OT:RR:CTF:EMAIN H326071 PF
Mr. Lars-Erik A. Hjelm
Ms. Emily S. Opp
Akin Gump Strauss Hauer & Feld LLP 2001 K Street, N.W. Washington, DC 20006-1037
RE: Tariff classification of HP Presence Small Space Solutions
Dear Mr. Hjelm:
This is in reply to your request for a prospective ruling on behalf of HP Inc. (“HP”), on the tariff classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of the HP Presence Small Space Solution and the HP Presence Small Space Solution Plus AI Camera (“subject merchandise”). Your request was forwarded by the National Commodity Specialist Division to this office for a response. Our decision takes into account meetings held on November 30, 2022, March 15, 2023, and a supplement submitted on May 9, 2023.
FACTS:
The subject merchandise is referred to as the HP Presence Small Space Solution and the HP Presence Small Space Solution Plus AI Camera. The subject merchandise is described as a system designed to facilitate videoconferencing and remote communications. The subject merchandise allows users to have video and audio calls. Moreover, the subject merchandise connects to virtual (remote) users through Microsoft Teams or Zoom applications.
The subject merchandise will consist of the following at the time of importation:
An “HP Presence Mini Conferencing PC” (“Mini Conferencing PC”) — a “personal computer” that stores and runs an operating system (“OS”), preinstalled and/or user-selected applications, and corresponding data at the command of the user.
An “HP Presence Control” (“Control”) — a touchscreen control panel that provides data outputs to the user (as images and sound) while allowing the user to input data and commands (through voice and touch).
And in the Solution Plus (but not the Solution), a “Presence See 4K AI Camera (“4K AI Camera”) (a movable device that captures and transmits images, sound and temperature readings to facilitate videoconferencing).”
In your submission, you state that the general purpose of the subject merchandise is to facilitate and enhance videoconferencing and remote communications experiences, specifically by blending harmoniously into a conference space. For example, one typical use would involve the placement of the Control at the center of a conference room table, placement of the Mini Conferencing PC below the Control, and (where applicable) placement of the See 4K AI Camera at the head of the table or a separate table. The Control and See 4K AI Camera would be connected by cable to the Mini Conferencing PC. When these items are so situated and connected, a user can operate the Control to execute videoconferencing and other applications on the Mini Conferencing PC, view and hear data outputs from these applications, and activate the See 4K AI Camera.
You note that the “HP Presence” units — i.e., the Mini Conferencing PC, Control, and, in the case of the Solution Plus, see 4K AI Camera — function interdependently and can only be used when connected via cable. Each unit has a unique layout of external ports that corresponds to the other units, and each unit is embedded with firmware that interacts specifically and exclusively with other units. Only once connected to the Mini Conferencing PC or other personal computer with similar specifications, for example, can the Control display or emit information and register and direct commands. Likewise, the See 4K AI Camera requires and relies on a connection to the Mini Conferencing PC (or comparable personal computer) to initiate and stop the capture of images, sound, and other data. Conversely, the Mini Conferencing PC depends upon the Control to provide data outputs and receive user commands. Consequently, these components are not capable of use as free-standing components without a connection.
The specification for the HP Presence Small Space Solution describes the product as follows:
Adaptive AI-enhanced audio and engaging controls make virtual meetings more personal. HP Presence interacts intuitively with you providing an intelligent meeting experience…Bring people together with this intuitive and easy-to-setup conferencing system…. Enjoy room-filling Audio by Bang & Olufsen calibrated to your room dimensions with dedicated audio processing that produces natural voice and audio output.
The specification for the HP Presence Small Space Solution Plus AI Camera describes the product as follows:
AI-enhanced audio, cinematic 4K video and engaging controls make virtual meetings more personal…Bring people together with this intuitive and easy-to-setup conferencing system…. The intelligent HP Presence See 4K Camera wakes on room entry and automatically adjust the framing of the video with speaker tracking and picture-in-picture modes. Room filling Audio by Bang & Olufsen produces natural voice and audio output from the HP Presence Control.
