CLA-2 RR:TC:MM 959575 DWS
Port Director of Customs
300 S. Ferry Street
Terminal Island, CA 90731
RE: Protest 2704-96-100029; Everest Transaction System; POS
Terminal;
Section XV, Note 3; Composite Machine; NY 855636; HQ
086121;
8471.92.10
Dear Port Director:
The following is our decision regarding Protest 2704-96-100029 concerning your action in classifying and assessing duty
on the Everest Transaction System under the Harmonized Tariff
Schedule of the United States (HTSUS).
FACTS:
The merchandise consists of the Everest Transaction System,
which is imported into the U.S. with the same number of Tranz 330
point of sale (POS) terminals. It is our understanding that the
System is designed for use as a debit-payment transaction device
for POS terminals. It enables existing POS terminals to register
bank, credit, or private label cards, allowing consumers to
initiate their own transactions through a built-in card reader
and PIN-entry device. The System also possesses the capability
to capture data and transfer funds. It incorporates a Motorola
68302 microprocessor, 12K ROM, 2 x 16 VFD dot matrix display,
card reader, 18-key keyboard, and two peripheral connector ports.
The System, imported with POS terminals, was entered on June
17, 1995, under subheading 8470.50.00, HTSUS, as a cash register.
The entry was liquidated on October 6, 1995, under subheading
8471.92.10, HTSUS, as a combined input/output unit. The protest
was timely filed on January 4, 1996.
The subheadings under consideration are as follows:
8471.92.10: [a]utomatic 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: [o]ther: [i]nput
or output units, whether or not
entered with the rest of a system and
whether or not containing
storage units in the same housing:
[c]ombined input/output units.
The 1995 general, column one rate of duty for goods
classifiable under this
provision is 3 percent ad valorem.
8470.50.00: [c]alculating machines; accounting machines,
postage-franking
machines, ticket-issuing machines and
similar machines, incorporating
a calculating device; cash registers:
[c]ash registers.
Goods classifiable under this provision receive duty-free
treatment.
ISSUE:
Whether the System, imported with POS terminals, constitutes
a composite machine and is classifiable under subheading
8470.50.00, as a cash register.
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's). GRI
1 provides that classification is determined according to the
terms of the headings and any relative section or chapter notes.
Section XVI, note 3, HTSUS, states that:
[u]nless the context otherwise requires, composite machines
consisting of two or
more machines fitted together to form a whole and other
machines adapted for the
purpose of performing two or more complementary or
alternative functions are to be
classified as if consisting only of that component or as
being that machine which
performs the principal function.
It is our position that, if imported with POS terminals, the
System and the POS terminal constitute a composite machine as
defined in section XVI, note 3, HTSUS. As the System possesses a
special port so as to connect to a terminal, the two machines are
designed to be fitted together to perform complementary functions
(i.e., operating as a fully functional POS terminal). Because the
POS terminal performs the principal function of the two machines,
both machines are classifiable under subheading 8470.50.00,
HTSUS. This determination is made based upon the description of
the merchandise and a full examination of the entry documents.
See NY 855636, dated August 24, 1990, in which slip printers
imported with POS terminals were held to be composite machines
and classifiable under subheading 8470.50.00, HTSUS. See also HQ
086121, dated March 20, 1990.
As the System constitutes a composite machine with the POS
terminal with which it is imported, it is no longer described by
subheading 8471.92.10, HTSUS, and is therefore precluded from
classification under that provision.
HOLDING:
The Everest Transaction System, imported into the U.S. with
the same number of Tranz 330 point of sale (POS) terminals, is
classifiable under subheading 8470.50.00, HTSUS, as a cash
register.
The protest should be AFFIRMED in full. In accordance with
Section 3A(11)(b) of Customs Directive 099 3550-065, dated August
4, 1993, Subject: Revised Protest Directive, this decision,
together with the Customs Form 19, should be mailed by your
office to the protestant no later than 60 days from the date of
this letter. Any reliquidation of the entry in accordance with
the decision must be accomplished prior to mailing of this
decision. Sixty days from the date of the decision the Office of
Regulations and Rulings will take steps to make the decision
available to Customs personnel via the Customs Rulings Module in
ACS and the public via the Diskette Subscription Service, Freedom
of Information Act, and other public access channels.
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division