CLA-2 OT:RR:CTF:TCM H229109 DSR
Terry Pilant
CHB Dept. Manager
Jacobson Global Logistics, Inc.
1930 6th Avenue South, Suite 401
Seattle, WA 98134
RE: Ruling request concerning tariff classification of the GAEMS G155 Mobile Gaming Environment from China
Dear Mr. Pilant:
This is in response to your request on behalf of G.A.E.M.S., Inc., (“GAEMS”), dated February 9, 2012, and received by this office on April 3, 2012, for a binding ruling on the tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS), of an article described as the GAEMS G155 Mobile Gaming Environment (“G155”). We received additional information needed to issue this ruling on June 12, 2012. We have examined the information submitted by GAEMS, along with a sample of the article, and our ruling follows. The sample is being returned to you, as requested.
FACTS:
The G155 is described as a “self-contained mobile gaming environment that lets you stay in the action when you’re on the move.” The G155 consists of a rugged, hard, plastic exterior case that measures 20” (W) x 15” (D) x 7” (H). Inside of the case, and permanently mounted to the interior top half is an integrated 15.5” (39.37 cm) diagonal, high-definition (“HD”) light-emitting diode (“LED”) monitor incorporating an HDMI connection, stereo speakers and dual headphone jacks. The interior bottom half of the case is hollowed out and contains a removable ethylene vinyl acetate (“EVA”) foam cushion that is specially formed to function as a “stage” for the placement of a Microsoft Xbox 360/360s (“Xbox”) or Sony PlayStation 3 Slim (“PS3 Slim”) game console. The stage fits in a 12” x 13” slot. When used in conjunction with two hook and loop fastener straps permanently attached to the bottom of the case, the purpose of the stage is to provide a cushioned base for an appropriate video game console and to secure the console for safe transportation. Two removable soft, cushioned textile drawstring pouches are also secured to the bottom of the case via hook and loop fasteners and are described in the user manual as “accessory storage bags.”
The G155 is also imported with a 12” HDMI cable, power adapter and remote control. The HDMI cable is industry standard in all respects except for its short length, and may be used with any other industry standard HDMI-enabled device. Thus, the G155 is compatible with any other industry standard HDMI-enabled device (DVD player, tablet, laptop, etc.). The power adapter also connects to the front of the LED monitor and is used to provide power only to the monitor. An inserted video game console must use its own power cable, which must be plugged directly into a power outlet just as if it would if it were being used at home. An image of the G155 appears below:
ISSUE:
What is the classification of the G155 under the HTSUS?
LAW AND ANALYSIS:
The following HTSUS provisions are under consideration:
4202 Trunks, suitcases, vanity cases, attache cases, briefcases, school satchels, spectacle cases, binocular cases, camera cases, musical instrument cases, gun cases, holsters and similar containers; traveling bags, insulated food or beverage bags, toiletry bags, knapsacks and backpacks, handbags, shopping bags, wallets, purses, map cases, cigarette cases, tobacco pouches, tool bags, sports bags, bottle cases, jewelry boxes, powder cases, cutlery cases and similar containers, of leather or of composition leather, of sheeting of plastics, of textile materials, of vulcanized fiber or of paperboard, or wholly or mainly covered with such materials or with paper:
* * *
8528 Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus:
* * *
Other monitors:
* * *
8528.59 Other:
Color:
* * *
With a flat panel screen:
* * *
Other:
* * *
Other:
8528.59.31 Flat panel display devices designed for use with an automatic data processing machine, as defined in additional U.S. note 13 to chapter 85
* * *
9504 Video game consoles and machines, articles for arcade, table or parlor games, including pinball machines, bagatelle, billiards and special tables for casino games; automatic bowling alley equipment; parts and accessories thereof:
* * * *
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI's). 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 based on GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI’s 2 through 6 may then be applied in order.
In addition, in interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89 80, 54 Fed. Reg. 35127 (August 23, 1989).
