CLA-2 OT:RR:CTF:TCM H310654 TPB
Center Director, Electronics Center of Excellence and Expertise
U.S. Customs and Border Protection
Los Angeles Service Port
301 E. Ocean Blvd.
Long Beach, CA 90802
ATTN: Elizabeth Carrick, Import Specialist
RE: Application for Further Review of Protest No. 4197-18-100843; Classification of certain biometric devices
Dear Center Director:
This is in response to the Application for Further Review (“AFR”) of Protest 4197-18-100843, dated June 29, 2018, filed on behalf of ZK Technology LLC. (“ZKTeco”/“Protestant”), in response to your classification of certain biometric controllers under the Harmonized Tariff Schedule of the United States (“HTSUS”). The articles were entered March 9, 2017, and liquidated February 16, 2018.
FACTS:
According to the submission, the names of the products imported by Protestant vary depending on the product type. The items are the interface for the customers of Protestant’s clients, who develop systems that capture various types of data from their actual end-users. The captured data could be whatever clients deem necessary to provide the functionality their system offers, based on the market niche, application, or other parameters determined during product review and deployment. The products are used to verify the identity of a person using biometrics (such as fingerprint or facial recognition); end-user card swipes using a built-in card reader; or capturing data that end-users enter or input into the device. The collected data is sent to the client's host application, which provides integration and communication from the data collection device to their system. Protestant indicates that each device has an operating system like Unix, Android, or Windows. Protestant’s software client can write its own application for the device to communicate with their specific software, which is either located to their end-user customers' locations or hosted in the Cloud.
Protestant’s submission indicates that the biometric readers are composed of the following components:
plastic enclosures
LCDs
printed circuit assemblies
an embedded microprocessor
memory
other components required to create the product functionality required based on the internal design specification
connectors for attaching external wiring, such as Ethernet cables, USB devices, etc.
verification reader (like biometric and/or proximity and/or barcode and/or magnetic).
a keypad, LCD screen with and without touch screen, depending on the model.
ISSUE:
Whether the entries in question are classified under heading 9106, HTSUS, as “Time of day recording apparatus and apparatus for measuring, recording or otherwise indicating intervals of time, with clock or watch movement or with synchronous motor…” ; heading 8471, HTSUS, as “Automatic data processing machines and units thereof…”, or heading 8543, HTSUS, as “Electrical machines and apparatus, having individual functions, not specified or included elsewhere…”.
LAW AND ANALYSIS:
Initially, we note that the matters protested are protestable under 19 U.S.C. §1514(a)(2) as decisions on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)). Further Review of Protest No. 4197-18-100843 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact, which have not been ruled upon by the Commissioner of Customs or his designee, or by the courts.
Classification under the HTSUS is determined 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 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 HTSUS provisions at issue are as follows:
8471 Automatic 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:
* * *
8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in [Chapter 85]; parts thereof:
* * *
9106 Time of day recording apparatus and apparatus for measuring, recording or otherwise indicating intervals of time, with clock or watch movement or with synchronous motor (for example, time-registers, time-recorders):
Note 1(n) to Section XVI, HTSUS, which includes Chapter 84, specifies that the section does not cover “clocks, watches, or other articles of Chapter 91”. As such, the first question is whether the instant merchandise is prima facie classifiable as a fingerprint, time and attendance devices of heading 9106, HTSUS.
The EN to heading 9106 states, in pertinent part, that:
Provided they are operated by a movement of the watch or clock type (including secondary or synchronous motor clock movements) or by a synchronous motor with or without reduction gear, this heading covers:
A wide range of apparatus for recording the time of day at which some action or operation is effected; and
Apparatus, not elsewhere specified, for measuring, recording or otherwise indicating intervals of time.
After examining the entries, we agree with Protestant’s claim that the products under consideration do not meet the legal text requirements in order to be classified under heading 9106. Consequentially, that heading is removed from consideration.
Protestant claims that the entries are classified under heading 8471, HTSUS, specifically, subheading 8471.60.10, HTSUS, as other input/output units of automatic data processing machines (ADP). Units of ADP machines are described in Note 5 (C) to Chapter 84, HTSUS, as follows:
Subject to paragraphs (D) and (E) below, a unit is to be regarded as being part of an automatic data processing system if it meets all of the following conditions:
i. It is of a kind solely or principally used in an automatic data processing system;
ii. It is connectable to the central processing unit either directly or through one or more other units; and
iii. It is able to accept or deliver data in a form (codes or signals) which can be used by the system.
In reaching the conclusion that the goods are classified under subheading 8471.60.10, HTSUS, Protestant cites to CBP rulings. Several of these rulings classified certain products in heading 8471, HTSUS, by application of Note 5 (A) to Chapter 84. However, that particular note deals with the classification of ADP machines and Protestant does not claim that these products are ADP machines themselves. Indeed, Protestant notes that without a host [ADP] connection, the subject merchandise cannot function in their intended environments. Rather, Protestant claims that these devices are units of ADP machines, controlled by Note 5 (C) to Chapter 84.
