CLA-2 RR:CR:GC 966669 DBS
U.S. Customs and Border Protection
9777 Via De La Amistad
San Diego, CA. 92154
RE: Protest #2506-03-100032; Audio/Video Control Center High Definition Set Top Box; Information Technology Agreement
Dear Port Director:
This is our decision on Protest #2506-03-100032 filed against your classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of audio/video control boxes imported by for use with a high definition (HD) monitor for an HDTV system. The entries were liquidated on January 17, 2003, and the protest was timely filed on April 17, 2003.
The merchandise at issue is the Hitachi Audio/Video Control Center (AVC), Models AVC20 and LUQ 3214-A. These are control boxes (set top boxes) which are part of Hitachi's gas plasma HDTV system. This system is comprised of a gas plasma monitor and the AVC. The AVC contains a television tuner for the reception and demodulation of a NTSC television broadcast signal and picture processing circuitry for conversion to HD resolution. The AVC receives, converts, and then sends the video signals to the monitor and audio signals to the speakers (which may be internal or external to the monitor). The AVC itself cannot display images or project sound. The AVC also contains circuitry for communication with home theater components and has multiple input and output jacks on the front and rear panels of the device (e.g., standard Video, S-Video, YpbPr for DVD or other set top box, analog and digital RGB, Audio, IR blaster) that allow for the connection of the monitor, speakers, DVDs, camcorders, VCRs, etc.
You classified Model LUQ 3214-A in subheading 8529.90.93, HTSUS, which covers other parts of television receivers, and Model AVC20 in subheading 8529.90.13, HTSUS, which provides for other printed circuit assemblies for television apparatus. Counsel for the protestant claims that the AVCs are classified in subheading 8528.12.92, HTSUS, which provides for set top boxes having a communications function.
Whether the Hitachi AVC boxes are classified as set top boxes which
have a communications function in subheading 8528.12.92, HTSUS, other television reception apparatus in subheading 8528.12.97, HTSUS, or parts of the goods of 8528 in subheadings 8529.90.13 and 8529.90.93, HTSUS?
LAW AND ANALYSIS:
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.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS provisions under consideration are as follows:
8528 Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors:
Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus:
8528.12.92 Set top boxes which have a communications function
* * *
* * *
8529 Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528:
Printed Circuit assemblies:
Of television apparatus:
* * *
Of television receivers:
Protestant claims that the audio video control box should be classified in
subheading 8528.12.92, HTSUS, as a set top box which has a communications function. In applying the GRIs, we must first determine classification at the heading level before we determine in which subheading a product falls to be classified. The product at issue is a type of set top box that incorporates a tuner for the reception and demodulation of NTSC television signals. Heading 8528, HTSUS, provides, in relevant part, for reception apparatus for television. The ENs to the heading describe these goods, in part, as follows:
This heading covers television receivers (including video monitors and video projectors), whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus.
(3) Video tuners, intended to be used with or incorporated in, e.g., video recording or reproducing apparatus or video monitors. These tuners convert high-frequency television signals into signals usable by video recording or reproducing apparatus or video monitors. However, devices which simply isolate high-frequency television signals (sometimes called video tuners) are to be classified as parts in heading 85.29.
(4) Receivers of satellite television broadcasts. These apparatus, which do not include a display device (cathode-ray tube, LCD, etc.) are similar to video tuners in that they serve to receive amplified signals whose frequency has been lowered by a down converter, to select a single signal (channel) and to convert it to a signal suitable for display on a video monitor ….
The AVCs have tuners that receive television signals and are intended to be used with a video monitor. They convert the signal so that it is suitable for high definition display but do not themselves incorporate a display unit. They are clearly described by the EN regarding video tuners and are also similar to the description of satellite receivers. As such, we conclude that they are reception apparatus for television, which is included in heading 8528, HTSUS, according to GRI 1.
You classified the AVCs in heading 8529, HTSUS, which provides, in relevant part, for parts of the goods of heading 8528, HTSUS. Note 2(a) to Section XVI, HTSUS, provides, in relevant part, that "parts which are goods included in any of the headings of chapter 84 or 85….are in all cases to be classified in their respective headings." As the AVCs are specifically provided for in heading 8528, HTSUS, they cannot be classified in heading 8529, HTSUS. Therefore, no further discussion of heading 8529, HTSUS, is necessary.
Since only heading 8528 is now under consideration, we turn to GRI 6, which provides:
For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.
In the event that merchandise is not found to be classifiable under a specific subheading, it is then classified as "other." The "other," or "basket," provision of a subheading should be used only if there is no tariff category that more specifically covers the merchandise. See Rollerblade, Inc. v. United States, 116 F. Supp. 2d 1247, 1251 (C.I.T. 2000) (citing EM Industries, Inc. v. United States, 999 F. Supp. 1473, 1480 (C.I.T. 1998)); see also GRI 3(a) ("The heading which provides the most specific description shall be preferred to headings providing a more general description.").
