CLA-2 OT:RR:CTF:TCM H154038 CKG
Port Director
U.S. Customs and Border Protection
Port of Anchorage
605 W. 4th Ave. Suite 230 Anchorage, AK 99501
Attn: Carol Takaki, Import Specialist
Re: Protest and Application for Further Review No: 3195-10-100291
Dear Port Director:
The following is our decision regarding Protest 3195-10-100291, filed on behalf of the importer, Kionix, Inc. (“Protestant”), contesting U.S. Customs and Border Protection’s (CBP) classification of electronic circuits in heading 8543 of the Harmonized Tariff Schedule of the United States (HTSUS), as “other” electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter.
The subject merchandise was entered between May 04, 2009, and October 29, 2010. CBP liquidated the entries between June 04, 2010 and August 20, 2010, in heading 8543, HTSUS. The protest was timely filed on November 29, 2010. Protestant contends that the correct classification of the merchandise is in heading 8542, HTSUS, as electronic integrated circuits.
.
FACTS:
Each Kionix circuit contains a silicon sensor chip that responds to acceleration (an accelerometer) or rotation (a gyroscope), in addition to a separate silicon integrated circuit chip (an ASIC). The sensor chip is a summation of many different capacitors each consisting of many different movable silicon beams. The silicon beams move in response to simple changes in motion, causing a change in capacitance which the ASIC chip then interprets and translates into usable electrical signals from the outside world. The sensor chip is separately produced via thin film technology.
Kionix ships the unpackaged fabricated sensor and circuit chips to Asia, where they are assembled on a single leadframe or single laminate, encapsulated with plastic, and shipped back for testing. The Kionix sensor and ASIC die are mounted on a single leadframe substrate or a single laminate substrate. When imported back into the U.S., the two chips are contained in an overmolded plastic package and connected by miniature wires.
ISSUE:
Whether the assembled electronic circuits are classified under heading 8542, HTSUS, as “electronic integrated circuits and microassemblies,” heading 8543, HTSUS, as “electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter,”, or heading 9031, as “measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter.”
LAW AND ANALYSIS:
The matter protested is protestable under 19 U.S.C. §1514(a) (2) as a decision on classification. The protest was timely filed, within 180 days of liquidation of the first entry for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii),(iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)).
Further Review of Protest No. 3195-10-100291 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24(c) because the decision against which the protest was filed is alleged to involve matters previously ruled upon in HQ H013678, dated June 1, 2009, by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling. Specifically, Protestant presents two alternative classifications for the instant merchandise--heading 9027, HTSUS, and heading 9031, HTSUS—which were not considered at the time of the original ruling.
Classification of goods under the HTSUS is governed by the General Rules of
Interpretation (GRI). GRI 1 provides that classification 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 HTSUS provisions under consideration are as follows:
Electronic integrated circuits and microassemblies; parts thereof:
8542.39.00 Other…
* * *
Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:
Other machines and apparatus:
8543.89 Other:
Other:
Other:
8543.89.96 Other…
* * *
9031 Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter:
9031.80 Other instruments, appliances and machines:
9031.80.80 Other…
* * *
Note 1(m) to Section XVI provides:
This section does not cover:
(m) Articles of chapter 90;
Note 8(b) to Chapter 85, for purposes of heading 8542, HTSUS, defines integrated circuits (HICs) as follows:
(b) "Electronic integrated circuits" are:
Monolithic integrated circuits in which the circuit elements (diodes, transistors, resistors, capacitors, inductances, etc.) are created in the mass (essentially) and on the surface of a semiconductor or compound semiconductor material (for example, doped silicon, gallium arsenide, silicon germanium, iridium phosphide) and are inseparably associated;
Hybrid integrated circuits in which passive elements (resistors, capacitors,
inductances, etc.), obtained by thin- or thick-film technology, and active elements (diodes, transistors, monolithic integrated circuits, etc.), obtained by semiconductor technology, are combined to all intents and purposes indivisibly, by interconnections of interconnecting cables, on a single insulating substrate (glass, ceramic, etc.). These circuits may also include discrete components;
Multichip integrated circuits consisting of two or more interconnected monolithic integrated circuits combined to all intents and purposes indivisibly, whether or not on one or more insulating substrates, with or without leadframes, but with no other active or passive circuit elements.
