CLA-2 OT:RR:CTF:EMAIN H302996 NVF
Michael K. Tomenga
Neville Peterson LLP
One Exchange Plaza
55 Broadway, Suite 2602
New York, New York 10006
RE: Tariff classification of Globalstar Sat-Fi2 Satellite Hotspot from China.
Dear Mr. Tomenga:
This is in response to your letter of March 4, 2019, submitted on behalf of Globalstar Inc. (“Globalstar), requesting a prospective ruling (“ruling request”) on the classification of the Sat-Fi2 satellite hotspot under the Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”). In reaching the below determination, we have considered information presented in your March 4, 2019 ruling request, public information from the Globalstar website, information presented during a meeting held on March 4, 2019, and additional information provided by you via email on May 8, 2019.
FACTS:
The Sat-Fi2 is a satellite Wi-Fi hotspot with integrated GPS and SOS functionality that is intended for use in remote locations where normal cellular phone service is not available. It receives and transmits data in digital signals utilizing Globalstar’s global satellite wireless telecommunications network. Up to eight portable devices or smartphones can connect to the Sat-Fi2 via Wi-Fi and access the internet, check email, send and receive SMS messages, and make phone calls via Globalstar’s network. To gain access to the Sat-Fi2, the user must first install the Sat-Fi2 app on the mobile device. The app is required to make calls, send and receive SMS messages, browse the internet, and access all other features of the Sat-Fi2. The Sat-Fi2 only permits one connected device at a time to make phone calls. Before it can be used, the Sat-Fi2 device has to be set up with a Globalstar account and a pre-paid plan must be selected.
ISSUE:
Whether the Sat-Fi2 is classified as a modem for use with automatic data processing machines under subheading 8517.62.0010, HTSUSA, as switching and routing apparatus under subheading 8517.62.0020, HTSUSA, or as other machines for the reception, conversion and transmission or regeneration of voice, images or other data under subheading 8517.62.0090, HTSUSA.
LAW AND ANALYSIS:
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. There is no dispute that the subject merchandise is classified under heading 8517, HTSUS. Accordingly, this matter is governed by GRI 6, which provides as follows:
For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.
Note 3 to Section XVI, HTSUS, provides as follows:
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 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).
EN 85.17 states that:
This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks.
EN 85.17 (II)(G) states, in pertinent part, that heading 8517:
{I}ncludes apparatus which allows for the connection to a wired or wireless communication network or the transmission or reception of speech or other sounds, images or other data within such a network.
The HTSUSA subheadings under consideration are as follows:
8517 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 heading 8443, 8525, 8527 or 8528; parts thereof:
Other apparatus for 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):
8517.62.00 Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus:
8517.62.0010 Modems, of a kind used with data processing machines of heading 8471.
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8517.62.0020 Switching and routing apparatus.
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8517.62.0090 Other
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In the present case, there is no dispute that by application of GRIs 1 and 6, the Sat-Fi2 is properly classified under subheading 8517.62.00, HTSUS, which provides for “Machines for the reception, conversion and transmission of regeneration of voice, images or other data, including switching and routing apparatus.” The Sat-Fi2 is a radio transceiver that permits connected users to access the internet via Globalstar’s satellite network, make phone calls, check email, receive messages, and perform other digital tasks. It therefore is a machine that receives, converts and transmits or regenerates voice, images and other data. We need only determine the appropriate 10-digit subheading under which the Sat-Fi2 is classified.
Subheading 8517.62.0010, HTSUSA provides for modems of a kind used with data processing machines of heading 8471. Note 5(c) to Chapter 84 defines data processing machines for purposes of heading 8471 as:
Storing the processing program or programs and at least the data immediately necessary for the execution of a program;
Being freely programmed in accordance with the requirements of the user;
Performing arithmetical computations specified by the user; and
Executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run.
The Sat-Fi2 is not a modem used with data processing machines of heading 8471, HTSUS. It is a standalone, portable device that enables multiple types and numbers of devices to connect to the internet via satellite signal. Therefore, it cannot be classified under heading 8517.62.0010, HTSUS.
Nor is the Sat-Fi2 considered switching and routing apparatus under heading 8517.62.0020, HTSUS. We have previously defined a router as a device which determines the destination of individual incoming signals or which regulates traffic between similar networks. HQ H301537 (ARRIS Telephony Gateway) (Oct. 17, 2019). We also determined that switching and routing apparatus allow data to move within a network or between networks. Id. While the Sat-Fi2 has the ability to manage data for up to eight connected devices, regulating such traffic is not its principle function. Multiple devices do not need to be connected to the Sat-Fi2 for it to function, and indeed, only one device can be used at a time to transmit phone calls. Any routing functionality that the Sat-Fi2 performs is secondary to its primary purpose of providing internet and phone connectivity to one or more portable devices.
We therefore find that the principle function of the Sat-Fi2 is similar to that of a satellite modem. The Sat-Fi2 is used to provide internet and voice call capabilities via satellite signal when a traditional internet or cellular phone connection is not available or intermittent. The Sat-Fi2 receives and transmits data between a mobile device and Globalstar’s satellite network. In that respect, it functions like other portable hotspots that we have classified under subheading 8517.62.0090, HTSUS. See HQ H302181 (Oct. 23, 2019) (certain cellular mobile hotspots).
In light of the foregoing, we find that the Sat-Fi2 is properly classified under 8517.62.0090, HTSUS, which provides for “Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Other.”
HOLDING:
By application of GRI 1, the Sat-Fi2 is classified under subheading 8517, HTSUS. By application of GRI 6 (Note 3 to Section XVI), it is specifically provided for under subheading 8517.62.0090, HTSUSA, 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 heading 8443, 8525, 8527 or 8528; parts thereof: Other apparatus for 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): Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Other.” The column one, general rate of duty for merchandise of subheading 8517.62.0090, HTSUS 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/.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Gregory Connor, Chief
Electronics, Machinery, Automotive, and
International Nomenclature Branch.