CLA-2 RR:CR:GC 962845 BJB
Port Director of Customs
U.S. Customs Service
300 South Ferry Street
San Pedro, CA 90731
RE: Protest 2704-99-100551; Personal embroidery design system; Flash memory card.
Dear Port Director:
The following is our decision regarding Protest 2704-99-100551, filed by Brother International Corporation (“protestant”), concerning the classification, under the Harmonized Tariff Schedule of the United States (“HTSUS”), of its “Personal Embroidery Design System” (“PE-Design System”), described as a “combined input/output unit” for an automatic data processing machine.
In preparing this decision, consideration was given to supplemental submissions of March 5, 1999, and March 28, 2000, provided by protestant’s counsel. A sample of the PE Design System was also submitted.
FACTS:
Protestant describes the PE-Design System, as “an embroidery system,” “to create embroidery designs which are executed by a sewing machine.” The PE-Design System allows one to create embroidery patterns on a personal computer, transfer them to a flash memory card, and then to insert it into a sewing machine. The articles at issue are a card reader/writer box, three software application diskettes (“diskettes”), a flash memory card, an interface cable, an AC adapter, and two instruction manuals. The diskettes contain four applications: design, layout and editing, a programmable stitch creator, and a file utility application. The articles are packaged together.
Both protestant’s counsel and you believe that the “system” should be classified as a set at GRI 3(b). You determined that the embroidery card was classifiable in heading 8543, HTSUS, and imparted the essential character of the set. Protestant claims that, at GRI 3(b), the R/W box imparts the essential character of the set, and is classifiable in heading 8471, HTSUS.
Protestant entered the merchandise on July 5, 1997, under subheading 8471.60.10, HTSUS, which provides for “[a]utomatic data processing machines and units thereof; . . .: input or output units[:] combined input/output units[.]” Customs liquidated the entries on February 19, 1999, under subheading 8543.89.96, HTSUS, which provides for “[e]lectrical machines and apparatus, having individual functions, not specified or included elsewhere in Chapter 85, HTSUS.”
ISSUE:
Do the card reader/writer box, diskettes, embroidery flash memory card, interface cable, AC adapter, and two instruction manuals form a set put up for retail sale at GRI 3(b)?
LAW AND ANALYSIS:
We note initially that the protest was timely filed on February 26, 1999, under the statutory and regulatory provisions for protests, 19 U.S.C. 1514(c)(3)(A) and 19 CFR 174.12(e)(1).
Classification under the HTSUS is made 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 may then be applied.
Heading 8524, provides, in pertinent part, for other recorded media for sound or other similarly recorded phenomena. Heading 8523, provides, in pertinent part, for prepared unrecorded media for sound recording or similar recording of other phenomena, other than products of chapter 37. Heading 8471, provides, in pertinent part, for machines for transcribing data onto data media in coded form and machines for processing such data. Heading 8544, provides, in pertinent part, for insulated cable, whether or not fitted with connectors. Heading 4901, HTSUS, provides, in pertinent part, for printed books . . . and similar printed matter.
GRI 3(a) indicates that when goods are classifiable in more than one heading, headings which refer to only part of the items put up for retail sale are to be regarded as equally specific.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are generally indicative of the proper interpretation of these headings. Customs believes the ENs should always be consulted. See T.D. 98-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The EN to GRI 3(b) states that to meet the criteria of a set put up together for retail sale, articles must:
consist of at least two different articles, which are, prima facie, classifiable in different headings.
consist of products or articles put up together to meet a particular need or carry out a specific activity; and
are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).
Applying the above GRI 3(b) EN criteria, the instant goods are several different articles classifiable in different headings. The articles work together to carry out the specific activity of creating personalized embroidery designs for use in a compatible sewing machine. The goods are put up in a manner suitable for sale directly to users without repacking in boxes. This is confirmed by the advertisements for the set provided on the protestant’s Internet website. Under the instant facts, the articles meet all three criteria of the GRI 3(b) EN, and therefore form a set put up for retail sale.
To be classified at GRI 3(b), the set must be classifiable as if the set consisted of the one article that gives the whole its “essential character,” insofar as this criterion is applicable. The ENs indicate that the characteristic which gives the set its “essential character” may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value or by the role of a constituent material in relation to the use of the goods.
In the instant case, the diskettes (classifiable in heading 8524), the flash memory card (classifiable in heading 8523), and the R/W box (classifiable in heading 8471), are all central to producing personalized embroidery designs useable on a sewing machine.
As no one of these three articles, alone, imparts the essential character of the set, it is necessary to resort to GRI 3(c), which requires that goods “be classified under the heading which occurs last in numerical order among those which equally merit consideration."
Accordingly, at GRI 3(c), the set is classifiable under heading 8524, HTSUS, which is the heading that occurs last in numerical order from among those headings that equally merit consideration. Specifically, it is classifiable under subheading 8524.39.40, HTSUS. Pursuant to chapter 85, note 6, the flash memory card remains classified in heading 8523.
HOLDING:
At GRI 3(c), the PE-Design System, for use in sewing machines to embroider personalized patterns, is classifiable in subheading 8524.39.40, HTSUS, which provides for: “[r]ecords, tapes and other recorded media for sound or other similarly recorded phenomena, including matrices and masters for the production of records, but excluding products of chapter 37: Other: For reproducing representations of instructions, data, sound, and image, recorded in a machine readable binary form, and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine; proprietary format recorded discs[.]” The flash memory card is classified in subheading 8523.90.00, HTSUS, which provides for: “[p]repared unrecorded media for sound recording or similar recording of other phenomena, other than products of chapter 37: Other.”
Since reclassification of the merchandise as indicated above will result in a lower rate of duty than claimed, the protest should be ALLOWED IN FULL. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs 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 (60) days
from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division