HQ 0087975 - Internal Advice Request 64/90; Classification of Toll Collection Equipment; Cash Register; Functional Unit; Parts - United States International Trade Commision Rulings

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HQ 087975

January 23, 1991

CLA-2 CO:R:C:G 087975 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8470.50.00; 8473.29.00

District Director
U.S. Customs Service
10 Causeway Street
Boston, MA 02222

RE: Internal Advice Request 64/90; Classification of Toll Collection Equipment; Cash Register; Functional Unit; Parts

Dear Sir:

This is in reply to your request for Internal Advice 64/90, dated August 14, 1990, concerning the classification of Toll Collection Equipment imported by the Massachusetts Turnpike Authority, manufactured in Japan by Toshiba.

FACTS:

The merchandise, as imported, consists of 65 lane controllers, 65 toll terminals (also known as validators), 55 receipt printers, 80 ticket transports, and 3 automatic ticket issue machines (ATIM). The Massachusetts Turnpike Authority intends to use the merchandise in several system configurations, outlined below, to collect tolls for road usage.

System A: (3 Entrance Ticket Systems)
1 Lane Controller
1 Toll Terminal
1 Ticket Transport
3 ATIM

System B: (55 Exit Ticket Systems)
1 Lane Controller
1 Toll Terminal
1 Ticket Transport
1 Receipt Printer

System C: (7 Entrance or Exit Ticket Systems) 1 Lane Controller
1 Toll Terminal
1 Ticket Transport

15 Ticket Transports are imported as additional spare parts

The Lane Controller connects and regulates the activity of the systems components and is connected to the main computer in the toll plaza. It contains an SRC main memory board with software designed to receive, store, and format data for transmission to the main computer.

The Toll Terminal consists of a keyboard, keypad, message display, and indicators which allow the toll collector to open and close the toll lane, control the traffic lights, and register vehicle classifications.

The Ticket Transport prints and encodes/decodes magnetic toll tickets. This information consists of the vehicle classification, number of axles, toll plaza number, lane number, date, time, collector ID#, and ticket serial number. Upon exiting the toll road, another ticket transport reads the magnetic code and determines the sum of money due.

The ATIM (Automatic Ticket Issuing Machine) also contains a ticket transport mechanism, however, it functions on a preset vehicle transaction data program and cannot be used for exiting vehicles or collection of money.

The Receipt Printer prints toll transaction receipts. Printed on the receipt is the vehicle classification, toll amount paid, date, plaza number, collector ID#, and receipt serial number.

ISSUE:

Are the Toll Collection Systems classifiable in subheading 8470.50.00, HTSUSA, which provides for: "[c]alculating machines; accounting machines, cash registers, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device: [c]ash registers," or in subheading 8470.90.00, HTSUSA, which provides for: "[c]alculating machines; accounting machines, cash registers, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device: [o]ther?"

LAW AND ANALYSIS:

Classification of merchandise under the HTSUSA 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.

The Toll Collection Systems are prima facie classifiable under the following subheadings:

8470.50.00 Calculating machines; accounting machines, cash registers, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device: Cash registers

8470.90.00 Calculating machines; accounting machines, cash registers, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device: Other

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) regarding "Cash Registers" provided for in subheading 8470.50.00, HTSUSA, page 1295, state in pertinent part:

These machines are used in shops, offices, etc., to provide a record of all transactions (sales, services rendered, etc.) as they occur, of the amounts involved, the total of the amounts recorded and, in some cases, the code number of the article sold, quantity sold, time of transaction, etc.

The data are introduced manually by means of a keyboard and a stop, lever or handle. Like calculating and accounting machines, however, some cash registers have ancillary facilities for the automatic input of recurrent or pre-set data (e.g., card or tape readers).

Usually, the result is visually displayed and printed, at the same time, on a ticket for the customer and on a tallyroll which is periodically removed from the machine for checking purposes.

These machines are often combined with a till or drawer in which the cash is kept.

They may also incorporate or work in conjunction with devices such as...appliances for transcribing all or part of the data on transactions onto data media in coded form.

This heading also covers cash registers working in conjunction, on-line or off-line, with an automatic data processing machine.

The Harmonized Commodity Description and Coding System Explanatory Notes (EN), although not dispositive, should be looked to for the proper interpretation of the HTSUSA. See 54 Fed. Reg. 35128 (August 23, 1989).

The instant merchandise is used to "provide a record of all transactions" (for both the patron and the toll facility), "as
they occur," for the "services rendered" (use of the toll road), "of the amounts involved," and also records the vehicle classification, number of axles, toll plaza number, lane number, date, time, collector ID#, and ticket serial number. "Data are introduced manually by means of a keyboard, and a magnetic card reader is used to retrieve "automatic input of recurrent or pre- set data." "The result is visually displayed and printed, at the same time, on a ticket for the patron." "These machines are combined with a till or drawer in which the cash is kept." These systems also utilize "appliances for transcribing all or part of the data onto media in coded form." This merchandise also works "in conjunction, on-line or off-line, with an automatic data processing machine." Therefore, the instant merchandise precisely meets the parameters of the EN for subheading 8470.50, HTSUSA, governing "Cash registers."

Section XVI, Legal Note 4., provides direction in the classification of a combination of machines intended to contribute to a clearly defined function in chapter 84:

Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.

Clearly, the instant toll collection systems are a combination of individual components intended to contribute together to the clearly defined function of cash registers. See HQ 086121, dated March 20, 1990, for a similar holding regarding computerized, magnetic card reading point-of-sale terminals.

The court in United States v. Willoughby Camera Stores, Inc., 21 CCPA 322, 324, T.D. 46,851 (1933), stated: "It is a well-established rule that a 'part' of an article is something necessary to the completion of that article. It is an integral, constituent, or component part, without which the article to which it is to be joined, could not function as such article." (Emphasis in original). Therefore, since the additional 15 ticket transports are an integral, constituent, component part necessary to the proper functioning of these cash registers, they are properly classifiable as parts of cash registers.

Furthermore, Section XVI, Legal Note 2, states, in pertinent part:

(a) Parts which are goods included in any of the headings of chapters 84 and 85 (other than headings 8485 and 8548) are in all cases to be classified in their
respective headings;

(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind...

The ticket transports are not goods included in any of the headings of chapters 84 or 85, however, they are suitable for use solely or principally with cash registers and are, therefore, to be classified as parts of these machines in subheading 8473.29.00, HTSUSA.

HOLDING:

The instant Toll Collection Equipment, imported by the Massachusetts Turnpike Authority, manufactured in Japan by Toshiba, are classifiable in subheading 8470.50.00, HTSUSA, which provides for: "[c]alculating machines; accounting machines, cash registers, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device: [c]ash registers." The rate of duty is Free.

The 15 additional ticket transports are classifiable in subheading 8473.29.00, HTSUSA, which provides for: "[p]arts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with the machines of headings 8469 to 8472: [p]arts and accessories of the machines of heading 8470: [o]ther." The rate of duty is 3.9 percent ad valorem.

Sincerely,

John Durant, Director

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