Other rulings cited by Protestant do classify goods in subheading 8471.60, HTSUS, as units of ADP machines by application of Note 5 (C) to Chapter 84: New York (NY) ruling letter I89737, dated January 22, 2003, dealt with the classification of a fingerprint recognition module; NY N074538, dated October 2, 2009, classified two models of fingerprint scanners; and NY N066015, dated July 02, 2009, dealt with the classification of a radio frequency identification reader (RFID).
However, reliance upon these rulings is not warranted. Although the products classified in these rulings may contain one component or function of the Protestant’s product, they are not, in total, similar devices. For example, the fingerprint recognition module subject to NY I89737 is comprised of a capacitive fingerprint sensor connected to a microprocessor mounted to a populated printed circuit board (PCB) via a ribbon cable. This module is intended to be integrated into other devices. The fingerprint scanners subject to NY N074538 utilize optical technology to scan an image of fingers placed on a glass platen using a self-contained light source (light emitting diodes) to illuminate the ridges of the finger and a charge coupled device (CCD) camera takes a picture. An analog to digital converter in the scanner converts the signal to digital data. An image of fingerprints is transferred to a personal computer (PC) from the scanner via a USB interface to compare with fingerprints on file. The fingerprint patterns are processed and stored in the connected PC. The RFID reader in NY N066015 is used to track employee mobility in various industries. It reads the RFID transponder (imported separately) storing the identification number of the transponder enabling the reader to store the ID in its memory, recording the date and time of the event. It can read up to 3,000 readings of transponders and can store up to 8,000 transactions on its internal flash memory. It is powered by an internal rechargeable battery and uses the docking station (imported separately) to communicate and transfer data to a computer. The software downloaded to a computer registers the readers with ID data, configures the date and time, and programs it to read tags one-by one, simultaneously, or from other readers. The software translates the transmitted data to determine work flow, attendance, labor time and productivity.
The classification of these devices is supported by the ENs for heading 84.71, which state that the units described in II (A) of the EN to heading 8471, i.e., magnetic and optical readers, are classified in this heading only if presented separately. When combined with other machines (e.g., machines for transcribing data onto data media in coded form and machines for processing such data in coded form) they are classified with those machines provided they are presented with them.
The Protestant describes the products at issue as devices used for tracking time and attendance and providing employee access to certain areas of the building by using biometrics (such as fingerprint or facial recognition), end-user card swipes using a built-in card reader, or capturing data that end-users enter or input into the device via a number pad. Protestant also notes that the devices are not parts of or other pieces of equipment; they are self-contained.
Protestant further cites to and incorporates a report issued by SGS North America Inc. (“Report”), included as an attachment to the protest, which concluded that the goods at issue were classified under Protestant’s claimed subheading. The Report relies upon a Headquarters (HQ) ruling letter, HQ 956286, dated June 7, 1996. That ruling letter itself incorporates the reasoning of another ruling letter, HQ 956839, dated March 28, 1996, in reaching its conclusion. Critically, however, these rulings do not address Chapter Note 5 (E) to Chapter 84, which reads:
Machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.
As the products at issue perform a specific function other than data processing, i.e., biometric data collection, it is not covered by heading 8471, HTSUS.
As such, heading 8543 should be taken into consideration. The EN to heading 8543 states that the heading overs all electrical appliances and apparatus, not falling in any other heading of this Chapter, nor covered more specifically by a heading of any other Chapter of the Nomenclature. Thus, in order for a good to be considered for inclusion within heading 8543, HTSUS, a good must meet three distinct criteria in that it must be electrical, have an individual function, and not be specifically provided for elsewhere in the Nomenclature. As the subject articles are clearly electrical, we address the remaining two criteria.
The EN to 85.43 address the term “individual function” by stating as follows:
The introductory provisions of Explanatory Note to heading 84.79 concerning machines and mechanical appliances having individual functions apply, mutatis mutandis, to the appliances and apparatus of this heading.
The EN to 84.79 defines “individual function” as follows:
Mechanical devices, with or without motors or other driving force, whose function can be performed distinctly from and independently of any other machine or appliance.
Mechanical devices which cannot perform their function unless they are mounted on another machine or appliance, or are incorporated in a more complex entity, provided that this function:
Is distinct from that which is performed by the machine or appliance whereon they are to be mounted, or the entity wherein they are to be incorporated, and
Does not play an integral and inseparable part in the operation of such machine, appliance or entity.