At the March 15, 2023 meeting, a representative from HP discussed that upon importation, the Mini Conferencing PC is preloaded with either a Zoom or a conferencing Teams application. The Mini Conferencing PC cannot run both applications, Zoom and Teams, by itself. In other words, the Zoom and Teams programs are not capable of interacting with each other solely on the Mini Conferencing PC. In order to run the second application (either Zoom or Teams), a user would need to connect a laptop to run the second program. For example, if the Mini Conferencing PC is imported with a preloaded with a Zoom application, it could not run the Teams application without connecting to laptop. Similarly, if the Mini Conferencing PC is imported with a preloaded Teams application, it could not run the Zoom application without connection to a laptop.
Below are images of the two systems with summaries of their components:
ISSUE:
Whether the subject merchandise is classified as automatic data processing (ADP) system of heading 8471, HTSUS or a telecommunication system of heading 8517, 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 (AUSR). The GRIs and the AUSR are part of the HTSUS, and are considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
Initially, we note that because the HP Presence Small Space Solution Plus Camera contains a separate “4K AI Camera”, it constitutes a retail set classifiable pursuant to GRI 3 if its components are put up for retail sale. However, we find that the “HP Presence Mini Conferencing PC” imparts the set with its essential character due to the fact that it provides the set with the vast majority of its functionality to hold and facilitate virtual meetings.
Therefore, the HTSUS headings 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 Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus:
8471 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included:
Other automatic data processing machines:
8471.49 Other, entered in the form of systems.
Note 6 to Chapter 84 provides the legal provisions for ADP machines, ADP
systems, ADP units and exclusions for classification therein.
ADP machines are defined in Legal Note 6 (A) to Chapter 84, HTSUS, which
provide as follows:
For the purposes of heading 8471, the expression "automatic data processing machines" means machines capable of:
Storing the processing program or programs and at least the data immediately necessary for the execution of the 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.
An ADP system is defined in Note 6 (B):
Automatic data processing machines may be in the form of systems consisting of a variable number of separate units.
To be classified as an ADP unit under heading 8471, HTSUS, an article must meet the terms of Legal Note 6 (C) to Chapter 84, HTSUS, which provides that:
Subject to paragraphs (D) and (E) below, a unit is to be regarded as being a part of an automatic data processing system if it meets all the following conditions:
It is of a kind solely or principally used in an automatic data processing system;
It is connectable to the central processing unit [CPU] either directly or through one or more other units; and
It is able to accept or deliver data in a form (codes or signals) which can be used by the system.
Separately presented units of an automatic data processing machine are to be classified in heading 8471.
However, keyboards, X-Y co-ordinate input devices and disk storage units which satisfy the conditions of paragraphs (C) (ii) and (C) (iii) above, are in all cases to be classified as units of heading 8471.
Chapter 84, Note 6 (D) identifies certain units that must be classified in their own provisions when separately presented. It states, in relevant part:
Heading 8471 does not cover the following when presented separately, even if they meet all of the conditions set forth in Note 6 (C) above :
Printers, copying machines, facsimile machines, whether or not
combined;
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);
Loudspeakers and microphones;
Television cameras, digital cameras and video camera recorders…
Note 6 (E) to Chapter 84 states the following:
Machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
The EN to heading 8471 provides, in pertinent part:
AUTOMATIC DATA PROCESSING MACHINES
AND UNITS THEREOF
Data processing is the handling of information of all kinds, in pre-established logical sequences and for a specific purpose or purposes.
Automatic data processing machines are machines which, by logically interrelated operations performed in accordance with pre-established instructions (program), furnish data which can be used as such, or, in some cases, serve in turn as data for other data processing operations.
This heading covers data processing machines in which the logical sequences of the operations can be changed from one job to another, and in which the operation can be automatic, that is to say with no manual intervention for the duration of the task….
