CLA-2 CO:R:C:S 557345 DLD
District Director of Customs
300 Second Avenue South
Great Falls, Montana 59401
RE: Decision on Application for Further Review of Protest No.
3307-93-100015.
Dear Sir:
This protest was filed against your decision to liquidate as
dutiable six (6) entries representing parts of a meteorological
research radar system imported by the University Corporation for
Atmospheric Research (UCAR).
FACTS:
The University Corporation for Atmospheric Research (UCAR)
of Boulder, Colorado, imported in 1992, under six entries of the
Customs port of Denver, Colorado, three parts of a Meteorological
Research Radar System. On April 7, 1992, UCAR filed with Customs
Headquarters Special Classification Branch, three applications
(Commerce Form ITA-338P) for duty-free entry under subheading
9810.00.60, HTSUS, which allows duty-free treatment to scientific
instruments and apparatus, provided certain criteria are met.
One application was for a rotodome for a meteorological research
radar system, another for a pair of antennas for a meteorological
research radar system and the third for two intermediate
frequency [IF] signal processors. The three applications were
denied by Customs on December 23, 1992. All three were denied on
the same grounds, namely, that the imported items were
"components", within the meaning of subsection 301.2(k) of the
joint regulations of the Department of Commerce and the
Department of the Treasury (15 CFR 301.2(k)). These regulations
govern duty-free entry under subheading 9810.00.60, HTSUS.
Components are not eligible for duty-free treatment under this
tariff number.
Accordingly, the six entries were liquidated as dutiable on
February 5, 1993. A protest (Customs Form 19) under 19 CFR Part
174 was timely filed on May 4, 1993. This protest was forwarded
to Customs Headquarters for further review on May 10, 1993, by
the District Director, Great Falls, Montana. The present letter
is Customs Headquarters' response to the application for further
review of the protest.
LAW AND ANALYSIS:
The protestant bases his protest on three arguments:
1. The three items could not have been
purchased in the U.S. at equal value.
2. The applicant saved the U.S. Government
grant money by obtaining the three items
from France.
3. Customs has the authority to determine the
items to be "accessories", instead of "compo-
nents", and hence entitled to duty-free entry.
With regard to item 1., the question of whether an item
which can serve the applicant's purposes is obtainable in the
U.S. is something for the Department of Commerce to determine.
The Department of Commerce was never asked to rule on this
because the application was denied by Customs. A denial by
Customs ends the processing of the duty-free application at that
point.
The argument of item 2., is irrelevant to any of the
criteria of the regulations by which the Customs Service
processes an application. It should be noted, however, that the
granting of duty-free entry to otherwise dutiable foreign-made
instruments necessarily entails a loss of revenue to the U.S.
Government (in lost duties), which would not occur if domestic
instruments had been acquired.
The argument of item 3. appears to be that under 15 CFR
301.2(k), Customs has "the latitude to use subjective judgement
in making a ruling", and therefore could and should decide that
the three items of the three UCAR applications are accessories
and not components as Customs had determined. If the three
imported items were considered accessories, they would be able to
enter duty-free. UCAR cites a portion of 15 CFR 301.2(k) in
support of this contention:
In determining whether an item is a component
ineligible for duty-free consideration or an
accessory eligible for such consideration,
Customs shall take into account such factors as
the item's complexity, novelty, degree of inte-
gration and pertinency to the research purposes
to be performed by the instrument as a whole.
Customs maintains that this sentence was intended to give
guidance in how to determine whether an item is a component or an
accessory. It was not meant to give Customs latitude in making
this determination. Customs determined, based on 15 CFR 301.2(k)
(including the above quoted sentence), the material submitted in
the applications and previous experience in distinguishing
components from accessories, that the three items (of the six
entries) were "components" within the meaning of the regulations
and hence ineligible for duty-free treatment. The denial letters
contained this definition of a component:
Pursuant to subsection 301.2(k) of the regulations,
components of an instrument are not eligible for duty-
free treatment under subheading 9810.00.60, HTSUS (15
CFR 301.2(k)). A component is there defined as a part
or assembly of parts which is substantially less than
the instrument to which it relates and which enables
the instrument to function at a specified minimum
level. That is, a component is a necessary part of an
instrument, but is not itself an instrument.
As quoted in the denial letters, Peter Hildebrand, Manager
of the Remote Sensing Facility of UCAR said that the three items
do not comprise one instrument but are merely "three components
of the whole radar system." The protest states (p.1) that "[t]he
'instrument or apparatus' is a Meteorological Research Radar
System, which is comprised of several components. Three of the
components (1. a Rotodome, 2. a pair of antennas, and 3.
intermediate frequency signal processors)... comprise the six
entries...." [Emphasis added]. Again on page 3 of the protest,
it is stated that "the three components (the Rotodome, the
Antennas, and the Intermediate Frequency Signal Processors) are
components of the Meteorological Research Radar System...."
[Emphasis added]. The protest uses the word "component[s]"
twenty-six times in discussing the imported items. Of course,
the fact that UCAR may use the term "component" for an item is
not a determining factor in whether Customs decides that an item
is a component or not. Customs determination is based on the
regulations and other criteria. However, it is assumed that UCAR
has the common understanding of the meaning of the terms
"instrument", "component" and "accessory". And Customs is in
agreement that the three items of the six entries which UCAR
characterized as "components" are indeed components within the
meaning of the regulations.
The dictionary gives these definitions of "accessory" and
"component" (The Random House Dictionary of the English Language,
the Unabridged Edition, New York: Random House, 1966):
accessory n. 1. a subordinate or supplementary
part, object, etc., used mainly for
convenience, attractiveness, safety,
etc., as a spotlight on an automobile
or a lens cover on a camera.
component adj. 1. being or serving as an element
(in something larger); composing; con-
stituent: the component parts of a
high-fidelity phonograph. n. 2. a com-
ponent part; constituent: hi-fi components.
The question to be answered in the response to the present
protest is whether the meteorological research radar system could
function without any of the three imported items, the rotodome,
the antennas or the intermediate frequency signal processors.
The following is a short description of the three subjects of the
three duty-free applications which comprise the items imported
under the six protested entries. This description was part of
each of the three denial letters:
The rotodome is a streamlined cylinder which, for the
research, is attached to the rear of the fuselage of an
Electra aircraft and which holds in its interior the
two antennas, which serve as the antennas for an
airborne meteorological research radar. The IF signal
processors are located in the cabin of the aircraft in
one of five U.S.-built racks containing other U.S.
electronic components of the radar system. The radar
signals are emitted from the two antennas in the
rotating rotodome. The radar signals reflected back to
the antennas are sent to the electronics in the cabin
racks, which include the IF signal processors.
It is clear that the three items of the six entries under
protest, the rotodome, the antennas and the intermediate
frequency signal processors are necessary constituents of the
meteorological research radar system and not optional equipment,
that is to say, they are components and not accessories.
Components are not eligible for duty-free treatment under
subheading 9810.00.60, HTSUS.
HOLDING:
The six entries are affirmed to comprise three components of
a larger instrument, the Meteorological Research Radar System.
Inasmuch as components are not eligible for duty-free treatment
under subheading 9810.00.60, HTSUS, you are directed to deny the
protest.
Sincerely,
John Durant, Director
Commercial Rulings Division