The G155 components are described by several headings of the HTSUS. The plastic case is described as a container by heading 4202, HTSUS. See HQ H068738, dated March 30, 2010. The EVA foam cushion is described by heading 9504, HTSUS, as a video game accessory. See Note 3 to Chapter 95, HTSUS. The textile drawstring pouches are described by heading 4202, HTSUS. See HQ 963558, dated January 7, 2002; HQ 960206, dated March 17, 1999. The HDMI cable is described by heading 8544, HTSUS, as an insulated electrical conductor. See HQ H024054, dated September 3, 2010. The power adapter is described by heading 8504, HTSUS, as a static converter. See HQ H176833, dated November 17, 2011. We do not have sufficient information to determine the classification of the remote control because it was not included with the sample. The LED monitor is described by heading 8528, HTSUS, as a monitor, or heading 9504, HTSUS, as a video game accessory.
Because no single heading of the HTSUS completely describes the G155 and, as noted above, its components are prima facie classifiable in two or more headings, classification must fall to GRI 3. GRI 3 provides, in pertinent part:
When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
…
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
For purposes of GRI 3(b), the EN (IX) to GRI 3(b) explains, in relevant part, that:
… composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts.
The G155 is comprised of separable components adapted one to the other that are mutually complementary, and that altogether form a whole that would not normally be offered for sale in separate parts. Because the G155 is considered a composite good made up of different components, GRI 3(b) requires that classification be based upon the product that provides the composite good with its essential character. In its discussion of the essential character of composite goods, EN (VIII) to GRI 3(b) states:
The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
There have been several court decisions on "essential character" for purposes of classification under GRI 3(b). See Conair Corp. v. United States, 29 C.I.T. 888 (2005); Structural Industries v. United States, 360 F. Supp. 2d 1330, 1337-1338 (C.I.T. 2005); and Home Depot USA, Inc. v. United States, 427 F. Supp. 2d 1278, 1295-1356 (C.I.T. 2006), aff’d. by 491 F.3d 1334 (Fed. Cir. 2007). ("[E]ssential character is that which is indispensable to the structure, core or condition of the article, i.e., what it is.") (quoting A.N. Deringer, Inc. v. United States, 66 Cust. Ct. 378, 383 (1971)). In particular, the court stated "[a]n essential character inquiry requires a fact intensive analysis." Id. at 1284. Applying the essential character analysis to the present case, we have considered factors such as the nature and values of the components, cost, sophistication, the reasons a person would purchase the merchandise, and the role of the constituent material in relation to the use of the goods.
There have been many cases where containers of heading 4202, HTSUS (such as tote bags, backpacks, or briefcases) have incorporated electronic devices into their design (such as speakers, RF transmitters, or battery packs), and U.S. Customs and Border Protection (“CBP”) has determined that the containers imparted the essential character of the article as a whole. The premise supporting those decisions is that when a consumer purchased those containers classifiable in heading 4202, HTSUS, the consumer was in the market to purchase the containers and not the electronic components. The electronic components were viewed as simply providing additional desirability to the containers, with the containers storing, protecting, organizing and providing portability to their contents during travel, and without regard to whether or not the electronic components were being used. See HQ 968051, dated June 6, 2008, and HQ 967704, dated August 25, 2005 (the essential character of a speaker/CD case was imparted by the case); HQ H026900, dated April 14, 2010 (the essential character of a carrying case with an incorporated speaker for use with an iPod© imparted by the carrying case); see also HQ 955261, dated April 14, 1994; HQ 089901, dated April 2, 1992.
By contrast, the G155 can be used as a portable means to transmit video and sound from a connected video game console (or other HDMI-enabled devices) through the G155’s permanently mounted monitor. The value of the incorporated monitor far outstrips the value of the other components of the G155. Although the G155 case is sturdy, its hollowed-out portion is designed to only accommodate specific video game consoles, and the case is not designed to transport, nor protect, other items. In short, without the monitor, the usefulness of the G155 is negated. Therefore, the essential character of the G155 is provided by the monitor, and the G155 is classified as if consisting only of the monitor. Heading 4202, HTSUS, does not provide for monitors in any form or for any use.
Heading 9504 covers, among other things, parts and accessories of video game machines. However, heading 8528, HTSUS, eo nomine provides for “monitors.” Additional U.S. Rule of Interpretation 1(c), HTSUS, provides that "[i]n the absence of special language or context which otherwise requires -- a provision for parts of an article covers products solely or principally used as a part of such articles but a provision for ‘parts’ or ‘parts and accessories shall not prevail over a specific provision for such part or accessory.” In other words, the specificity of heading 8528, HTSUS, would typically prevail over the parts and accessories clause contained in heading 9504, HTSUS, absent some special language dictating otherwise.
