HQ 0950344 - Protest No. 2809-91-101170; Video Signal Output Boards; Codecs; 8517.81.00; HQ 086526; NY 864500; EN 85.25(B); Additional U.S. Rule of Interpretation 1(a) - United States International Trade Commision Rulings

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HQ 950344
March 10, 1992

CLA-2 CO:R:C:M 950344 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8529.90.20

District Director
U.S. Customs Service
555 Battery Street
P.O. Box 2450
San Francisco, CA 94126

RE: Protest No. 2809-91-101170; Video Signal Output Boards; Codecs; 8517.81.00; HQ 086526; NY 864500; EN 85.25(B); Additional U.S. Rule of Interpretation 1(a)

Dear Sir:

This is our response on Application for Further Review of Protest No. 2809-91-101170, dated July 3, 1991, concerning your action in classifying and assessing duty on video signal output boards under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The subject merchandise consists of video signal output boards which are components of the "Rembrandt II" coder-decoder ("codec"). The "Rembrandt II" is a component of a video conferencing system.

The "Rembrandt II" multiplexes video and user data for transmission as a digital data stream along a satellite or line communications network. The subject boards are principally used to transmit video signals. Before multiplexing the data which will be transmitted, the "Rembrandt II" uses special proprietary algorithms to compress or reduce the number of bits of data that represent the original video and audio signals. Before the video signal can be compressed or multiplexed, it must be converted from a video analog signal to a digital signal. Similarly, before the incoming transmission can be viewed, it must be demultiplexed, decompressed, and converted from a digital signal to an analog signal. This process is performed by the subject video signal output boards.

Finally, counsel for the importer claims that the video signal output boards do not prepare, transmit, or receive voice or sound signals.

ISSUE:

What is the proper classification of the video signal output boards under the HTSUS?

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

The merchandise was entered under subheading 8529.90.20, HTSUS, which provides for: "[p]arts suitable for use solely or principally with the apparatus of headings 8525 to 8528: [o]ther: [o]f television apparatus: [p]rinted circuit boards and ceramic substrates with components assembled thereon, for color television receivers; subassemblies containing one or more of such boards or substrates, except tuners or convergence assemblies: [o]ther." However, the merchandise was liquidated under subheading 8517.81.00, HTSUS, which provides for: "[e]lectrical apparatus for line telephony or telegraphy, including such apparatus for carrier-current line systems; parts thereof: [o]ther apparatus: [t]elephonic."

HQ 086526, dated June 28, 1990, is cited in support of the argument that the merchandise is classifiable under subheading 8517.81.00, HTSUS. That ruling classified a video module, connected to a telephone and providing a visual image, as telephonic apparatus. It is argued that the merchandise in HQ 086526 is similar to the codec, because "the codec, which processes a combination of voice, video, and data signals for transmission over lines, is also classifiable as telephonic apparatus."

It is our position that the "Rembrandt II" codec is distinguishable from the merchandise in HQ 086526. In that ruling, it was held that "the video module serves a function which is incidental and subordinate to that of the telephone. The video module is only used in conjunction with the telephone communication to enhance the call by transmitting a 4 1/2", black and white, freeze frame image of the caller."

Additional U.S. Rule of Interpretation 1(a), HTSUS, states that:
a tariff controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which imported goods belong, and the controlling use is the principal use. (emphasis supplied).

The video signal output boards do not prepare, transmit, or receive telephonic signals. As already noted, the principal use of the boards is to transmit video signals. They do not serve a function which is incidental or subordinate to that of a telephone. Also, the video signals can be transmitted by fiber optic cable or by satellite (radio).

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive, are to be used to determine the proper interpretation of the HTSUS. 54 Fed. Reg. 35127, 35128 (August 23, 1989). In part, Explanatory Note 85.25(B) (p. 1374), HTSUS, states that:

. . . . television apparatus falls here whether the transmission is by electro-magnetic waves or by line.

This group includes:

(1) Transmitters of all kinds.

(2) Relay apparatus used to pick up a broadcast and retransmit it and so increase the range.

NY 864500, dated July 10, 1991, involved the classification of a complete codec similar to the "Rembrandt II". It was used in television signal transmission equipment and could transmit a video signal via satellite or fiber optic cable. It was held to be classifiable under heading 8525, HTSUS.

We find that the subject merchandise is not the type of equipment classifiable under heading 8517, because its principal use is that of transmitting video signals. The merchandise is fully distinguishable from the video module in HQ 086526, in that the boards do not operate subordinate or incidental to a telephone.

HOLDING:

Based upon Explanatory Note 85.25(B), HTSUS, and NY 864500, the video signal output boards are classifiable under subheading 8529.90.20, HTSUS. The protest should be granted in full.

A copy of this decision should be attached to the Customs Form 19 and provided to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

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