However, the heading excludes machines, instruments or apparatus incorporating or working in conjunction with an automatic data processing machine and performing a specific function. Such machines, instruments or apparatus are classified in the headings appropriate to their respective functions or, failing that, in residual headings (See Part (E) of the General Explanatory Note to this Chapter).
AUTOMATIC DATA PROCESSING MACHINES
The automatic data processing machines of this heading must be capable of fulfilling simultaneously the conditions laid down in Note 6 (A) to this Chapter. […]
Thus, machines which operate only on fixed programs, i.e., programs which cannot be modified by the user, are excluded even though the user may be able to choose from a number of such fixed programs.
These machines have storage capability and also stored programs which can be changed from job to job….
ADP systems are further clarified in the EN to heading 8471 as:
Automatic data processing machines may comprise in the same housing, the central processing unit, an input unit (e.g., a keyboard or a scanner) and an output unit (e.g., a visual display unit), or may consist of a number of interconnected separate units. In the latter case, the units form a “system” when it comprises at least the central processing unit, an input unit and an output unit (see Subheading Note 2 to this Chapter). The interconnections may be made by wired or wireless means.
A complete automatic data processing system must comprise, at least:
(1) A central processing unit which generally incorporates the main storage, the arithmetical and logical elements and the control elements; in some cases, however, these elements may be in the form of separate units.
(2) An input unit which receives input data and converts them into signals which can be processed by the machine.
(3) An output unit which converts the signals provided by the machine into an intelligible form (printed text, graphs, displays, etc.) or into coded data for further use (processing, control, etc.).
Two of these units (input and output units, for example) may be combined in one single unit.
A complete automatic data processing system is classified in this heading, even though one or more units may be classified elsewhere when presented separately (see Part (B) Separately presented units, below).
These systems may include remote input or output units in the form of data terminals.
Such systems may also include units, apart from the input or output units, designed to increase the capacity of the system for instance, by expanding one or more of the functions of the central unit (see Part (B) below). Such units are inserted between the input or output units (start and end of the system), although adapting and converting units (channel adaptors and signal converters) may occasionally be connected before the input unit or after the output unit.
The EN to heading 8471, Part (B) Separately presented units, states that:
Subject to the provisions of Notes 6 (D) and (E) to this Chapter, this heading also covers separately presented constituent units of automatic data processing systems. These may be in the form of units having a separate housing or in the form of units not having a separate housing and designed to be inserted into a machine (e.g., insertion onto the main board of a central processing unit). Constituent units are those defined in Part (A) above and in the following paragraphs, as being parts of a complete system.
An apparatus can only be classified in this heading as a unit of an automatic data processing system if it:
a) Performs a data processing function;
b) Meets the following criteria set out in Note 6 (C) to this Chapter
c) Is not excluded by the provisions of Notes 6 (D) and (E) to this Chapter.
…
If the unit performs a specific function other than data processing, it is to be classified in the heading appropriate to that function or, failing that, in a residual heading (see Note 6 (E) to this Chapter). If an apparatus does not meet the criteria set out in Note 6 (C) to this Chapter, or is not performing a data processing function, it is to be classified according to its characteristics by application of General Interpretative Rule 1, if necessary in combination with General Interpretative Rule 3 (a).
The Explanatory Notes to note 6 (E) to Chapter 84 state as follows: In accordance with the provisions of Note 6 (E) to Chapter 84, the following classification principles should be applied in the case of a machine incorporating or working in conjunction with an automatic data processing machine, and performing a specific function: (1) A machine incorporating an automatic data processing machine and performing a specific function other than data processing is classifiable in the heading corresponding to the function of that machine or, in the absence of a specific heading, in a residual heading, and not in heading 84.71. (2) Machines presented with an automatic data processing machine and intended to work in conjunction therewith to perform a specific function other than data processing, are to be classified as follows: the automatic data processing machine must be classified separately in heading 84.71 and the other machines in the heading corresponding to the function which they perform unless, by application of Note 4 to Section XVI or Note 3 to Chapter 90, the whole is classified in another heading of Chapter 84, Chapter 85 or of Chapter 90.