Note 8 further provides that “[f]or the classification of articles defined in this note, headings 8541 and 8542 shall take precedence over any other heading in the tariff schedule which might cover them by reference to, in particular, their function.”
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 the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The 2012 Explanatory Notes to heading 8542, HTSUS, provide as follows:
The articles of this heading are defined in Note 8 (b) to the Chapter.
Electronic integrated circuits are devices having a high passive and active element or component density, which are regarded as single units (see Explanatory Note to heading 85.34, first paragraph concerning elements or components to be regarded as “passive” or “active”). However, electronic circuits containing only passive elements are excluded from this heading.
Unlike electronic integrated circuits, discrete components may have a single active electrical function (semiconductor devices defined by Note 8 (a) to Chapter 85) or a single passive electrical function (resistors, capacitors, inductances, etc.). Discrete components are indivisible and are the basic electronic construction components in a system.
However, components consisting of several electric circuit elements and having multiple electrical functions, such as integrated circuits, are not considered as discrete components.
Electronic integrated circuits include memories (e.g., DRAMS, SRAMs, PROMS, EPROMS, EEPROMS (or E2PROMS)), microcontrollers, control circuits, logic circuits, gate arrays, interface circuits, etc.
Electronic integrated circuits include :
(I) Monolithic integrated circuits.
These are microcircuits in which the circuit elements (diodes, transistors, resistors, capacitors, inductances, etc.) are created in the mass (essentially) and on the surface of a semiconductor material (doped silicon, for example) and are therefore inseparably associated. Monolithic integrated circuits may be digital, linear (analogue) or digital-analogue.
(II) Hybrid integrated circuits.
These are microcircuits built up on an insulating substrate on which a thin or thick film circuit has been formed. This process allows certain passive elements (resistors, capacitors, inductances, etc.) to be produced at the same time. However, to become a hybrid integrated circuit of this heading, semiconductors must be incorporated and mounted on the surface, either in the form of chips, whether or not encased, or as encased semiconductors (e.g., in specially designed miniature casings). Hybrid integrated circuits may also contain separately produced passive elements which are incorporated into the basic film circuit in the same way as the semiconductors. Usually these passive elements are components such as capacitors, resistors or inductors in the form of chips.
Substrates made up of several layers, generally ceramic, heat-bonded together to form a compact assembly, are to be taken to form a single substrate within the meaning of Note 8 (b) (ii) to this Chapter.
The components forming a hybrid integrated circuit must be combined to all intents and purposes indivisibly, i.e., though some of the elements could theoretically be removed and replaced, this would be a long and delicate task which would be uneconomic under normal manufacturing conditions.
(III) Multichip integrated circuits.
These consist of two or more interconnected monolithic integrated circuits combined to all intents and purposes indivisibly, whether or not on one or more insulating substrates, with or without leadframes, but with no other active or passive circuit elements.
Multichip integrated circuits generally come in the following configurations:
- Two or more monolithic integrated circuits mounted side by side;
- Two or more monolithic integrated circuits stacked one upon the other;
- Combinations of the configurations above consisting of three or more
monolithic integrated circuits.
These monolithic integrated circuits are combined and interconnected into a single body and may be packaged through encapsulation or otherwise. They are combined to all intents and purposes indivisibly, i.e., though some of the elements could theoretically be removed and replaced, this would be a long and delicate task which would be uneconomic under normal manufacturing conditions.
Insulating substrates of the multichip integrated circuits may incorporate electrically conductive regions. These regions may be composed of specific materials or formed in specific shapes to provide passive functions by means other than discrete circuit elements. Where conductive regions are present in the substrate, they are typically relied upon as a means by which the monolithic integrated circuits are interconnected.
