CLA-2 RR:CR:GC 964753 BJB
Port Director of Customs
300 South Ferry Street
Terminal Island, CA 90731
RE: Protest 2704-00-102254; Loudspeakers; External computer speakers; Computer audio system; Automated data processing machines.
Dear Port Director:
The following is our decision regarding Protest 2704-00-102254, dated August 14, 2000, which concerns the classification of loudspeakers, described as a computer audio system (CAS), under the Harmonized Tariff Schedule of the United States (HTSUS). Customs liquidated the subject entries during a period dating from June 2, through August 4, 2000. Counsel on behalf of United Suntech Craft Incorporated (“the protestant”), timely filed the protest on August 14, 2000.
In preparing this decision, consideration was given to an additional memorandum in support of the protest, dated September 4, 2001, as well as arguments presented by counsel on September 25, 2001, in a telephone conference with a representative of our office.
The merchandise is comprised of single and dual, separately housed- loudspeakers, connectable by attached electrical cord to an external power source and by a wire fitted with a jack to a computer. Protestant classified the goods upon entry, under subheading 8473.30.50, HTSUS, which provides for “other” parts of goods of heading 8471, HTSUS. Protestant now argues that the speakers are classifiable under subheading 8471.60.90, HTSUS, as “other” input or output units of automatic data processing machines. Customs determined that the merchandise was properly classifiable under subheadings 8518.21.00 and 8518.22.00, HTSUS, which provide respectively, for single and multiple loudspeakers mounted in their enclosures.
According to information submitted, the merchandise is advertised as audio speakers for computers. Protestant describes the subject merchandise as “Computer Audio System speakers,” or “output devices which are specially designed for use with automatic data processing machines.” The conversion of digital file into analog electrical output is a function performed by a “sound card” installed in the central processing unit of an automatic data processing (“ADP”) system. Counsel has stated that the CAS speakers will only perform when attached to a computer with an appropriate sound card and jack connection.
These audio speakers include the following models: BOKA-SW2000, BOKA-SP1000, Sun-69 IH/S, Sun-185, and BOKA-2050. Most of the merchandise features two speakers, although item BOKA-SW2000, includes two separately housed speakers and a separately housed subwoofer. Counsel has provided samples and schematic drawings of the speakers. Pictures, schematics, descriptions and samples of the merchandise, submitted by protestant, have demonstrated significant similarities with conventional audio loudspeakers.
Loudspeakers are used to reproduce sound by converting electrical signals into mechanical vibrations which are communicated to the air. It is also common for computer output to be generated in the form of audio through the use of “sound cards” that convert digital files into electric signals. In these fundamental respects, the CAS speakers performance is not a result of “special design characteristics” attributed to the CAS speakers by counsel. The CAS speakers do not differ markedly from conventional audio speakers.
The speakers are externally housed from any computer or automated data processing (“ADP”) equipment to which they may later be attached. They are also packaged, shipped, and entered separately from other computer parts, systems, or ADP equipment. Protestant’s invoices provide varied references for the merchandise, including: “woofer system[s],” “pair w/hp [pair of speakers with headphones]” “pair speakers.” Protestant advertises all of the speakers, as goods separately available from any other item of computer or ADP equipment.
Are these external desktop computer speakers classifiable in heading 8518, HTSUS, as “loudspeakers,” or in subheading 8471, HTSUS, as “[a]utomatic data processing machines and units thereof,” or as parts of such machines and units, in appropriate subheadings of heading 8473, HTSUS?
LAW AND ANALYSIS:
We note initially that the protest was timely filed under the statutory and regulatory provisions for protests, 19 U.S.C. 1514(c)(3)(A) and 19 CFR 174.12(e)(1).
Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRIs.
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 HTSUS provisions under consideration are as follows:
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 digital automatic data processing machines:
8471.60 Input or output units, whether or nor containing storage units in the same housing:
* * * * * *
Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8469 to 8472:
* * * * * * *
8518 Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones, earphones and combined microphone/speaker sets; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof:
* * * * * *
Loudspeakers, whether or not mounted in their enclosures:
8518.21.00 Single loudspeakers, mounted in their enclosures . . .
Multiple loudspeakers, mounted in the same enclosure[.]
