CLA-2 RR: CR: GC 967054 TPB
Mr. Michael Jackson
Meeks, Sheppard & Pilsbury, LLP
100 Newport Center Drive
Newport Beach, CA 92660
RE: High Definition Digital Video Recorder
Dear Mr. Jackson:
This is in reference to your letter dated February 23, 2004 to the Director, National Commodity Specialist Division, New York, on behalf of your client, PC Open, Inc. (“PC Open”), requesting a binding ruling on the classification of certain High Definition Digital Recorders (“HDDR”s) under the Harmonized Tariff Schedule of the United States (“HTSUS”). That request was referred to this office for reply. In reaching our decision, we have also taken into consideration you supplemental submission of March 2, 2004.
In subsequent telephone conversations, Customs has been made aware that the merchandise in question was being entered into the Port of Seattle. A courtesy copy of this ruling will be sent to that Port.
The merchandise at issue consist of various models of Open Eye® HDDRs. Except for variations in the number of channels and frames per second, these units are generally self-contained rack mounted housings incorporating an Intel® Pentium® 4 2.0+ GHz CPU (Central Processing Unit) utilizing the Microsoft® Windows® 2000 operating system. Features include a 120 GB Hard Drive, multiple BNC RG 59 connectors for camera inputs, multiple video outputs (via RCA, NTSC, PAL, S-video, SVGA and DVI), and audio inputs and outputs. Additional features include inputs of a PS/2 mouse and keyboard, 1 to 2 USB ports, LPT parallel printer port, DB-9 and DB-15 serial port devices and motion detector devices for alarm activation. A 3.5” floppy drive is also provided for backup. The Open Eye® HDDRs can hold up to 6 hard disk drives for maximum storage. Installed software allows multiple remote users to view, search, index, and backup video through any network or dial-up connection. Remote users can also be granted system configuration privileges based upon a customized user management interface.
Are the Open Eye® HDDRs properly classified under heading 8471, HTSUS, as automatic data processing machines or 8521, HTSUS, which provides for video recording or reproducing apparatus?
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.
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80.
The HTSUS provisions under consideration are as follows:
Automatic data processing machines and units thereof…
8521 Video recording or reproducing apparatus, whether or not incorporating a video tuner
You indicate that the devices before us are automatic data processing (“ADP”) machines and should therefore be classified under heading 8471, HTSUS. To be classified as an ADP machine, the device must meet the terms of Note 5(A)(a) to Chapter 84, which reads as follows:
For the purposes of heading 84.71, the expression “automatic data processing machines” means :
Digital machines, capable of (1) storing the processing
program or programs and at least the data immediately necessary for the execution of the program; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and, (4) executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run;
Your letter states that the HDDRs are based on a personal computer (“PC”) and describe them as automatic data processing machines incorporating high definition video recording units. In accordance with the Facts above, you indicate that because the devices contain memory, are freely programmable based upon their operating system (“OS”), contain a CPU microprocessor which is capable of performing arithmetical computations as specified by the user and is capable of executing, through the OS and without human intervention, programs which require them to modify their execution, by logical decision during the processing run, the HDDRs are classified in heading 8471, HTSUS.
In its imported condition, all hardware and software is installed into each unit with no proprietary restrictions or blocks. Each unit contains an Application Programming Interface (“API”) that provides clients the option to freely program any Windows® operating program to directly interface with the installed software. The units contain all of the components required for a working PC, including a complete motherboard with CPU, memory, BIOS and all other operating components. Based upon the information that has been supplied in the exhibits attached to your submission, we conclude that the HDDRs meet the terms of Note 5(A)(a) to Chapter 84, HTSUS.
Note 5(A)(a) is subject to Note 5(E) to Chapter 84, HTSUS. That Note reads:
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.
You cite to HQ 960434, dated August 2, 2002 and NY C83022, dated January 9, 1998 as proof that the HDDRs fall outside of the scope of Note 5(E) to Chapter 84, HTSUS. HQ 960434 classified the Quantel Image Processing Manipulation System (“IPAMS”) under heading 8471, HTSUS. That ruling determined that “video editing”, as performed by the IPAMS was a data processing function. That ruling included several definitions of “video editing”, including the following from http://www.webopedia.com:
The process of manipulating video images. Once the province of expensive machines called video editors, video editing software is now available for personal computers and workstations. Video editing includes cutting segments (trimming), re-sequencing clips, and adding transitions and other special effects.
The HDDRs before us do not fall within the scope of “video editing” and are distinguishable from the merchandise in HQ 960434. The HDDRs are video recorders, not editors. They are not designed to cut, manipulate, add special effects, etc.
The primary function of the HDDRs is to digitally record video from external sources. This is evident from its configuration, which has been optimized for use in a video surveillance security system. It contains a larger than necessary number of hard drives (up to 6) and 32 RG59 connectors for camera inputs and looping outputs. The specifications are configured for either NTSC or PAL. They also have video outputs, such as S-video, RCA, and an RS-422 interface used for connecting to a PAN/TILT/ZOOM camera, etc. The data processing functions mentioned by you in your submission all appear to be either complementary or subsidiary to the video recording function.
All of these factors are taken into account when considering if a machine, which may incorporate an ADP machine, is performing a specific function other than data processing.
Indeed, the HDDRs before us also conform to the 2002 revised Explanatory Note for 85.21(A). As indicated above, although not binding, the ENs constitute the official interpretation of the Harmonized System at the international level and provide a commentary on the scope of each heading of the HTSUS, which are generally indicative of the proper interpretation of these headings. EN 85.21 reads, in pertinent part, as follows:
Recording and Combined Recording and Reproducing
These are apparatus which, when connected to a television camera or a television receiver, record on media electric impulses (analogue signals) or analogue signals converted into digital code (or a combination of these) which correspond to the images and sound captured by a television camera or received by a television receiver. Generally, the images and sound are recorded on the same media. The method of recording can be by magnetic or optical means and the recording media is usually tapes or disks.
This heading also includes apparatus which record, generally on a magnetic disc, digital code representing video images and sound, by transferring the digital code from an automatic data processing machine (e.g. digital video recorders).
Thus, we conclude that the High Definition Digital Recorders before us perform a specific function other than data processing, i.e. video recording, and thus are not classified under heading 8471, HTSUS, but rather under the heading appropriate to their respective function, heading 8521, HTSUS, as prescribed by Note 5(E) to Chapter 84, HTSUS.
This ruling is consistent with Customs treatment of similar devices used in a video surveillance system. See NY H89506, dated April 4, 2002 and NY I87359, dated October 29, 2002.
For the reasons stated above, the Open Eye® HDDRs are classified under heading 8521, HTSUS, specifically, subheading 8521.90.0000, HTSUSA, which provides for “Video recording or reproducing apparatus, whether or not incorporating a video tuner: Other.” The column one, general rate of duty is free. 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 internet at www.usitc.gov.
Myles B. Harmon, Director
Commercial Rulings Division