HQ 0951926 - Reconsideration NY 872659; Injectable transponder; card transponder; Heading 8542; Heading 8529; Chapter 85, note 5(b)(ii); GRI 1; EN 85.42 (I)(2); H. Conf. Rep. No. 576; Chapter 85, note 5(b)(iii); EN 85.42 (II). - United States International Trade Commision Rulings

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HQ 951926

September 18, 1992

CLA-2 CO:R:C:M 951926 AJS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8543.80.90

Mr. Bruce H. Leeds
Manager
Export/Import Operations
CO/C1/B112
Hughes Identification Devices Inc.
P.O. Box 80028
Los Angeles, CA 90080-0028

RE: Reconsideration NY 872659; Injectable transponder; card transponder; Heading 8542; Heading 8529; Chapter 85, note 5(b)(ii); GRI 1; EN 85.42 (I)(2); H. Conf. Rep. No. 576; Chapter 85, note 5(b)(iii); EN 85.42 (II).

Dear Mr. Leeds:

This is in reply to your letter of May 26, 1992, requesting the reconsideration of New York (NY) 872659 (April 21, 1992), concerning the tariff classification of certain microcircuit devices assembled in Thailand.

FACTS:

The devices at issue are the model TX14XX series injectable transponder (IT) and model TX1309 series card transponder (CT). The IT is described as a passive radio-frequency identification (ID) tag designed to work in conjunction with a compatible radio- frequency ID reading system. It consists of an electromagnetic coil, tuning capacitor, and EEPROM microchip sealed in a cylindrical glass enclosure. The chip is pre-programmed with an unique ID code which cannot be altered. Although specifically designed for inserting under the hides of livestock, the IT can be used for other animal or non-animal applications. The IT need only be programmed with an unique ID code, no physical change is required.

The CT is composed of a card insert, laminated card and coil insert. It appears that only the coil insert will be imported. Your submission states that the coil insert is an unfinished microcircuit based device used in many potential applications. The finishing operations performed after importation depend on the nature of the finished product.

Each device contains an EEPROM chip which can be programmed with any one of tens of billions of ID codes. When a person or object having one of the Hughes ID devices passes near a specially designed radio frequency scanner, it activates the code on the chip. The code is then reflected back to the scanner to identify the person or object.

ISSUE:

Whether the subject devices are properly classifiable within heading 8542, Harmonized Tariff Schedule of the United States (HTSUS), which provides for electronic integrated circuits and microassemblies; or within heading 8529, HTSUS, which provides for parts suitable for use solely or principally with the apparatus of headings 8525 to 8528; or heading 8543, HTSUS, which provides for electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter.

LAW AND ANALYSIS:

Heading 8542, HTSUS, provides for electronic integrated circuits. These devices consist of hybrid integrated circuits (HICs) in which passive elements (resistors, capacitors, interconnections, etc.) obtained by thin- or thick-film technology and active elements (diodes, transistors, monolithic integrated circuits, etc.) obtained by semiconductor technology are combined to all intents and purposes indivisibly, on a single insulating substrate (glass, ceramic, etc.). Chapter 85, note 5(b)(ii). The subject devices do not satisfy the terms of this legal note. They are not combined indivisibly on a substrate, but are individually wire bonded to a substrate. In the HTSUS, classification is determined according to the terms of the headings and any relative section or chapter notes. General Rule of Interpretation (GRI) 1. Accordingly, the subject devices do not satisfy the terms of the relative chapter note for HICs, and thus cannot be classified as such within heading 8542, HTSUS.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) state that HICs are microcircuits built up on an insulating substrate on which a thin or thick film circuit has been formed. EN 85.42 (I)(2), p. 1400 (1992). Furthermore, this process allows certain passive elements

(resistors, capacitors, interconnections, etc.) to be produced at the same time. EN 85.42 (I)(2). The subject devices do not satisfy this description. A thin or thick film circuit is not formed, nor are passive elements produced at the same time. As discussed previously, the subject devices consist of chips which are individually wire bonded to an epoxy resin substrate. While the ENs are not dispositive, they provide a commentary on the scope of each heading and offer guidance for interpretation of the HTSUS. H. Conf. Rep. No. 576, 100th Cong., 2d Sess., p. 550, reprinted in 1988 U.S. CODE CONG. ADMIN. NEWS p. 1582. Therefore, we find the above ENs instructive for determining that the subject devices do not satisfy the description of a HICs.

Heading 8542, HTSUS, additionally provides for electronic microassemblies. These devices consist of a molded module, micromodule or similar type, consisting of discrete, active or both active and passive components which are combined and interconnected. Chapter 85, note 5(b)(iii), See also EN 85.42 (II), p. 1401. The subject devices do not satisfy this chapter note. They do not consist of discrete components. Discrete components are indivisible and are the basic electronic construction components in a system. EN 85.42 (II). They may have a single active electrical function (semiconductor devices defined by Note 5(A) to Chapter 85) or a single passive electrical function (resistors, capacitors, interconnections, etc.). EN 85.42 (II). However, components consisting of several electric circuit elements and having multiple electrical functions, such as integrated circuits, are not considered discrete components. EN 85.42 (II). The subject devices do not consist of discrete components. They contain an EEPROM chip, which is a type of integrated circuit. Thus, we find the above ENs instructive for determining that the subject devices also do not satisfy the description of an electronic microassembly.

Heading 8529, HTSUS, provides for parts suitable for use solely or principally with the apparatus of headings 8525 to 8528 (e.g., radio reception and transmission apparatus). In NY 872659, Customs classified the subject devices within this heading based on the view that the devices received a radio signal. Upon further review, however, they do not appear to receive or transmit a signal. Rather, they merely reflect a signal which is altered by the EEPROM chip so that the signal ID code is recognized by a radio frequency scanner. Therefore, the subject devices do not satisfy the terms of heading 8529, HTSUS.

Heading 8543, HTSUS, provides for electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter. The subject devices satisfy this description. They are electrical apparatus with the individual
function of altering and reflecting a signal, which are not specified elsewhere. More specifically, they are described within subheading 8543.80.90, HTSUS, which provides for "other" electrical apparatus of heading 8543, HTSUS.

HOLDING:

The subject IT and CT coil insert are classifiable within subheading 8543.80.90, HTSUS, which provides for "other" electrical apparatus, having individual functions, not specified or included elsewhere in chapter 85. NY 872659 is modified accordingly. Merchandise classified within subheading 8543.80.90, HTSUS, which is assembled in Thailand may be eligible for special tariff treatment under the Generalized System of Preferences (GSP).

Sincerely,

John Durant, Director
Commercial Rulings Division

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