essential character of this set is the Boombox. It is the dominant component, by use and cost in relation to the other constituent components of the set. It is also the reason why a consumer would purchase the set.
HOLDING:
By application of GRI 1 (Note 3 to Section XVI) and 3(b), the Boombox kit is classified under heading 8529, HTSUS. It is specifically provided for in subheading 8529.10.90, which provides for: “Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528: Antennas and antenna reflectors of all kinds; parts suitable for use therewith: Other.” The column one, general rate of duty is 3% ad valorem. If imported separately, the Boombox would be classified in subheading 8529.10.90, HTSUS, by application of GRI 1 and Note 3 to Section XVI.
EFFECT ON OTHER RULINGS:
NY M80558 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 and Trade Facilitation Division