The EN to heading 8517 states, in relevant part: 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 electromagnetic 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.
You maintain that the subject merchandise are two ADP systems in accordance with Note 6 (C) to Chapter 84 and Subheading Note 2 to Chapter 84. The first alleged “system” includes a Mini Conferencing PC and a separate Control. The second purported “system” includes the Mini Conferencing PC, Control, and a 4K AI camera. However, before we consider whether the subject merchandise are ADP systems, we first must consider whether the Mini Conferencing PC is freely programmable and thereby satisfying the requirements of Note 6 (A) to Chapter 84 of being an ADP machine.
The Mini Conferencing PC appears capable of “storing the processing program or programs and at least the data immediately necessary for the execution of the program;” “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.” See Note 6(A)(i), (iii) and (iv) to Chapter 84, HTSUS. At issue in this case is whether the Mini Conferencing PC is “capable of … being freely programmed in accordance with the requirements of the user.” See Note 6(A)(ii) to Chapter 84, HTSUS.
In Optrex America Inc. v. United States, 427 F. Supp. 2d. 1177 (Ct. Int’l Trade 2006), aff’d, 475 F.3d 1367 (Fed. Cir. 2007) (“Optrex”), the U.S. Court of Appeals for the Federal Circuit (“CAFC”) upheld CBP’s longstanding interpretation that a “freely programmable” ADP machine is one that: (i) applications can be written for, (ii) does not impose artificial limitations upon such applications, and (iii) will accept new applications that allow the user to manipulate the data as deemed necessary by the user.” 475 F.3d at 1368. See also Headquarters Ruling Letter (“HQ”) 964880, dated December 21, 2001. The Optrex court noted that “[CBP’s] interpretation is supported by the World Customs Organization’s Explanatory Notes […] which provide that ‘machines which operate only on fixed programs, that is, programs which cannot be modified by the user, are excluded [from heading 8471] even though the user may be able to choose from a number of such fixed programs.’ Explanatory Note 84.71(I)(A).” Id. at 1370. The court added that “[a]pplication programs are not ‘fixed’ because they can be installed or deleted from a machine.” 427 F. Supp. 2d at 1197.
CBP has ruled that devices which enable the user to decide which applications to install or delete from the device are freely programmable. For example, in HQ 964880, supra, CBP examined the classification of the Palm VII and VIIx – personal digital assistants (“Palm PDAs”) with Internet connectivity. Both models used Palm’s 3.2.0 OS, a 16MHz microprocessor, and came with 2 MB of random-access memory and 2 MB of read-only memory. They were imported with pre-installed applications (including a date book, an address book, a memo pad, and desk top e-mail connectivity software) and could accept additional applications that were available directly from Palm or from third-party vendors. In finding that the devices were freely programmable, CBP stressed the fact that they could be programmed in several ways: directly on the devices, with a host computer to generate a generic application, or with a host computer to generate a native application. CBP also noted that:
the Palm [OS] is an open operating system; programming tools are readily available to any user either directly from Palm or from other commercial sources;
programming tools are readily available to any user either directly from Palm or from other commercial sources; [and]
hundreds of software applications are currently available for the Palm OS through a variety of vendors who distribute them either as freeware, shareware, or commercial applications …
CBP classified the PDAs in subheading 8471.30.00, HTSUS, as portable ADP machines.
Conversely, in HQ H026665, dated July 9, 2008, CBP ruled that the AIDA System Compact II, a machine used in hospitals to archive images, video and audio files associated with patient information onto a database, was not freely programmable because users were not free to add or remove software from the device. There, CBP noted, first, that the importer could not provide “… an affirmative representation that the hardware and software are installed into the AIDA without any proprietary restrictions or blocks” and second, that “the software installation manual and license prohibited the downloading of additional software and also identified such action as an impediment to the operation of the device.”
