CLA-2 CO:R:C:M 951644 LTO
U.S. Customs Service
Thomas P. O'Neill, Jr. Federal Building
10 Causeway Street, Room 603
Boston, Massachusetts 02222-1052
RE: Protest No. 0401-91-100191; Unburnished Cookies (Media); 19
CFR 177.9(d)(1); HQ 085845; NY 837610; NY 837610 Amendment
revoked; 53 Fed. Reg. 38045; 54 Fed. Reg. 6433; 54 Fed. Reg.
13406; 56 Fed. Reg. 36775; Royal Business Machines, Inc., et
al v. U.S.
This is our decision on Protest No. 0401-91-100191, dated
April 3, 1991, which concerns the classification of unburnished
media or "cookies" under the Harmonized Tariff Schedule of the
United States (HTSUS). The protestant, Kao Infosystems Company
(KIC), also seeks the reliquidation of entries subject to this
protest without the assessment of antidumping duties.
The articles in question are mylar polyethylene disks known
as "cookies" from Japan. Before importation, the cookies are
coated with a thin film of magnetic particles. After
importation, the subject merchandise will be magnetized, mounted
on an aluminum center hub, and enclosed within a plastic casing.
The disks will then be ready for formatting.
On September 29, 1988, the U.S. Department of Commerce
issued an affirmative preliminary antidumping determination for
3.5" microdisks and media from Japan, and instructed the Customs
Service to assess antidumping deposits on items covered by the
determination [Case A-588-802]. 53 Fed. Reg. 38045 (September
29, 1988). Because KIC imported unburnished cookies that were - 2 -
found to be classifiable under subheading 8523.20.00, HTSUS
(prepared unrecorded magnetic disks), the tariff number specified
in the preliminary determination, Customs began assessing
antidumping duties on KIC entries. Commerce subsequently issued
an affirmative final antidumping determination and order. 54
Fed. Reg. 6433 (February 10, 1989); 54 Fed. Reg. 13406 (April 3,
Counsel for the protestant contends that in February 1989,
Customs officials suggested to KIC that the cookies they were
importing were not covered by Commerce's antidumping
determination and advised KIC to obtain a classification ruling
to that effect. In a letter dated February 29, 1989, to Customs
in New York, the protestant requested a binding classification
ruling concerning the cookies.
In NY 837610, dated March 13, 1989, it was determined that
the cookies were not "magnetic," and they were held to be
classifiable under subheading 8523.90.00, HTSUS ("other prepared
unrecorded media"). At this time, the protestant states that
Customs stopped collecting antidumping duties on KIC entries.
KIC continued to import the cookies free of antidumping
duties until April 1990. At this time, Customs rejected a KIC
entry on the grounds that the cookies were in fact covered by
Commerce's scope determination (based on a Customs laboratory
report that indicated that the disks were "magnetized"). Customs
began assessing antidumping duties on KIC entries, including
those entries made by KIC following the March 13, 1989, ruling
that had not yet been liquidated.
On June 8, 1990, New York issued another ruling (NY 837610
Amendment) which purportedly modified the ruling of March 13,
1989. This amended response to the protestant's February 29,
1989, request for a classification ruling, stated that the
subject merchandise was classifiable under subheading 8523.20.00,
On June 26, 1991, Commerce issued a scope ruling to the
protestant concerning KIC's unburnished cookies. 56 Fed. Reg.
36775 (August 1, 1991). This ruling stated that the cookies were
within the scope of their earlier, affirmative final antidumping
The protestant states that, in reliance on NY 837610, they
imported a large number of cookies between March 1989 and April
1990. They claim that because of their reliance on this ruling,
and because of subsequent actions taken by Customs officials
(specifically, the issuance of NY 837610 Amendment and the
retroactive assessment of antidumping duties on KIC entries made
- 3 -
after March 1989 until April 1990 that had not yet been
liquidated), they have suffered severe business hardship.
1. Whether the unburnished cookies are classifiable under
subheading 8523.20.00, HTSUS, which describes prepared unrecorded
magnetic disks for the recording of other phenomena.
