HQ 0952556 - 8517.40.50; Video conference system; HQ 083611 - United States International Trade Commision Rulings

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HQ 952556

November 4, 1992

CLA-2 CO:R:C:M 952556 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.40.50

Mr. Mark Jones
Hitachi America, Ltd.
50 Prospect Avenue
Tarrytown, NY 10591-4698

RE: 8517.40.50; Video conference system; HQ 083611

Dear Mr. Jones:

In a letter dated August 3, 1992, to the Regional Commissioner of Customs in New York, you inquired as to the tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS), of the Hitachi DP-200 and CA-200 Video Conferencing Systems manufactured in Japan. Your letter was referred to this office for a direct response.

FACTS:

The merchandise in question are two video conference systems, Hitachi models DP-200 and the CA-200 from Japan. Both versions of the video conferencing system (VCS) are tabletop systems for small group conferences, designed to provide simultaneous voice, data and visual information between two or more locations.

Both the DP-200 and the CA-200 with a television monitor contain all the necessary equipment for a video conference, including: wide-angle color camera with automatic focus and 8:1 zoom ratio; high-quality, echo-cancelling audio system with a built-in microphone and connections for three additional microphones; built-in speakerphone with automatic redial, hold and speed-dial directory; and advanced electronics, including a built-in CCITT H.261 video coder/decoder (codec) and the audio/video controller. The high-resolution video images are transmitted at up to 15 frames per second, and images can be stopped for detailed inspection with a freeze-frame feature.

An easy-to-use keypad controls the video images, audio volume, telephone dialing, and other functions. On-screen programming simplifies set up and configuration, and includes a 20-number speed-dial directory and help screens for real-time assistance.

A Group III fax or a personal computer also can be attached to the VCS to simultaneously transmit data, voice, video, and facsimile information over the same communication link for cost- effective multimedia interactions. Both VCS links are based on worldwide integrated services digital network (ISDN) standards, the video compression on CCITT H.261 standards, and both fax and data transmission on worldwide CCITT standards. Both units work with the ISDN lines or Switched 56 digital telephone networks.

ISSUE:

Are the video conferencing systems electrical apparatus for line telephony or are they articles designed for connection to telephonic apparatus or instruments under the Harmonized Tariff Schedule of the United States (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 shall be determined according to the terms of the headings and any relative section or chapter notes, and if not, by the following GRI's, taken in order.

Heading 85.17, HTSUS, provides for electrical apparatus for line telephony or line telegraphy, including such apparatus for carrier-current line systems. The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the Customs Cooperation Council's official interpretation of the Harmonized System. While not legally binding, the ENs provide a commentary on the scope of each heading of the Harmonized System and are generally indicative of the proper interpretation of these headings. EN 85.17, page 1360, defines the term "electrical apparatus for line telephony or line telegraphy" as an
apparatus for the transmission between two points of speech or other sounds (or of symbols representing written messages, images or other data), by variation of an electric current or of an optical wave flowing in a metallic or dielectric (copper, optical fibres, combination cable, etc.) circuit connecting the transmitting station to the receiving station. . . .

The heading covers all such electrical apparatus designed for this purpose, including the special apparatus used for carrier-current line systems.

The term "apparatus" has been defined by the courts as a combination of articles and materials which are intended, adapted, and necessary for the accomplishment of some purpose. The Deseret Co., v. United States, 10 CIT 609, 611, Slip Op. 86- 93 (1986).

"Carrier current" is used in connection with both power and communications circuits, however, the principle is basically the same for both systems. As defined by Van Nostrands's Scientific Encyclopedia, Seventh Edition, Vol. 1, page 518 (1989), the term "carrier current"
refers to the use of a relatively high-frequency alternating current superimposed on the ordinary circuit frequencies in order to increase the usefulness of a given transmission line. Thus, in the case of power systems, carrier currents of several kHz frequency are coupled to the 60-Hz transmission lines. These carrier currents may be modulated to provide telephone communication between points on the power system or they may be used to actuate relays on the system. This latter use is known as carrier relaying. Carrier currents have greatly extended the usefulness of existing line facilities of the telephone and telegraph companies. Several carrier frequencies may be coupled to the lines already having regular voice or telegraph signals on them. Each of these carrier frequencies may be modulated with a separate voice or telegraph channel and thus a given line may carry the regular signal plus several new carrier channels, each of which is equivalent to another circuit at regular frequencies. At the receiving end, the various channels are separated by filters and the signals are demodulated and then fed to conventional phone or telegraph circuits. The number of carrier channels which may be applied to a given line depends upon the characteristics of the line, varying from one or two for some lines to several hundred for a coaxial cable.

Transmission equipment involves the forwarding of electromagnetic signals over wire or cable. In Fanon Electronic Industries, Inc. v. United States, 65 Cust. Ct. 542, 546 (1970), the court stated that the intent of Congress in enacting the provision (the predecessor of heading 8517) for electrical telegraph and telephone apparatus was to encompass all communications equipment by wire within that provision.

In HQ 083611 (May 11, 1990), we stated that "telecommunications equipment, both in a common and commercial sense, encompasses the transfer of sound, written information, video information, and data, as well as combinations thereof." There has been a "continuing recognition by Congress that, regardless of distance (i.e., "long- haul" or "local area") or type of signal (i.e., analog or digital), all transmission of information via an electromagnetic signal is, for tariff purposes, within the telephone and telegraph category. . ." HQ 083611. Based upon HQ 083611, the VCS are telecommunication devices because they allow parties who are far apart to communicate verbally and visually as well as send each other documents.

You argue that the VCS should be classified under subheading 8543.80.60, HTSUS, which provides for: "[e]lectrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter. . .[o]ther machines and apparatus: [a]rticles designed for connection to telegraphic or telephonic apparatus or instruments or to telegraphic or telephonic networks." EN 85.43, page 1402, states that "[t]his heading covers 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, nor excluded by the operation of a Legal Note to Section XVI or to this Chapter." (emphasis in the original)

We believe that both VCS models are telephonic apparatus which use a carrier-current line system. The VCS are telecommunications apparatus because both VCS models are the type of apparatus covered by EN 85.17. The DP-200 and the CA-200 VCS transmit sound, video images, written information and data from one unit to another by the use of a carrier-current line. As stated in the literature, the VCS can simultaneously transmit signals for sound, video images, written information and data.

The proper classification for both VCS models is under subheading 8517.40.50, HTSUS, which provides for: "[e]lectrical apparatus for line telephony or telegraphy, including such apparatus for carrier-current. . .[o]ther apparatus, for carrier- current line systems: [o]ther: [t]elephonic. Because both models are specifically covered by heading 8517, HTSUS, they are therefore precluded from being classified under heading, 8543, HTSUS.

HOLDING:

The video conference systems are classifiable in subheading, 8517.40.50, HTSUS. The general column 1 rate of duty is 8.5 percent ad valorem.

Sincerely,

John Durant, Director
Commercial Rulings Division?

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