Similarly, in HQ 964682, dated July 15, 2002, we determined that the Sony PlayStation2 (“PS2”), a video game console, was not freely programmable because:
[p]roprietary blocks in the PS2 prevent the console from running any commercially available Linux OS and only specially designed Sony disks can be read by the system. If a non-PS2 compatible disc is inserted in the console, the hardware layer (with the firmware) determines that the disc does not contain one of the accepted formats and thus does not acknowledge it as accepted media.
Significantly, we noted that to run additional Linux-based programs on the PS2, the user was required to install Sony’s version of the Linux OS, which was not included with the console. Moreover, in HQ 952862, dated November 1, 1994, CBP determined that Teklogix data collection devices were not freely programmable, in part, because they were not “general purpose” machines and were designed for certain specific applications and could not by themselves perform the typical applications of computers or personal computers. HQ 952862 discussed the concept of freely programmable by examining the definitions of computer and personal computer and stated as follows:
“In determining whether a particular machine is "freely programmable," it is helpful to examine the definitions of the terms "computer" and "personal computer." A computer, which is freely programmable, is a "[g]eneral-purpose machine that processes data according to a set of instructions that are stored internally either temporarily or permanently." A. Freedman, The Computer Glossary, Sixth Edition, pg. 95 (1993). A personal computer "is functionally similar to larger computers, but serves only one user. It is used at home and in the office for almost all applications traditionally performed on larger computers." Computer Glossary (1993), pg. 400. Personal Computers "are typically used for applications, such as word processing, spreadsheets, database management and various graphics-based programs, such as computer-aided design (CAD) and desktop publishing. They are also used to handle traditional business applications, such as invoicing, payroll and general ledger. At home, personal computers are primarily used for games, education and word processing." A. Freedman, The Computer Glossary, Fourth Edition, pg. 524 (1989). Because they can perform any of the above-listed applications, personal computers are considered to be "freely programmable."
As discussed in your presentation on March 15, 2023, the Mini Conferencing PC in its condition as imported, is preloaded with either a Zoom or a Teams application. The Mini Conferencing PC cannot run both applications, Zoom and Teams, by itself. In order to run a second conferencing application (either Zoom or Teams), a user would need to connect a laptop to run a second program. For example, a Mini Conferencing PC that in its condition as imported, is preloaded with a Zoom application, cannot run the Teams application without connecting to a laptop. Similarly, a Mini Conferencing PC that is loaded with a Teams application in its condition as imported cannot run the Zoom application without connection to a laptop.
The presence or requirement of a laptop to run a separate conferencing application indicates that the Mini Conferencing PC has software blocks that prevent it from running a second conferencing application. During the presentation, it was discussed that the Mini Conferencing PC could not run two conferencing programs at the same time without connection to a laptop. In Optrex, discussed supra, the CAFC noted that a freely programmable ADP machine is one that “will accept new applications that allow the user to manipulate the data as deemed necessary by the user.” 475 F.3d 1367, 1370 (citing HQ 964880, supra (emphasis added); accord HQ 956839 (Mar. 28, 1996); HQ 952862, supra. In this case, since the Mini Conferencing PC cannot accept a new conferencing application (either Zoom or Teams), without being connected to an ADP machine, it is not freely programmable. As a result, the Mini Conferencing PC does not meet the criteria of Note 6(A) (ii) of Chapter 84, HTSUS, and it cannot be considered an ADP machine for tariff purposes and classification under heading 8471, HTSUS is precluded.
It is your contention that the Control and the See 4K AI Camera are both “input units” and that the Control also constitutes an “output unit” as set out in Note 6 (C), subheading Note 2, and EN 84.71. However, as the Mini Conferencing PC is not an ADP machine, the subject merchandise cannot be considered an ADP system pursuant to Note 6 (C).
Moreover, the subject merchandise is excluded from classification under heading 8471, HTSUS, by application of Note 6 (E) to Chapter 84, HTSUS, because it performs specific functions other than data processing, namely providing a telecommunication function.
