CLA-2 OT:RR:CTF:TCM HQ H234950 TNA
Mr. Andy Shim, Product Manager
LG Electronics U.S.A. Inc.
1000 Sylvan Avenue
Englewood Cliffs, NJ 07632
RE: Revocation of HQ H213705 and NY R01884; Classification of the LG ND3520 and ND4520 Docking Stations and the iFi speaker system
Dear Mr. Shim:
This letter is in reference to your request for reconsideration of Headquarters Ruling Letter (“HQ”) H213705, issued to LG Electronics on August 31, 2012, concerning the tariff classification of the “LG ND3520 Docking Speaker” (“ND3520”). There, U.S. Customs and Border Protection (“CBP”) classified two models of “docking speakers” under subheading 8518.22.00, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Microphones and stands therefor; 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: Multiple loudspeakers, mounted in the same enclosure.”
This letter also concerns NY Ruling Letter (NY) R01884, dated May 24, 2005, which classified the iFi speaker system made by Klipsch Audio Technologies in subheading 8518.40.20, HTSUS, which provides for “Audio-frequency electric amplifiers.” We have reviewed HQ H213705 and NY R01884 and found them to be incorrect. For the reasons set forth below, we hereby revoke HQ H213705 and NY R01884.
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, notice proposing to revoke HQ H213705 and NY R01884 was published on September 4, 2013, in Volume 47, Number 37, of the Customs Bulletin. CBP received one comment in response to this notice, which is discussed in the ruling.
In HQ H213705, CBP classified the LG ND3520 and the LG ND4520, docking stations with speakers intended for exclusive use with the iPod, iPad, and iPhone. They are both single units that contain both loudspeakers and a base for the iPod, iPad or iPhone. The electronic device is inserted into this base, and the docking stations serve both to charge the device, and to play the music files on it through the loudspeakers.
The docking stations allow users to charge the device, while the loudspeakers allow the user to play the music that is saved on the iPod, iPad or iPhone. They also have audio input that allows connection to MP3 players, laptops, etc., and Bluetooth, which allows them to play music directly from a laptop or mobile phone. They also contains a USB port, which allows a user to insert a thumb drive with music on it; once such a drive is inserted, the ND3520 and the ND4520 can read the music from the thumb drive and play it through its speakers. Neither the ND3520 nor the ND4520 contain a radio.
In NY R01884, CBP classified the iFi Multimedia System. This is essentially a speaker system that can play music from an attached hard disc drive unit such as an MP3 Player, iPod, or a similar Flash Memory device. The system consists of 2 speakers, 1 subwoofer with amplifier, 1 radio frequency remote control, 2 speaker wires, 1 AC power cord, 5 plastic spacers, 1 control dock. These components are imported together along with an owner’s manual and warranty card.
Whether the subject docking stations and speaker system are classified as loudspeakers of heading 8518, HTSUS, or as sound recording or reproducing devices of heading 8519, HTSUS?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRI). 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 GRI may then be applied.
The HTSUS provisions under consideration are as follows:
8518 Microphones and stands therefor; 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:
8519 Sound recording or reproducing apparatus:
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The EN to heading 85.18 provides, in pertinent part, the following:
This heading covers microphones, loudspeakers, headphones, earphones and audio frequency electric amplifiers of all kinds presented separately, regardless of the particular purpose for which such apparatus may be designed (e.g., telephone microphones, headphones and earphones, and radio receiver loudspeakers).
The heading also covers electric sound amplifier sets….
(B) LOUDSPEAKERS, WHETHER OR NOT MOUNTED IN THEIR ENCLOSURES
The function of loudspeakers is the converse of that of microphones: they reproduce sound by converting electrical variations or oscillations from an amplifier into mechanical vibrations which are communicated to the air.
Matching transformers and amplifiers are sometimes mounted together with loudspeakers. Generally the electrical input signal received by loudspeakers is in analogue form, however in some cases the input signal is in digital format. Such loudspeakers incorporate digital to analogue converters and amplifiers from which the mechanical vibrations are communicated to the air.
Loudspeakers may be mounted on frames, chassis or in cabinets of different types (often acoustically designed), or even in articles of furniture. They remain classified in this heading provided the main function of the whole is to act as a loudspeaker. Separately presented frames, chassis, cabinets, etc., also fall in this heading provided they are identifiable as being mainly designed for mounting loudspeakers; articles of furniture of Chapter 94 designed to receive loudspeakers in addition to their normal function remain classified in Chapter 94.
The heading includes loudspeakers designed for connection to an automatic data processing machine, when presented separately.
The EN to heading 85.19 provides, in pertinent part, the following:
This heading covers apparatus for recording sound, apparatus for reproducing sound and apparatus that is capable of both recording and reproducing sound. Generally, sound is recorded onto or reproduced from an internal storage device or media (e.g., magnetic tape, optical media, semiconductor media or other media of heading 85.23)….
(IV) OTHER APPARATUS USING MAGNETIC, OPTICAL OR SEMICONDUCTOR MEDIA
The apparatus of this group may be portable. They may also be equipped with, or designed to be attached to acoustic devices (loudspeakers, earphones, headphones) and an amplifier.
In requesting reconsideration, you submitted evidence emphasizing that the ND3520 contains a USB port that can read files from a USB device. You also emphasized that it can play back music when physically connected to such devices as the iPod, iPad and iPhone. As such, in requesting reconsideration of HQ H213705, you argue that the LD3520 is classified in heading 8519, HTSUS, as a sound recording or reproducing device. In support of this argument, you cite NY N133779, dated December 17, 2010, which classified a device that is designed to play and control audio files that it receives over a wireless computer network in heading 8519, HTSUS.