Note 3 to Chapter 95, HTS, provides such special language. It states that "[s]ubject to note 1 above, parts and accessories which are suitable for use solely or principally with articles of this chapter are to be classified with those articles. [emphasis added].” CBP has interpreted this to mean that if a part or accessory incorporates some special design that shows that it is of the same class or kind of good that is to be “solely or principally” used with the gaming machines of Chapter 95, HTS, then that part or accessory is classified in that chapter. See HQ 966216, dated May 27, 2003; HQ 958298, dated January 17, 1996.
The G155 is marketed and sold as a device that enables the user of a gaming system to safely transport and utilize the system. However, this does not automatically qualify it as belonging to the same class or kind of goods solely or principally used with video game systems of Chapter 95. For example, in HQ 957836, dated October 17, 1995, a 14” VGA monitor for a “gaming machine,” i.e., an electronic poker or blackjack machine, was classified as a part or accessory in heading 9504, HTSUS, as opposed to heading 8528, HTSUS. The determining factors in the decision was a finding that the monitor was un-housed, fitted to a gaming machine with mounting brackets (one of which was fixed), and most importantly, used a non-composite signal to produce visuals such as those found on an electronic poker or blackjack machine. The sounds from the gaming machine were produced by the machine’s internal programming functions.
Conversely, in HQ 960624, dated August 29, 1997, power supplies used with video game consoles were classified in heading 8504, HTSUS, as other static converters because the power supplies were not shown to belong to a class of merchandise principally used as parts of video games. Whether the power supplies were actually used with game machines of heading 9504, HTSUS, was irrelevant. “Heading 9504, HTSUS, is a principal use provision; it is not an actual use provision.” Id.
In another example, in HQ 958781, dated April 30, 1996, CBP examined the issue of whether “B-Grade” color picture tubes, in various sizes and used exclusively in the video game industry, were properly classified under heading 9504, HTSUS, as entered. CBP determined that, even though the evidence provided showed that the tubes were in fact used exclusively in the video game industry, they did not possess any chassis and or control circuitry that dedicated the tubes to be used exclusively as video game monitors. The tubes were capable of receiving and processing electronic signals from a number of different applications other than those associated with video games, i.e., televisions, close circuit televisions, etc. Therefore, the tubes did not meet the requirements of Note 3 to Chapter 95, HTSUS.
Here, the G155, via its industry standard HDMI input, can be used with a plethora of electronic devices with generic HDMI outputs. Such devices include, for example, game consoles, HDMI compatible DVD players, Blu-Ray disc players, set-top boxes, and automatic data processing (“ADP”) machines. There is nothing that dedicates the G155 to a principal use with video game consoles, and it therefore is not classifiable under heading 9504, HTSUS.
As stated, monitors are eo nomine provided for in heading 8528, HTSUS. Additional U.S. Note 13 to Chapter 85, HTSUS, states in relevant part that subheading 8528.59.31, HTSUS, covers:
… monitors that have as a purpose operation with an automatic data processing (“ADP”) machine of heading 8471, such monitors being able to display signals or data from an ADP machine in a form that meets the requirements of the user.
Such monitors need not be shown to be solely or principally for use with an ADP machine and may also be capable of displaying signals or data from devices other than ADP machines. [emphasis added]
The G155 (through its monitor) is capable of displaying signals or data from both ADP machines and devices other than ADP machines, possesses a high-definition flat panel screen and exhibits images in color. As such, the G155 is eo nomine provided for in subheading 8528.59.31, HTSUS.
HOLDING:
By application of GRI 3(b), the G155 is classified in heading 8528, HTSUS, specifically in subheading 8528.59.31, HTSUS, which provides, in pertinent part, “Monitors and projectors, not incorporating television reception apparatus … Other monitors: Other: Color: With a flat panel screen: Other: Other: Flat panel display devices designed for use with an automatic data processing machine, as defined in additional U.S. note 13 to Chapter 85.” The 2012 column one, general rate of duty is “Free.”
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at www.usitc.gov.
Sincerely,
Ieva O’Rourke, Chief
Tariff Classification and Marking Branch