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Heading 8518, HTSUS, provides for, in pertinent part, loudspeakers, whether or not mounted in their enclosures. The EN for the heading indicates that loudspeakers function by converting electrical variations or oscillations into mechanical vibrations which are then reproduced as sound and communicated to the air. It further states that the heading covers loudspeakers of all kinds presented separately, regardless of the particular purpose for which such apparatus may be designed. The subject speakers satisfy this description. These articles are used to reproduce sound by converting electrical signals into mechanical vibrations which are communicated to the air. Accordingly, we consider the above EN instructive for determining that the subject speakers satisfy the description of a loudspeaker within the meaning of this heading. In fact, industry sources indicate that audio speakers often contain two or three speakers, woofers and tweeters, each designated to cover a different range of frequencies perform the conversion of electrical signals. Thus, the commercial definition of loudspeakers includes those designed to be plugged into an additional power source, include a woofer, or volume controls.
However, protestant claims that these articles are more than the loudspeakers provided for in heading 8518, HTSUS. Inter alia, its’ counsel claims that the speakers are designed solely to be connected to a computer with a “sound card,” and to perform the function of outputting data signals generated by the sound card, and thus, unlike “ordinary audio speakers,” are incapable of connecting to ordinary audio equipment, or processing the output therefrom. In short, protestant argues that the speakers are not of the same class or kind of merchandise as typical audio speakers. Counsel argues that the speakers meet all of the conditions set forth in Chapter 84, Note 5(B) and (C), and are not excluded from consideration in heading 8471, HTSUS, pursuant to Note 5(E) (Chapter 84), as they are neither incorporated into, nor work in conjunction with, an automatic data processing machine.
Note 5 for Chapter 84 states, in pertinent part:
(B) Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. Subject to paragraph (E) below, a unit is to be regarded as being a part of a complete system if it meets all the following conditions:
(a) It is of a kind solely or principally used in an automatic data processing system;
(b) It is connectable to the central processing unit either directly or through one or more other units; and
(c) It is able to accept or deliver data in a form (codes or signals) which can be used by the system.
(C) Separately presented units of an automatic data processing machine are to be classified in heading 8471.
* * * * *
(E) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.
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Counsel concludes that the merchandise meets the criteria of Note 5(B), and is not excluded by the terms of Note 5(E). Based upon this conclusion counsel argues that a loudspeaker designed specifically for a computer or ADP system of chapter 84, HTSUS, and meets the above criteria of Note 5(B), must be classified in heading 8471, HTSUS.
However, the loudspeakers do not constitute automatic data processing machines and units thereof. Specifically the merchandise is not in compliance with the terms of chapter 84, Note 5(B)(c). The loudspeakers are not able to accept or deliver data in a form (codes or signals) which can be used by the system because delivering the data in the form of codes or signals which can be used by the system is a function of the sound card installed in the central processing unit of the ADP system and not of the speakers. The sound card converts coded data into analog electrical output into vibrations communicated through the loudspeakers as sound. In accordance to chapter 84, Note 5(E), HTSUS, “[m]achines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings,” the loudspeakers are provided for, eo nomine, in heading 8518, HTSUS.
Protestant originally sought classification of the loudspeakers in heading 8473, HTSUS. However, counsel’s analysis notwithstanding, the Court of Appeals for the Federal Circuit ruled in Nidec v. United States, 861 F. Supp. 136, aff’d, 68 F.3d 1333 (1995), that goods that are identifiable as parts of machines or apparatus of Chapter 84 or Chapter 85 are to be classified in accordance with Section XVI, Note 2, HTSUS.
In arguendo, that sufficient evidence proving claims that the loudspeakers should be considered “parts” of an ADP machine have been submitted, Section XVI, Note 2(a) requires, among other things, that parts which are goods included in any of the headings of Chapters 84 and 85, are in all cases to be classified in their respective headings. The speakers are advertised as loudspeakers, and substantially operate and function as loudspeakers. Counsel’s claim that the goods differ markedly from conventional loudspeakers is factually unsubstantiated and immaterial insofar as heading 8518, HTSUS, provides an unlimited eo nomine designation that includes all forms of loudspeakers. Thus, insofar as the speakers at issue are specifically described as loudspeakers, they are goods included in heading 8518, under the authority of Section XVI, Note 2(a). This renders any “parts” claim moot.
External speakers for desktop computers are classifiable, at GRI 1, in subheading 8518.21.00, HTSUS, as “single loudspeakers, mounted in their enclosures,” and in subheading 8518.22.00, HTSUS, as “multiple loudspeakers, mounted in the same enclosure.”
The protest should be DENIED. 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.
John Durant, Director
Commercial Rulings Division