* * * *
The classification of the instant electronic circuits was addressed in Headquarters Ruling Letter (HQ) H013678, dated June 1, 2009, in which CBP determined that the Kionix devices at issue were classified in heading 8543, HTSUS, as other electrical machines and apparatus, having individual functions, not specified or included elsewhere in Chapter 85. Protestant argues that this conclusion is incorrect, and that the Kionix multi-die products are classified in heading 8542, HTSUS, as hybrid integrated circuits, or alternatively, as multichip integrated circuits. HQ H013678 has been revoked by Headquarters Ruling Letter H240792, dated March 28, 2014. In HQ H240792, CBP reclassified the instant electronic circuits in heading 9031, HTSUS, as measuring or checking instruments. Notice of the revocation of HQ H013678 was published in Volume 48, No. 4 of the Customs Bulletin on January 29, 2014. The instant Kionix electronic circuits are thus classified in heading 9031, HTSUS, according to the analysis set forth in HQ H240792 and reproduced below.
As noted in HQ H240792, CBP has consistently interpreted Note 8 to Chapter 85 (previously Note 5) to require that hybrid integrated circuits contain passive nondiscrete components, built up on the substrate. In HQ H013678, CBP concluded that the instant Kionix devices were not classifiable as hybrid integrated circuits of heading 8542, HTSUS, because no circuit was built up on the substrate. The Kionix electronic circuit does not contain any nondiscrete components, passive or active. The sensor chip (a passive element) is a discrete component and is not built up on the surface of the same substrate to which the ASIC chip is mounted.
Protestant argues that legal note 8 and EN 85.42(II) require only that hybrid integrated circuits contain elements obtained by film technology, whether discrete or built up on the substrate. Stated conversely, Protestant does not believe that elements must be produced through film technology directly on the substrate of the hybrid integrated circuit, in the mass, before the semiconductors and discrete passive components are added to the substrate. These arguments have already been extensively addressed in prior CBP rulings, in which CBP concluded that hybrid integrated circuits must contain non-discrete passive elements produced by film technology directly on (in the mass of) the insulating substrate onto which active elements produced via semiconductor technology are incorporated. See, e.g., HQ 951926, dated September 18, 1992; HQ 962750, dated January 10, 2000; HQ 961050, dated May 1, 2000; HQ 964606, dated May 2, 2002; HQ H013678, dated June 1, 2009; NY I82633, dated June 26, 2002; NY N086783, dated January 6, 2010; and NY N216102, dated February 17, 2012. As the instant products have only discrete passive components which are not produced directly on the insulating substrate to which the semiconductor chip is added, they are not hybrid integrated circuits of heading 8542, HTSUS.
Protestant further contends that HQ H013678 is inconsistent with another CBP ruling on substantially similar merchandise, HQ 963150, in which CBP classified certain acceleration sensors in heading 8542, HTSUS, as hybrid integrated circuits. Protestant claims that the instant Kionix electronic circuits are identical in function to the sensors at issue in HQ 963150, and thus the Kionix devices should also be classified in the same heading. HQ 963150, however, does not specify whether the passive elements of the integrated circuit at issue were created in the mass of the same substrate upon which the semiconductor devices and other discrete components were added, but the ruling does note that its conclusion is consistent with the interpretation of Note 8 and EN 85.42 articulated in HQ 961050 (i.e., that hybrid integrated circuits must contain non-discrete passive elements formed by film technology in the mass of the same insulating substrate upon which active elements formed by semiconductor technology are incorporated). Furthermore, we note that classification in heading 8542, HTSUS, is not based on the function of the product, but rather the method of manufacture. If a circuit is manufactured in a way that meets the requirements of the legal text and the ENs for heading 8542, HTSUS, the function of the device is considered in classification at the subheading level under heading 8542, HTSUS.
