CLA-2 OT:RR:CTF:EMAIN HQ H301558 TPB
Mr. Matthew H. Moore
Maynard, Cooper & Gale
655 Gallatin St SW, PO Box 18668 (35804-4936)
Huntsville, AL 35801-4936
Re: Binding ruling request on the tariff classification of certain transmitter modules
Dear Mr. Moore:
The following is our decision to your October 2, 2018 request for a binding ruling on the classification of certain transmitter modules, filed on behalf of your client EMCORE Corporation. (EMCORE), under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
According to your submission, EMCORE uses its wholly owned Chinese subsidiary to manufacture certain products within EMCORE's Cable TV/Broadband line, including the transmitter modules that are the subject of this Request. As the parent corporation of the manufacturer of these transmitter modules, EM CORE is an interested party and is making this Request regarding the Subject Modules.
Your letter contains three separate requests. The first request covers the LM-l000E series and DM2000C series transmitter modules. The second request covers the HDTx D3.l 1310 series, the HDTx D3.l SQAM 1550 series, the HDTx D3.l LRMW series, and the HDTx D3.l HQT series transmitter modules. The third request covers the GMOD series transmitters.
These transmission modules are utilized within a transmission platform used in an outside-the-home infrastructure for fiber optic broadband transmission of data (inclusive of broadband internet, TV, and voice over internet protocol (VoIP) phone service). In use, a number of these transmitters will be installed within a rack type housing along with receiver modules, power supplies, etc.
These transmission modules are electronic components used to transmit data. They include a mechanical housing and proprietary communication interface, which allows the subject module to function within ARRIS's subject platform.
ISSUE:
What is the classification of the subject transmitter modules under the 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).
You argue that the goods at issue should be classified under heading 85.17, HTSUS, which provides for “Telephone sets, including telephones for cellular networks or for other wireless networks; other 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), other than transmission or reception apparatus of headings 8443, 8525, 8527 or 8528; parts thereof.” More specifically, you are of the view that the products in question are classified under the “parts” provision of heading 85.17, subheading 8517.70.0000, HTSUS. You come to this conclusion by eliminating possible classification under other headings, including headings 85.25 and 85.28, HTSUS.
You note that heading 85.25 includes “Transmission apparatus for radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video camera recorders.” (emphasis added by you). Heading 85.28 includes “Monitors
and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus.” (emphasis added by you). In other words, you state, these headings include subheadings that cover apparatus for the transmission (heading 85.25) or reception (heading 85.28) of TV signals.
While allowing that one of the applications of fiber optic broadband networks is to transmit data in the form of TV signal, that is just one of several applications. You note that the subject platform is also used in the provision of broadband internet service and VoIP phone service, in addition to TV service. Telecommunications service companies purchase the subject platform to provide the “triple-play” bundle of broadband internet, television, and phone service. In your view, the subject modules are simply parts of the subject platform. You conclude that neither the subject platform nor the subject modules are properly classified under heading 85.25 or 85.28 and, thus, it would appear that these items are properly classified under heading 85.17. You indicate that this conclusion is supported by previous decisions by CBP.
Finally, you note that these goods should be classified as “parts” because they are dedicated exclusively for use with a specific higher-level assembly/system classified under Chapter 85 of the HTSUS.
We note that “parts” are classified in accordance with Note 2 to Section XVI which states that, subject to certain exclusions found in Note 1 to Section XVI, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 84.84, 85.44, 85.45, 85.46 or 85.47) are to be classified according to the following rules: (a) Parts which are goods included in any of the headings of chapters 84 and 85 (other than headings 84.09, 84.31, 84.48, 84.66, 84.73, 84.87, 85.03, 85.22, 85.29, 85.38 and 85.48) are in all cases to be classified in their respective headings.
In this instance, the transmitter modules are “goods” that are either included in heading 8517 or 8525 (HTSUS). These modules are classified as transmission apparatus and not as parts.
As stated in your ruling request, these transmitters work in both a telecommunication network and a broadcast network. They are used in outside-the-home infrastructure for fiber optic broadband transmission of data, internet, TV, and voice over internet protocol (VOIP) phone service. These platforms are used by telecommunication series companies, who use the platforms to provide “triple-play” broadband internet, TV, and phone service.
Note 3 to Section XVI states:
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.
The Explanatory Notes (ENs) to Note 3 to Section XVI states:
(VI) MULTI FUNCTION MACHINES AND COMPOSITE MACHINES (Section Note 3) In general, multi-function machines are classified according to the principal function of the machine.
Multi-function machines are, for example, machine-tools for working metal using interchangeable tools, which enable them to carry out different machining operations (e.g., milling, boring, lapping).
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 84.70 to 84.72.
Composite machines consisting of two or more machines or appliances of different kinds, fitted together to form a whole, consecutively or simultaneously performing separate functions which are generally complementary and are described in different headings of Section XVI, are also classified according to the principal function of the composite machine.
In accordance with Section XVI Note 3, the merchandise in question are composite machines that perform telecommunication functions of heading 85.17, HTSUS and a television transmission function of heading 85.25, HTSUS.
EN 85.25 states, in pertinent part:
The apparatus for radio-broadcasting falling in this group must be for the transmission of signals by means of electro-magnetic waves transmitted through the ether without any line connection. On the other hand television apparatus falls here whether the transmission is by electro-magnetic waves or by line.
This group includes:
(1) Transmitters for radio-broadcasting or television.
The heading also excludes:
Apparatus of heading 85.17.
In our view, the transmission of these video signals through a broadband connection within this networking structure is just a more efficient, updated version of transmitting video signals for TV purposes. In addition, we would consider Internet Protocol Television (IPTV) to be a lined television apparatus.
In New York rulings NY N063015, NY N063020, NY N063016, and NY N063018 it was found that similar composite machines did not have any machine function that performed the principal function as per legal Note 3 to Section XVI and therefore, in reference to the General EN (VI) to Section XVI, which directs one to apply GRI 3 (c), this merchandise was properly classified under heading 85.25, HTSUS. These decisions were reached in noting that the customer could choose to subscribe to any one feature (the non-video broadband data and phone services covered under heading 85.17, HTSUS, or the broadband IPTV service covered under heading 85.25, HTSUS), or a combination of any of these features, as well as all of these features.
Moreover, headings 85.17 and 85.25, HTSUS, provide for the functions performed by the devices and merit equal consideration. However, it is the view of this office that none of the functions can be categorized as the principal function of the devices, because the devices must be able to process all three types of signals (voice, television and data) and must be able to cut off any individual signal at the command of the telecommunications service provider or the customer.
Accordingly, by application of Note 3 to Section XVI and GRI 3(c), we are of the opinion that the devices are classified in subheading 8525.60.2000, HTSUS, which provides in pertinent part, for “Transmission apparatus for radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatuses: Other Transmission apparatus incorporating reception apparatus.”
HOLDING:
By application of GIRs 1, 3(c) and 6, the transmitter modules at issue are classified under subheading 8525.60.2000, HTSUS, which provides in pertinent part, for “Transmission apparatus for radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatuses: Other Transmission apparatus incorporating reception apparatus.”. The 2019 column one, general rate of duty for merchandise of this subheading 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 https://www.usitc.gov/tata/hts/index.htm.
Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings.
Products of China classified under subheading 8517.60.20, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8517.60.2000, HTSUS, listed above.
The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading.
Sincerely,
Gregory Connor, Chief
Electronics, Machinery, Automotive, and
International Nomenclature Branch