As stated above, you claim that the product at issue is a "set top box which has a communications function." When the Information Technology Agreement (ITA) went into effect on July 1, 1997, pursuant to Presidential Proclamation No. 7011 (62 FR 35909 (July 2, 1997)), the U.S. created various new provisions to implement the agreement. The amendments set forth in Presidential Proclamation No. 7011 are based on the framework established in the Declaration on Trade in Information Technology Products, which, together with its Annex, constitute the ITA. See 62 FR 35909, para. 1. The Annex is comprised of two attachments. Attachment A, Section 1 lists the Harmonized System (HS) headings and subheadings covered by the ITA. (The HS is the international agreement on which the HTSUS is based.) Attachment A, Section 2 lists certain semiconductor manufacturing and testing equipment and parts thereof to be covered by the ITA. Attachment B is a positive list of specific products to be covered by the ITA wherever they are classified in the HS (emphasis added). See Attachment A and Attachment B, Annex of the ITA.
Among the amendments adopted by the U.S. were two new subheadings for "set top boxes which have a communications function." One is found under heading 8525, HTSUS, which provides in relevant part for transmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television. The other is under heading 8528, HTSUS, enumerated above. The tariff term "set top boxes which have a communication function" is found in the positive list of specific products set forth in Attachment B. The type of product intended to be covered by the ITA is described as "a microprocessor-based device incorporating a modem for gaining access to the Internet, and having a function of interactive information exchange." Presidential Proclamation No. 7011. Therefore, Customs considers this description to provide the minimum requirements for a set top box to be classified as "set top boxes which have a communications function."
The ITA requires that these set top boxes be microprocessor-based devices. That is, they must contain a microprocessor. In addition to a microprocessor, the ITA requires that these set top boxes incorporate a modem for gaining access to the Internet. Modems are devices that transmit digital data by modulating and demodulating a signal. A modem alone does not access the Internet. In simple terms, to gain access to the Internet, a modem is used to connect to an Internet Service Provider (ISP), and the ISP connects the user to the Internet. Hence, the ITA requires that these microprocessor-based set top boxes must be able to access the Internet, not simply incorporate a modem.
The ITA also requires that this class of set top boxes has a function of interactive information exchange. This requirement may be satisfied by having access to the Internet. Other factors, such as an RJ11 telephone jack, may also be indicative of interactive information exchange.
According to the technical specifications submitted in support of the instant protest and the information provided telephonically by protestant's counsel, the instant AVC boxes do not incorporate the hardware or functions required by the ITA to be "set top boxes which have a communications function." Specifically, they do not have a modem and cannot access the Internet. Therefore, they are not classified in subheading 8528.12.92, HTSUS. However, the AVC boxes are set top boxes that are reception apparatus for television. As there is no more specific provision within the heading for set top boxes other than those described by the ITA, they are classified in basket subheading 8528.12.97, HTSUS. This decision is also consistent with Headquarters Ruling Letter (HQ) HQ 966742, dated December 15, 2003, in which Customs discussed the ITA requirements and classified a set top box that satisfied them in subheading 8528.12.92, HTSUS.
Counsel for the protestant put forth several arguments regarding set top boxes and the ITA. We believe the foregoing law and analysis adequately responds to those arguments. We also note New York Ruling Letters (NY) NY F80216, dated December 14, 1999, NY D82241, dated September 28, 1998 and NY G80471, dated August 8, 2000, which counsel cited, are factually distinguishable from the instant AVCs because the set top boxes classified in those rulings all have modems and can access the Internet. The last ruling cited by counsel, NY G82574, dated October 3, 2000, is also factually distinguishable in that it is designed for cable television reception and is for use with a television set, whereas the AVC is designed for use with a video monitor. However, we have reviewed NY G82574 and have determined the classification of that set top terminal to be incorrect as it does not satisfy the requirements of the ITA. In accordance with 19 U.S.C. §1625(c), a proposed revocation of this ruling will be published in a forthcoming edition of the Customs Bulletin.
Hitachi AVCs, Models AVC20 and LUQ 3214-A, are classified in subheading 8528.12.97, HTSUS, which provides for "Reception apparatus for television…; video monitors and video projectors: Reception apparatus for television…: Color: Other: Other: Other: Other."
Since the rate of duty under the classification indicated above is more than the liquidated rate, you are instructed to DENY the protest 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 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 Bureau of Customs and Border Protection 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.
Myles B. Harmon, Director
Commercial Rulings Division