In the alternative, Protestant contends that the instant products are multichip integrated circuits of heading 8542, HTSUS, because the ASCIS and the sensor chip are both monolithic integrated circuits pursuant to EN 85.42. Note 8(b) to Chapter 85 defines monolithic integrated circuits as “integrated circuits in which the circuit elements (diodes, transistors, resistors, capacitors, inductances, etc.) are created in the mass (essentially) and on the surface of a semiconductor or compound semiconductor material (for example, doped silicon, gallium arsenide, silicon germanium, iridium phosphide) and are inseparably associated.” In support of this argument, Protestant notes that the sensor chip is created in the mass of a silicon wafer via film technology identical to that used in conventional monolithic circuit manufacturing, and that the components are inseparably associated. However, a monolithic circuit must have both passive and active components. The Kionix devices contain one monolithic integrated circuit—the ASIC chip—and one passive component—the sensor chip. Thus, the instant devices are not multichip integrated circuits, because they contain only one monolithic integrated circuit. Protestant argues that the sensor chip should be considered a monolithic circuit in and of itself, because the capacitors in the sensor chip change capacitance upon movement or acceleration and thus are not fully passive elements. However, the fact that the capacitance of a capacitor can change does not transform it from a passive to an active element. Capacitors are considered passive elements, but they do not have to produce a fixed output. In any case, even if we considered the capacitors in the sensor chip to be an active element, the sensor chip still would not have both the passive and active components necessary to constitute a monolithic integrated circuit in its own right. Because the sensor chip is not a monolithic integrated circuit, the combination of the ASIC and the sensor would have only one monolithic circuit and thus cannot be considered a multichip integrated circuit.
Finally, the merchandise at issue was examined by the CBP Laboratory in San Francisco, and was determined not to constitute an integrated circuit because the sensor chip was separately produced.
Protestant argues, in the alternative, that if CBP does not consider the Kionix electronic circuits to be classified in heading 8542, HTSUS, as integrated circuits, that they should be classified in heading 9027, HTSUS, instruments and apparatus for physical or chemical analysis, or heading 9031, HTSUS, as measuring or checking instruments. Heading 9027, HTSUS, however, is limited to devices which, in addition to simply measuring a substance or force, interpret or analyze the measured data. See e.g., HQ 955445 dated January 19, 1994, which classified a particle spectrometer under heading 9031, HTSUS. Classification under heading 9027, HTSUS, was determined to be incorrect because the instrument measured the size, distribution and shape of the particles without performing any actual analysis of the particles. See also, HQ 967082, dated June 04, 2004, which classified two distinct types of gas detectors in heading 9027, HTSUS, and 8531, HTSUS. All models of the gas detectors contained a sensor which measured the parts per million (ppm) of a gas in a general area, and electronics that determined when that gas level went beyond a designated range. However, some models also contained additional electronics that analyzed and displayed the gas level data. These were classified in heading 9027, HTSUS, while the gas detectors with only alarm and no display/analysis capabilities were classified in heading 8531, HTSUS.
The Kionix accelerometers, like the devices discussed above, do not identify or provide a measurement of a particular property. They simply detect changes in motion via displacement of the silicon beams in the sensor chip, which causes a change in capacitance, and interpret or translate the resulting signal via the ASIC chip. In this manner, the Kionix accelerometers are similar to the MEMS accelerometers at issue in NY F82413, dated March 3, 2000, which were classified by CBP in heading 9031, HTSUS. Like the instant merchandise, the MEMS accelerometers at issue in NY F82413 measured lateral acceleration via the displacement of movable silicon elements, causing a change in electrical capacitance. The Kionix accelerometers are similarly classified in heading 9031, HTSUS, as measuring or checking instruments.
Because the Kionix accelerometers are classified in Chapter 90, they are excluded from classification in heading 8543, HTSUS, pursuant to Note 1(m) to Section XVI.
HOLDING:
The Kionix accelerometers are classified in heading 9031, HTSUS, specifically subheading 9031.80.80, HTSUS, which provides for “Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof: Other instruments, appliances and machines: Other.” The 2010 general, column one rate of duty is 1.7% ad valorem.
Since reclassification will result in a lower duty rate, you are instructed to allow the protest in full. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page online at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director,
Commercial and Trade Facilitation Division