CLA-2 OT:RR:CTF:EMAIN HQ H300877 TPB
Deborah B. Stern
Sandler, Travis & Rosenberg, P.A.
1000 NW 57th Court, Suite 600
Miami, FL 33126
Re: Binding ruling request on the tariff classification of certain ADP systems
Dear Ms. Stern:
The following is our decision to your August 22, 2018 request for a binding ruling on the classification of certain automatic processing machine (“ADP”) systems, filed on behalf of your client HP Inc. (“HPI”), under the Harmonized Tariff Schedule of the United States (HTSUS).
According to your submission, HPI intends to import ADP systems consisting of the central processing unit (“CPU”), bundled with: (1) a “QWERTY” keyboard or an optical mouse; and (2) either one of two over-the-ear headsets, i.e., the HP USB Headset 500 (“USB500”) or the HP H2800 Black Headset (“H2800”).
The USB500 (https://store.hp.com/us/en/pdp/hp-usb-headset-500) is an over-the-ear USB Audio Class-compliant headset with integrated microphone which connects to a PC through a USB-A connection. The headset permits the user to take calls, listen to music, and command Microsoft’s Cortana to control the PC. Specifically, there is a “tap to launch Cortana” button on the volume control which issues a Win+C USB KB command and the PC’s operating system responds accordingly. In addition, this device incorporates an analog-to-digital converter and USB sound card so that the device bypasses such components present in the PC when connected.
The H2800 is an over-the-ear headset which provides an in-line microphone with easy to use controls to receive phone calls and control volume, while music is automatically muted. It can be connected to a personal computer (PC), smartphone, tablet computer, MP3 player or video game console through a 3.5mm mini jack.
Whether the CPU, keyboard or mouse and headset comprise an “ADP system” classifiable in subheading 8471.49.0000, HTSUS.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
General Rule of Interpretation 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 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, 35128 (August 23, 1989).
The provision at issue is subheading 8471.49.0000, HTSUS, which provides for “Automatic data processing machines and units thereof…: Other Automatic data processing machines: Other, entered in the form of systems.” The pertinent parts of Note 5 to Chapter 84 read:
Automatic data processing machines may be in the form of systems consisting of a variable number of separate units.
Subject to paragraphs (D) and (E) below, a unit is to be regarded as being part of an automatic data processing system if it meets all of the following conditions:
It is of a kind solely or principally used in an automatic data processing system;
It is connectable to the central processing unit either directly or through one or more other units; and
It is able to accept or deliver data in a form (codes or signals) which can be used by the system.
Separately presented units of an automatic data processing machine are to be classified heading 8471.
Further, Chapter 84 Subheading Note 2 provides:
For the purposes of subheading 8471.49, the term “systems” means automatic data processing machines whose units satisfy the conditions laid down in note 5 (C) to Chapter 84 and which comprise at least a central processing unit, one input unit (for example, a keyboard or a scanner), and one output unit (for example, a visual display unit or a printer).
In addition, the EN for heading 84.71 indicates that a complete automatic data processing system must comprise, at least:
A central processing unit which generally incorporates the main storage, the arithmetical and logical elements and the control elements; in some cases, however, these elements may be in the form of separate units.
An input unit which receives input data and converts them into signals which can be processed by the machine.
An output unit which converts the signals provided by the machine into an intelligible form (printed text, graphs, displays, etc.) or into coded data for further use (processing, control, etc.).
That EN further states that two of these units (input and output units, for example) may be combined into a single unit.
Chapter 84, Note 5 (D) identifies certain units that must be classified in their own provisions when separately presented. It states, in relevant part:
Heading 8471 does not cover the following when presented separately, even if they meet all of the conditions set forth in Note 5 (C) above :
Printers, copying machines, facsimile machines, whether or not
Apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network);
Loudspeakers and microphones…
In addition, the EN to heading 8471 clarifies that:
A complete automatic data processing system is classified in this heading, even though one or more units may be classified elsewhere when presented separately (see Part (B) Separately presented units, below).
Finally, the EN to heading 8471, Part (B) Separately presented units, states that:
Subject to the provisions of Notes 5 (D) and (E) to this Chapter, this heading also covers separately presented constituent units of automatic data processing systems. These may be in the form of units having a separate housing or in the form of units not having a separate housing and designed to be inserted into a machine (e.g., insertion onto the main board of a central processing unit). Constituent units are those defined in Part (A) above and in the following paragraphs, as being parts of a complete system.