Based on internet research and information provided on the units at issue, we are able to discern that both units are used to verify the identity of a person using biometrics (i.e. fingerprints or facial recognition), smart card reading, or other specific user input (i.e. personal identification code). The Protestant further states that the collected data is sent to the end user’s host application for analysis and storage. The system is customizable based on the needs of the end user.
Initially, the subject articles were described as time and attendance devices, leading the CBP to classify based on the terms of heading 9106, HTSUS. However, in reviewing the documentation provided, we conclude that the instant devices collect biometric data, which in turn can be used to control employee access or track time and attendance in accordance with the requirements of the end user. Referring back to EN 84.79, supra, we find that the function of biometric data collection, as it is completed without the assistance of any other device, is considered an individual function.
Finally, we note that this function is not specifically provided for elsewhere in Chapter 85 or the Nomenclature. As such, it may be classified under heading 8543. HTSUS.
As shown below, CBP has previously held that biometric devices used for access control perform functions other than data processing and classified such devices under heading 8543, HTSUS, as other electrical machines and apparatus, having individual functions, not specified or included elsewhere.
In HQ W968259, dated August 29, 2006, CBP the classification of a biometric door access control system. In that case, the product consisted of a biometric finger vein scanner, a ten-key keypad, ACPU, and a controller that are all housed within a metal travel case. The CPU was a printed circuit assembly (PCA) that consisted of a microprocessor with a fixed operating system, flash memory, a power supply and a digital converter. The finger vein biometric reader would scan and verify a person’s finger vein pattern before granting them access rights. Additionally, to get access to an area, a person must input a PIN (Personal Identification Number) using the buttons of a keypad. This data is transmitted to the CPU. The CPU stored matched sets of the finger vein images and the PINS of specific individuals. When a transmission was received from the scanner, the CPU would compare the image with stored images. If the current image cannot be identified, the processing stopped. If the current image was identified, the CPU would wait for the transmission of data that corresponded to the stored PIN matched with the image in its set. If data representing an unidentified or unmatched PIN was received, the processing will stop. If data representing a match PIN number were received and identified, the CPU would send a signal to the controller to unlock an automatic door lock. That ruling determined that the product was not an ADP machine of heading 8471 nor was it an input unit (optical reader) of that same heading. It held that although the unit did have an optical reader that read finger vein patterns, the reader was only one part of a larger system that was used for controlling access to a physical area by locking and unlocking doors. Since the reader was combined with other components to form the device, EN 84.71 instructs that the product was not classifiable as a reader in heading 8471, HTSUS. Instead, it falls to heading 8543, HTSUS, as other electrical machines and apparatus, having individual functions, not specified or included elsewhere.
Headquarters ruling letter W968259 cited to another CBP ruling, NY K82918, dated March 4, 2004, in support of its conclusions. In that ruling, a “biometric authentication unit,” which consisted of an optical reading device that verified stored fingerprint information, and a keypad for inputting an assigned code, functioned by storing a template of fingerprints to allow access to a particular restricted area or for monitoring the movement of individuals within a certain area. The device was classified under heading 8543, HTSUS.
Further, in New York ruling letter N289637, dated September 21, 2017, CBP considered the classification of a biometrics access control system (BACS). This product was described as an appliance that features fingerprint, facial characteristics, iris, and vein pattern scanners which provide an all-in-one integration of multiple biometric technologies used for the purpose of identification and verification access. The BACS incorporates optical scanners, an internal processor, data storage, and is capable of interfacing with multiple external devices or systems. The BACS receives input from access readers, door contacts, fire alarms, and switches. Output connections include two relayed outputs for doors and gates, access controllers, alarms, and a video display. In use, the BACS is programmed locally to recognize the user’s biometric features. Once the biometric data is stored, the BACS allows users to gain access to the entry point where the BACS is installed, such as a door or gate entryway. The primary function of the BACS is to scan the biometric features of users, process that data, and issue control and reporting commands directly to various external devices and systems it is connected to. Once a user’s features have been scanned, the BACS analyzes the scanned data and provides a control action, reports to a supervisory system controller, or both. CBP determined that the BACS was classified under heading 8543, subheading 8543.70, HTSUS, which provides for other electrical machines and apparatus, having individual functions, not specified or included elsewhere.
Similar to the goods subject to the above rulings, the biometric controller presently at issue performs a function other than data processing, that is, biometric validation granting access to individuals. Further, this function is not provided for or described elsewhere in the HS. As such, it is classified in heading 8543, subheading 8543.70, HTSUS.
HOLDING:
By application of GRIs 1 and 6, the subject biometric devices are classified under heading 8543, HTSUS, specifically under subheading 8543.70.99, HTSUS, which provides for: “Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other.” The column one, general rate of duty is 2.6%.
You are instructed to deny the protest, except to the extent that reclassification of the merchandise as indicated above results in a partial allowance.
Duty rates are provided for 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/tata/hts/.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division