Note 6 (C) establishes that it subject to Note 6 (E) of Chapter 84, HTSUS, which provides as follows:
Machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.
The term “data processing” is not defined in the HTSUS. As such, it must be construed in accordance with its common meaning, which may be ascertained by reference to “dictionaries, scientific authorities, other reliable information sources,” “lexicographic and other materials” and to the pertinent ENs. C.J. Tower & Sons v. United States, 69 C.C.P.A. 128, 673 F.2d 1268, 1271 (1982); Simod America Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir. 1989); GRK Can., Ltd. v. United States, 761 F.3d 1354, 1357 (Fed. Cir. 2014). The technical reference “Data Processing and Information Technology,” and EN 84.71 denote that “data processing” involves the collection and manipulation of data for a specific purpose. The Oxford English Dictionary online defines “data processing” as “[p]rocessing of data, esp. by computer, for the purposes of analysis, classification, or calculation.” The Cambridge Dictionary online defines “data processing” as the following “the use of a computer to perform calculations on data,” “the use of computers to store, organize, and perform calculations on information,” and “the use of a computer to store, organize, and use information.”
In addition, Merriam-Webster’s Online Dictionary defines “data processing” as “the converting of raw data to machine-readable form and its subsequent processing (such as storing, updating, rearranging, or printing out) by a computer.” The National Institute of Standards and Technology defines “data processing” as “[t]he collective set of data actions (i.e., the complete data life cycle, including, but not limited to collection, retention, logging, generation, transformation, use, disclosure, sharing, transmission, and disposal).”
Moreover, the Encyclopedia Britannica states that “data processing” consists of:
The manipulation of data by a computer. It includes the conversion of raw data to machine-readable form, flow of data through the CPU and memory to output devices, and formatting or transformation of output. Any use of computers to perform defined operations on data can be included under data processing.
The HP Presence Systems incorporate specific functions other than data processing. The subject merchandise allows users to have remote video and audio calls in a conference space. The subject merchandise connects virtual (remote) users through Microsoft Teams or Zoom applications, which are both communication platforms. The product manuals and specifications of the subject merchandise also describe them as teleconferencing systems and they consist of the necessary components for performing teleconferencing. The Mini Conferencing PC has preinstalled telecommunication programs (Microsoft Teams or Zoom) and uses specific connectors/ports which allow connection to the other components of the system. The Mini Conferencing PC, Control, microphones, speakers, preloaded videoconferencing applications and in the case of the HP Presence Small Space Solution Plus AI Camera, the camera all work together to allow for the subject merchandise to facilitate audio and videoconferencing. These functions are clearly something other than data processing. For that reason, we apply Note 6 (E) to Chapter 84 to the subject merchandise and preclude heading 8471, HTSUS, from consideration.
We also note that the Control performs a control function. While the Control launches and controls the applications that physically reside on the Mini Conferencing PC, its function is to manage and adjust the audio, video, and other settings for the conferencing software. The Control has microphones and speakers, performs audio processing/mixing functions such as volume and noise filtering. The Control also controls the camera, places calls, and manages the video conference. These functions are not data processing functions. The Control’s temperature sensors, light sensors, and the passive infrared sensors (“PIR”) enable the Control to manage the teleconference experience and automatically make program adjustments to microphones and speakers. Many of these features are limited to the Control itself (e.g., the volume control on the Control’s speakers, PIR detection of a user, and turning on the microphone). Therefore, the Control does not provide the required functionality to be an output unit. As a result, the Control cannot be considered an “input unit” or “output unit” of an ADP system of heading 8471, HTSUS.
With regard to the See 4K AI Camera, you maintain that it receives data in the form of images, converts that the data into signals and sends those signals to the Mini Conferencing PC for centralized data processing. The 4K AI Camera is described as a high-resolution camera with embedded microphone that capture video images and sound, which are fed to the PC for processing and transmittal. The 4K AI Camera is designed to be connected to an ADP machine for capturing video images that must be transmitted to the ADP machine.