An apparatus can only be classified in this heading as a unit of an automatic data processing system if it:
a) Performs a data processing function;
b) Meets the following criteria set out in Note 5 (C) to this Chapter
c) Is not excluded by the provisions of Notes 5 (D) and (E) to this Chapter.
If the unit performs a specific function other than data processing, it is to be classified in the heading appropriate to that function or, failing that, in a residual heading (see Note 5 (E) to this Chapter). If an apparatus does not meet the criteria set out in Note 5 (C) to this Chapter, or is not performing a data processing function, it is to be classified according to its characteristics by application of General Interpretative Rule 1, if necessary in combination with General Interpretative Rule 3 (a).
With regard to the matter at issue, we note that the claimed “system” will include a CPU, a keyboard or a mouse and a headset. The CPU satisfies the first requirement of a complete ADP system as set out in subheading Note 2 to Chapter 84 and the EN to heading 8471. Additionally, the inclusion of either a keyboard or a mouse would satisfy the “input” requirement of a complete ADP system according to the aforementioned EN, as both of these devices are used as examples of input units.
With regard to the output unit required to form a complete ADP system as set out in the EN, it is your contention that either HP headset would satisfy this requirement. With regard to the USB500, you contend that the headset is solely used with an ADP machine, directly connectable to the CPU via a USB-A port. As such, it would fulfill the first two requirements of Note 5(C) to Chapter 84. You further contend that the USB500 headset outputs sound signals from a PC. It receives and processes sound signals from a software program, an audio or A/V file, streaming audio or video, telecommunications (e.g. a VOIP call) and the like. With a sound card and analog-to-digital converter, connection of the headset bypasses the internal conversion so the device itself can convert the signals to analog sound waves for the user to hear. As such, it fulfills the third requirement of Note 5(C) to Chapter 84. Therefore, with regard to the USB500 headset, this office agrees that it is an output unit and its inclusion with a CPU and keyboard or mouse would form a complete ADP system of subheading 8471.49.0000.
With regard to the H2800 headset, you argue that it also serves as an input and output unit, using a microphone for communicating voice commands to the PC with the appropriate software. You indicate that it delivers voice and audio signals to the user, thus fulfilling the third requirement of Note 5(C) to Chapter 84. You also contend that it is directly connectable to the CPU through the 3.5 mm jack connection, fulfilling the second requirement of Note 5(C) to Chapter 84. Finally, you argue that, while not limited to use solely with an ADP machine, it is principally used with one. Specifically, you note that while this device can connect to other devices, such as a video game console, it is your view that it is principally used with an ADP machine, being branded and sold by HPI - a company specializing in computers - is designed and marketed for use in computer-based communications, having a special feature to pause music the user may be listening too when a call is incoming.
On this point we disagree. There is no indication that the product at issue is of a kind used principally used with an ADP system as required by Note 5(C) and research suggests that the product can be used with equal effectiveness for a number of electronic devices. Although the product is branded by HPI, the link provided with your submission states in the overview of the product, “Compatible with most computers, tablets, smartphones and MP3 players, with easy to adjust on-ear controls.” The built-in microphone could be utilized in almost any of the foregoing devices to provide additional functionality. As such, we do not find that the H2800 is principally used by an ADP system. As it does not fulfill the first requirement of Note 5(C) to Chapter 84, this unit cannot be regarded as being part of and ADP system and should be classified in its heading 85.18, subheading 8518.30.2000, HTSUS, which provides for “… headphones and earphones, whether or not combined with a microphone…”. Because the shipments containing these devices do not include an output unit, the CPU and keyboard or mouse do not constitute an ADP system of subheading 8471.49.0000, HTSUS.
By application of GIRs 1 and 6, the combination of a CPU, keyboard or mouse and the USB500 headset form a complete automatic data processing system of heading 8471, subheading 8471.49.0000. The 2019 column one, general rate of duty for merchandise of this subheading is free.
By application of GIRs 1 and 6, the H2800 headset is classified under heading 8518, subheading 8518.30.20000. The 2019 column one, general rate of duty for merchandise of this subheading is 1.2% ad valorem. Consequentially, the CPU, keyboard or mouse should be classified in its respective heading, as the lack of an output unit fails to establish a complete automatic data processing system of subheading 8471.49.0000.
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/.
Gregory Connor, Chief
Electronics, Machinery, Automotive, and
International Nomenclature Branch