CLA-2-85:OT:RR:NC:N1:112
Mr. Robert Gaydo
Deringer Logistics Consulting Group
6930 Metroplex Drive
Romulus, MI 48174
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of the Touch2Play Mini from Canada
Dear Mr. Gaydo:
In your letter dated September 22, 2014 you requested a tariff classification and status under the NAFTA, on behalf of your client, Kidzpace Interactive, Inc.
The merchandise in question is referred to as the Touch2Play Mini, which consists of a Microsoft Surface Pro tablet, a customized enclosure, and proprietary software. The Touch2Play Mini is used as an entertainment and information device in customer waiting areas such as medical offices, fitness facilities, restaurants, etc. The main function of the tablet is to entertain, educate, and amuse customers’ children through interactive gameplay and restricted web browsing.
In your request, you suggest that the Touch2Play Mini should be classified under subheading 9504.50.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Video game consoles and machines, other than those of subheading 9504.30, and parts and accessories thereof.” However, the item does not belong to a class or kind of merchandise classifiable under heading 9504. As previously stated, the Touch2Play Mini is a Microsoft Surface Pro, which is commercially known as a “tablet computer”, and is advertised and used as “a marketing, information, and entertainment machine” that can provide the latest news, weather and/or advertising images and videos. In its imported state, the Touch2Play Mini has had its Windows Operating System (OS) modified to disable certain functions of the tablet, which is discussed in detail below, and is therefore no longer considered an automatic data processing (ADP) machine. However, this does not convert the device to a video game machine simply because it is no longer considered an ADP machine. Based on these facts, heading 9504 is not applicable.
The Microsoft Surface Pro tablet imported from China to Canada is a freely programmable ADP machine. However, as part of the manufacturing process in Canada, the OS is modified and proprietary security software is added which prevents users from accessing the OS, adding or removing third party applications of their choosing, and inhibits their ability to change the machine without the specialized security software to override the blocks. Because the Touch2Play Mini does not appear to be capable of being modified by the end user, the tablet in question is not freely programmable in accordance with Note 5A to Ch.84, HTSUS, and is excluded from classification in heading 8471, HTSUS.
The applicable subheading for the Touch2Play Mini will be 8543.70.9650, HTSUS, which provides for “Electrical machines and apparatus…: Other machines and apparatus: Other: Other: Other: Other.” The rate of duty will be 2.6%.
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 World Wide Web at http://www.usitc.gov/tata/hts/.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if—
they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
they have been transformed in the territory of Canada, Mexico and/or the United States so that—
except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or
the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or
they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or
they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the non-originating materials falling under provisions for "parts" and used in the production of such goods does not undergo a change in tariff classification because—
the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or
the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts, provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
Based on the facts provided, the goods described above qualify for NAFTA preferential treatment because they will meet the requirements of HTSUS General Note 12(b)(ii)(A). The goods will therefore be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Karl Moosbrugger at [email protected].
Sincerely,
Gwenn Klein Kirschner, Director
National Commodity Specialist Division