CBP has previously classified PC cameras designed to be connected to ADP machines, used for videoconferencing and for the capture of still images and moving images. In HQ 964973, dated July 17, 2002, CBP classified PC-cameras as television cameras of subheading 8525.30.90, HTSUS. The issue in that ruling was whether the cameras were classifiable as input units of ADP machines. CBP held that the cameras were subject to Note 6 (E) to Chapter 84 and thereby excluded from classification in heading 8471, HTSUS. Similarly in this case, the function of the See 4K AI camera is to transmit video images. They perform specific functions other than data processing and, as with the cameras in HQ 964973, are not classifiable as input units of ADP machines pursuant to Note 6 (E) to Chapter 84.
We note your reliance on HQ H300877 in support of your contention that the Control and the 4K AI camera are output units. In HQ H300877, the article was described as a USB headset with a microphone which was solely used with an ADP machine, and connected to the PC via a USB-A connection. The headset permitted the user to take calls, listen to music, and command Microsoft’s Cortana to control the PC. This device also incorporated an analog-to-digital converter and USB sound card. CBP determined that this product was an output unit and with its inclusion with a CPU and keyboard or mouse would form a complete ADP system of subheading 8471.49.00. The merchandise in HQ H300877 is not the same as the subject Control and 4K AI camera. As discussed, the subject merchandise also provides functions other than data processing, specifically the Control performs a Control function and the Camera transmits video images. Moreover, when paired with the Mini Conferencing PC, they perform a teleconferencing or telecommunication function. As a result, the Control and 4K AI Camera are excluded by Note 6 (E) to Chapter 84 and therefore may not be considered either an “input” or “output” unit for purposes of Note 6 (C) to Chapter 84.
CBP has applied Note 6 (E) to exclude a variety of products from heading 8471, HTSUS. See e.g., Headquarters Ruling (“HQ”) W966951, dated April 21, 2006 (a Digidesign Control 24, described as a control surface designed to give tactile control over Pro Tools software for recording, mixing and editing, performed a function other than data processing and was excluded from heading 8471, HTSUS); HQ 967054, dated June 1, 2004 (certain high definition digital video recorders incorporating a CPU were excluded from heading 8471, HTSUS, by application of Note 6 (E) to Chapter 84, HTSUS, because they performed a function described by heading 8521, HTSUS, which provides for video recording or reproducing apparatus); HQ 966172, dated June 4, 2003 (PC cameras designed to be connected to ADP machines, used for videoconferencing, and for the capture of still images performed functions other than data processing and were not classifiable as input units of ADP machines pursuant to Note 6 (E)).
The function of the subject merchandise is to facilitate remote communication between two or more parties. This function is described by heading 8517, HTSUS, which provides for “Telephone sets…; other apparatus for the transmission or reception of voice, images or other data...”. Therefore, the subject merchandise is classifiable in heading 8517, HTSUS, and specifically subheading 8517.62, HTSUS.
Moreover, we note that a principal function analysis under Note 3 to Section XVI is not appropriate here. Note 3 to Section XVI states, “[u]nless 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.” Section Note 3 to Section XVI, HTSUS (2023). Here, because the components of the subject merchandise are not fitted together to form a whole, Note 3 to Section XVI does not apply.
HOLDING:
The HP Presence Small Space Solution (by application of GRIs 1 and 6) and the HP Presence Small Space Solution Plus AI Camera (by application of GRIs 1, 3(b) and 6) are classified in heading 8517 HTSUS, and specifically in subheading 8517.62.00, 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.” The column one, general rate of duty for merchandise of this subheading is Free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under statistical reporting number 8517.62.0090, HTSUS Annotated, unless specifically excluded, are subject to an additional 7.5 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.15, in addition to statistical reporting number 8517.62.0090, 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.
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 World Wide Web at https://hts.usitc.gov/current. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported.
Sincerely,
Gregory Connor, Branch Chief
Electronics, Machinery, Automotive, and International Nomenclature Branch