OT:RR:CTF:VS H322324 JMV
Jorge A. Garcia, Center Director
Electronics Center of Excellence and Expertise
U.S. Customs and Border Protection
301 E. Ocean Blvd.
Suite 1400
Long Beach, CA 90802
RE: Protest and Application for Further Review 2720-21-104126; prototype; cameras
Dear Director:
This is in response to the Application for Further Review (“AFR”) of Protest No. 2720-21-104126, received on December 14, 2021, and filed against Customs and Border Protection's (CBP’s) decision to liquidate the merchandise at issue under subheading 8525.80.30, Harmonized Tariff Schedule of the United States (“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: Television Cameras: Other.” The Protestant, Zoox, Inc. (“Zoox”), seeks treatment of the merchandise under subheading 9817.85.01, HTSUS, which provides for “Prototypes to be used exclusively for development, testing, product evaluation, or quality control purposes.”
You have asked that certain information submitted in connection with this ruling request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), your request for confidentiality is approved. The information contained within brackets and all attachments to your request for a binding ruling, forwarded to our office, will not be released to the public and will be withheld from the published version of this ruling.
FACTS:
The products at issue are Leopard B2 cameras, which Zoox will incorporate into [XX] Zoox pre-production prototype vehicles. Zoox initially entered these cameras with a primary classification as prototypes under subheading 9817.85.01, HTSUS and a secondary classification of 8525.80.40, HTSUS. CBP liquidated the merchandise under subheading 8525.80.30, HTSUS. In this protest, Zoox argues that the correct primary classification of the merchandise is under subheading 9817.85.01, HTSUS, but does not contest the change to the secondary classification of 8525.80.30, HTSUS.
Zoox is currently developing a fully autonomous vehicle targeted at the robo-taxi market. Zoox’s vehicle will be able to maneuver urban environments without any human intervention and function similarly to a taxi. Zoox states that these pre-production vehicles will be used exclusively for development, testing, product evaluation, or quality control purposes, and they will not be leased, sold, or utilized in any commercial capacity. The cameras at issue are part of the sensor system that are used in the prototype. Specifically, the cameras are part of the vehicle sensor array located in the top corners of the vehicle. The Zoox Co-Founder and CTO Jesse Levinson explained the purpose of the sensor array in a published interview:
Our vehicles also use a variety of advanced sensors, including LIDAR, cameras, and radar, to see objects on all sides of the vehicle. And because of the geometrical configuration of these sensors, we can almost always see around and behind the objects nearest to us, which is particularly helpful in dense urban environments. Our software then uses a combination of machine learning and geometric reasoning to understand the sensor data, make sense of the scene unfolding around the vehicle, and effectively navigate the roads.
Zoox states that it is building a custom vehicle that houses multiple sensors for a unique use. The sensors, which include the cameras, comprise multiple modifications that are currently under testing to determine whether they can successfully operate the prototype vehicle. In particular, the customizations to the cameras at issue include modifications to the following:
Electrical design: [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
Mechanical design: [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX]
Optical design: [XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX]
Because these cameras are currently undergoing testing and product evaluation for suitability of use in custom vehicles, Zoox states that the particular customizations described above are subject to change.
According to Zoox, these customizations are not made available to any party other than Zoox. To support this assertion, Zoox provided emails and instructions it provided to the manufacturer outlining its particular needs. Further, Zoox asserts that the cameras will not be sold after importation into the United States, nor will they be incorporated into any other product which will be sold. Rather, the cameras will either be stored or destroyed after testing.
ISSUE:
Whether the entered merchandise is entitled to treatment as a prototype under subheading 9817.85.01, HTSUS.
LAW AND ANALYSIS:
Pursuant to section 1433 of the Product Development and Testing Act of 2000 (PDTA), enacted as part of the Tariff Suspension and Trade Act of 2000 (Pub.L. 106-476, § 1433), articles described as “prototypes” under the Act may be imported duty-free. To provide for duty-free entry of prototypes, section 1433 of the PDTA inserted subheading 9817.85.01 into Subchapter XVII of Chapter 98, HTSUS, which provides for:
Prototypes to be used exclusively for development, testing, product evaluation, or quality control purposes …
U.S. Note 7 to Subchapter XVII, Chapter 98, HTSUS, provides, in relevant part:
The following provisions apply to heading 9817.85.01 :
For purposes of this subchapter, including heading 9817.85.01 , the term “prototypes” means originals or models of articles that –
(i) are either in the preproduction, production, or post production stage and are to be used exclusively for development, testing, product evaluation, or quality control purposes; and
(ii) in the case of originals or models of articles that are either in the production or postproduction stage, are associated with a design change from current production (including a refinement, advancement, improvement, development, or quality control in either the product itself or the means for producing the product).
For purposes of clause (i), automobile racing for purse, prize, or commercial competition shall not be considered to be "development, testing, product evaluation, or quality control."
(b) (i) Prototypes may be imported only in limited noncommercial quantities in accordance with industry practice.
(ii) Except as provided for by the Secretary of the Treasury, prototypes or parts of prototypes may not be sold after importation into the United States or be incorporated into any other products that are sold. . . .
Articles subject to quantitative restrictions, antidumping orders, or countervailing duty orders may not be classified as prototypes under this note. Articles subject to licensing requirements, or which must comply with laws, rules, or regulations administered by agencies other than the United States Customs Service before being imported, may be classified as prototypes if they comply with all applicable provisions of law and otherwise meet the definition of "prototypes" under paragraph (a).
U.S. Note 7(a) provides, in relevant part, that prototypes are “originals or models of articles” that fulfill the conditions set out in subparagraphs (i) and (ii) of the Note. The adjective “original” in the Oxford English Dictionary is defined, in relevant part, as, “Designating the thing, as a document, text, picture, etc., from which another is copied or reproduced; that is the original.” Likewise, that same publication defines the adjective “model” as, “B.1 … serving or intended to serve as a pattern for imitation; exemplary, ideal.” Based on these definitions, we conclude that the phrase “originals or models of articles” used in the umbrella text of U.S. Note 7(a) means that a prototype must be the pattern of a manufactured article that is copied or reproduced. We find that the cameras are originals or models because the specifications of these cameras are subject to change based on the results of product testing.
In addition, to comply with the terms of the Note, original or models of articles can only be used for development, testing, product evaluation or quality control purposes at any stage of the production process. See U.S. Note 7(a)(i). We find that the cameras are for use as prototypes in the preproduction stage as the Zoox autonomous taxicab is still in the testing and development phase. We also find that the cameras meet the requirements of U.S. Note 7(b) as the cameras are imported in a limited commercial quantity and they will either be stored or destroyed after testing. Therefore, the Zoox cameras meet the requirements for classification as a prototype under subheading 9817.85.01, HTSUS
HOLDING:
The subject cameras meet the requirements for classification as a prototype under subheading 9817.85.01, HTSUS and the protest should be allowed.
In accordance with the Protest/Petition Processing Handbook (CIS 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 in accordance with this 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 Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
For Craig Clark, Director
Commercial and Trade Facilitation Division