2. Whether the entry can be reliquidated without antidumping
duties regardless of the scope determination made by the U.S.
Commerce Department concerning the application of these duties to
3.5" microdisks and coated media thereof from Japan.
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) to the HTSUS
govern the classification of goods in the tariff schedule. GRI 1
states in pertinent part that "for legal purposes, classification
shall be determined according to the terms of the headings and
any relative section or chapter notes . . . ."
The articles in question are covered by heading 8523, HTSUS,
which provides for "[p]repared unrecorded media for sound
recording or similar recording of other phenomena." The
subheadings at issue are as follows:
8523.20.00 Magnetic discs
In NY 837610, dated March 13, 1989, the unburnished cookies
were held to be classifiable under subheading 8523.90.00, HTSUS.
In NY 837610 Amendment, dated June 8, 1990, this ruling was
purportedly modified and the cookies were held to be classifiable
under subheading 8523.20.00, HTSUS. However, according to
section 177.9(d)(1) of the Customs Regulations [19 CFR
177.9(d)(1)], "[m]odification or revocation of a ruling letter
shall be effected by Customs Headquarters . . . ." This office
has recognized that "under current instructions the New York
office cannot modify or revoke its rulings." See HQ 085845,
dated June 27, 1990. Thus, the June 8, 1990 ruling was without
effect and is hereby revoked. We must now consider whether the
articles in question are classifiable under subheading
8523.20.00, HTSUS, or subheading 8523.90.00, HTSUS.
Counsel for the protestant contends that the cookies are not
"magnetized" or "magnetically charged," but merely "magnetic," - 4 -
and argues, therefore, that the cookies cannot be classified as
magnetic disks. We disagree.
The Harmonized Commodity Description and Coding System
Explanatory Note (EN) to heading 8523, HTSUS, pg. 1372, states
that the heading includes "media for magnetic recording, e.g.,
discs or cards (of plastics or paper) . . . either capable of
being magnetised or so rendered by coating with a lacquer
containing dispersions of magnetic powder or by electrolytic
deposit of a ferromagnetic coating (e.g., for magnetic wire)
[emphasis added]." The articles in question are coated with a
thin film of magnetic particles prior to the time of importation.
Thus, while the cookies are not "magnetised," they are "capable
of being magnetised" and are therefore, classifiable as magnetic
disks under subheading 8523.20.00, HTSUS.
2. Anti-dumping duties
Counsel for the protestant requests that the entries of
unburnished cookies be reliquidated without antidumping duties.
Because antidumping scope and tariff classification have
fundamental differences, the tariff classification of the
unburnished cookies by Customs does not affect the Commerce
Department's antidumping scope determination. The Court of
International Trade has stated:
The Court distinguishes between the authority of
the Customs Service to classify according to tariff
classifications [19 U.S.C. 1500] and the power of
the agencies administering the antidumping law to
determine a class or kind of merchandise. The
determinations under the antidumping law may
properly result in the creation of classes which do
not correspond to classifications found in the
tariff schedules or may define or modify a known
classification in a manner not contemplated or
desired by the Customs Service.
Royal Business Machines, Inc., et al v. U.S., 1 CIT 80, 87 (CIT
1980), 507 F.Supp. 1007, aff'd 669 F. 2d 692 (1982).
Thus, the Commerce Department's antidumping scope
determination applies to the merchandise named in that
determination regardless of where Customs classifies that
merchandise, and Customs is not empowered to grant the relief now
sought by the protestant.
The unburnished cookies are properly classifiable under - 5 -
subheading 8523.20.00, HTSUS, which provides for "[p]repared
unrecorded media for sound recording or similar recording of
other phenomena . . . [m]agnetic discs." The corresponding rate
of duty for articles of this subheading is 4.2% ad valorem.
Commerce's final antidumping scope determination of June 26,
1991 [56 Fed. Reg. 36775] is unaffected by this ruling. Thus,
the protestant's request for reliquidation of the entries subject
to this protest without the assessment of antidumping duties must
Accordingly, the protest should be denied in full. A copy
of this decision should be attached to the Customs Form 19 and
provided to the protestant as part of the notice of action on the
John Durant, Director