CLA-2 OT:RR:CTF:EMAIN H304455 MFT/JDK
TARIFF NO(s).: 8525.80.30; 9903.88.03
Port Director
Los Angeles/Long Beach Seaport
301 E. Ocean Blvd. Suite 1400
Long Beach, CA 90802
Attn: Ms. Heather Jimenez, Import Specialist
RE: Protest and Application for Further Review 2704-19-103345; Classification of a network video recorder and camera kit
Dear Port Director:
The following is our decision on Protest and Application for Further Review (AFR) No. 2704-19-103345, which was filed on May 16, 2019, on behalf of Ferris Marketing, Inc. (Protestant). The Protest pertains to U.S. Customs and Border Protection’s (CBP) classification under the Harmonized Tariff Schedule of the United States (HTSUS) of a certain security kit consisting of a network video recorder and cameras.
The subject merchandise was entered by Protestant on October 31, 2018. CBP liquidated the entries on January 4, 2019, under subheading 8525.80.30, HTSUS, which provides for, “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: Television cameras, digital cameras and video camera recorders: Other,” and subheading 9903.88.03, HTSUS. On May 16, 2019, Protestant filed a Protest and AFR regarding the tariff classification of the subject merchandise, claiming that the correct classification is subheading 8521.90.00, HTSUS, which provides for, “Video recording or reproduction apparatus, whether or not incorporating a video tuner: Other.”
In reaching the below determination, we have considered information presented in the Protest and AFR, information provided during the conference between counsel for Protestant and CBP on January 26, 2022, and supplemental information provided by counsel for Protestant on February 18, 2022.
FACTS:
The subject merchandise is the Night Owl Security Kit, model WM-MNVR-421, from China. The security kit consists of a network video recorder (NVR) and two wireless, Wi-Fi security cameras. The NVR contains a 1TB hard disk drive (HDD) and can control up to four Wi-Fi cameras. The subject cameras can capture video and wirelessly transmit video to the NVR for remote recording. The cameras are altered so that they only function with the NVR in the security system of which they are a part.
ISSUE:
Whether the Night Owl Security Kit should be classified as a video recording or reproduction apparatus under 8521, HTSUS, or as television cameras under 8525, HTSUS.
LAW AND ANALYSIS:
We first note that this matter 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. 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. 2704-19-103345 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a).
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation (GRIs). 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 GRIs 2 through 6 may then be applied in order.
GRI 3(a) states that “the heading which provides the most specific description shall be preferred to headings providing a more general description.” GRI 3(b) states, in pertinent part, that composite goods that cannot be classified by reference to GRI 3(a), are to be classified as if they consisted of the component that gives them their essential character. GRI 3(c) provides that when goods cannot be classified by reference to GRI 3(a) or 3(b), they are to be classified in the heading that occurs last in numerical order among the competing headings that equally merit consideration.
The HTSUS provisions under consideration are as follows:
8521 Video recording or reproduction apparatus, whether or not incorporating a video tuner
*****
8525 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
The subject security kit is imported as a retail set featuring components that are classified in different headings: an NVR of heading 8521, HTSUS, and video cameras of heading 8525, HTSUS.
CBP has previously applied GRI 3(c) to classify several security surveillance systems and related merchandise similar to the instant security kit. In Headquarters Ruling Letter (HQ) 957992, this office considered a certain observation system consisting of a charge-coupled device (CCD) camera, black-and-white monitor, intercom, microphone, camera mounting bracket, cables, and a power supply. There, the importer argued that the CCD camera gave the observation system its essential character in part because of the prominence of the camera in the system’s sales literature and the necessity of the camera to the system’s overall functioning. But because the CCD camera and black-and-white monitor played equal roles in the use of the entire system, the “interaction between the systems’ primary components . . . persuaded this office to classify the systems according to GRI 3(c), HTSUS, rather than GRI 3(b).” Similarly, in New York Ruling Letter (NY) N012061, this office ruled that no single component imparted the essential character of a certain video surveillance system, which consisted of, inter alia, a DVR with an HDD and four cameras. Finding that “the individual components function[ed] in a cohesive, seamless manner to complete [the] task” of video surveillance, this office held that the classification of the system would be in accordance with GRI 3(c).
We find that the subject merchandise must be classified by reference to GRI 3(c) rather than GRI 3(b). Similar to the components in HQ 957992 and NY N012061, the NVR and the cameras in the instant security kit play equal roles in the use of the entire surveillance system. Though the wireless cameras have the singular function of capturing and transmitting image data to the NVR, that function is critical to the primary use of the system; without the cameras, the NVR cannot record the transmitted images. Thus, the NVR and cameras cannot perform the function of video surveillance independent of one another and must be considered equally essential for purposes of GRI 3(b). As a result, heading 8521, HTSUS, and heading 8525, HTSUS merit equal consideration.
Because the subject security kit must be classified by reference to GRI 3(c), it shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Heading 8525, HTSUS, occurs last in numerical order compared to heading 8521, HTSUS. Thus, the subject merchandise must be classified under heading 8525, HTSUS, specifically subheading 8525.80.30, HTSUS, which provides for, “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: Television cameras, digital cameras and video camera recorders: Other.”
HOLDING:
By application of GRIs 1, 3(c), and 6, the Night Owl Security Kit is classified under subheading 8525.80.30, HTSUS, which provides for, “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: Television cameras, digital cameras and video camera recorders: Other.” The general, column one rate of duty is free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8525.80.30, HTSUS, unless specifically excluded, are subject to an additional xx percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8525.80.30, HTSUS, listed above.
The HTSUS is subject to periodic amendment, so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, including information on exclusions and their effective dates, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china, respectively.
Products of China classified under subheading 8525.80.30, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty.
You are instructed to DENY the Protest.
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 CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP website at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division