In response, we note that although you only requested reconsideration of model ND3520 in HQ H213705, the ND3520 and the ND4520 contain the same product specifications, including the USB port that you now argue makes the ND3520 a product of heading 8519, HTSUS. As a result, we reconsider our position with respect to both the ND3520 and the ND4520, so as to avoid inconsistent results.
Next, we note that the ENs define a “sound-recording or reproducing device” as including one that functions by way of semiconductor media. Sound that is recorded onto such a medium is done so as digital code converted from analogue signal on the recording medium, and sound that is reproduced is done so by reading such medium. The fact that the ENs allow for semiconductor media to be either permanently installed in the apparatus or in the form of removable solid-state non-volatile storage media means that sound can be recorded onto an internal file or a removable solid state non-volatile media, such as a USB flash memory apparatus. In order for a device to be a sound-reproducing device, it must be able to read the recorded file, either from an internal memory or from a removable solid state non-volatile media, such as a USB flash memory apparatus. See EN 85.19.
This definition is in accordance with definitions of dictionaries and other lexicographic sources. For example, the Oxford English Dictionary defines “record” as “of a machine, instrument or device: to set down (a message, reading, etc.) in some permanent form.” See www.oed.com. The Oxford English Dictionary defines “reproduce” as “To relay (sound originating elsewhere) or replay (sound recorded on another occasion) by electrical or mechanical means…. To produce again in the form of a copy.” See www.oed.com. In addition, the McGraw-Hill Encyclopedia of Science and Technology defines “sound recording” as “the technique of entering sound, especially music, on a storage medium for playback at a subsequent time.” See McGraw-Hill Concise Encyclopedia of Science and Technology, 6th Ed., 2009 at 2197. This encyclopedia defines “sound-reproducing systems,” in pertinent part, as:
Systems that attempt to reconstruct some or all of the audible dimensions of an acoustic event that occurred elsewhere. A sound-reproducing system includes the functions of capturing sounds with microphones, manipulating those sounds using elaborate electronic mixing consoles and signal processors, and then storing the sounds for reproduction at later times and different places.
Id. at 2197.
A machine with a USB port allows a flash drive or other memory device to be plugged directly into the machine. The information submitted states that the instant dock could read information or music stored in an MP3 format directly from the device. The USB device is a semiconductor media device onto which sound is recorded, because it converts the music files on it from an analogue signal to a digital one on the drive itself. The ND3520 and the ND4520, because they can read these files from the USB device, are sound-reproducing devices. Furthermore, sound reproducing devices of 8519, HTSUS, can be equipped with, or designed to be attached to, acoustic devices such as speakers. See EN 85.19. The ND3520 and the ND4520 are fully described by the terms of heading 8519, HTSUS, and should be classified there. This conclusion is consistent with prior CBP rulings, including NY N133779, to which you cited in support of this reconsideration. See NY N133779; see also NY N182121, dated September 16, 2011 and NY N129141, dated November 16, 2010.
NY R01884 classified the iFi speaker system made by Klipsch Audio Technologies in 8518, HTSUS, according to its speaker function. However, this ruling also noted both that the system reproduced sound from an attached hard disc drive unit, whether it was an MP3 Player, an iPod, or a similar flash memory device. Thus, the iFi system meets the definition of “sound recording or reproducing device” for the same reasons as the ND3520 and ND4520 do.
The comment that CBP received focused on ND3520 and argued that the subject merchandise should remain classified in heading 8518, HTSUS. The commenter argues that nothing in the subject merchandise’s product literature indicates that the merchandise actually reproduces sound in the way this ruling states that it does. The commenter also distinguishes this merchandise from other merchandise of heading 8519, HTSUS, that he argues actually record or reproduce sound. The commenter argues that docking stations such as the subject merchandise offer a convenient way of interconnecting multiple devices, without actually being able to perform any function on its own except this connection. The commenter also notes that the merchandise of heading 8519, HTSUS, records or reproduces sound by way of internal mechanisms, such as the needle, armature, etc of a turntable. By contrast, the commenter argues that there is nothing inside the subject merchandise that allows it to record or reproduce sound, and that it is the iPod or other device to which the subject merchandise is connected that actually does the sound recording or reproducing. The commenter further argues that the subject merchandise’s functionality is more akin to the type of loudspeakers typically used with an iPod, iPad, or iPhone in that those devices’ earbuds receive the signal directly from these devices without having to further process the signal.
In response, we note that the subject merchandise, in reading the audio files off a USB port and allowing them to be played through the attached speakers, acts as more than a mere conduit for the music, as the commenter suggests. Furthermore, heading 8519, HTSUS, provides for sound reproducing devices that have speakers attached to them. See EN 85.19. By contrast, heading 8518, HTSUS, provides for speakers, but does not cover the subject merchandise’s sound reproducing function. Thus, heading 8519, HTSUS, fully describes the subject merchandise at GRI 1, while heading 8518, HTSUS, does not.
Under the authority of GRI 1, the ND3520, the ND4520 and the iFi speaker system are classified in heading 8519, HTSUS. Specifically, they are provided for in subheading 8519.89.30, HTSUS, which provides for “Sound recording or reproducing apparatus: Other apparatus: Other: Other.” The column one general rate of duty is Free.
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 internet at www.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
HQ H213705, dated August 31, 2012, and NY R01884, dated May 24, 2005, are REVOKED.
Myles B. Harmon, Director
Commercial and Trade Facilitation Division