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HQ 953369

February 10, 1993

CLA-2 CO:R:C:M 953369 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8525.10.20

Ms. Deborah A. Gross
North American Philips Corporation
100 East 42nd Street
New York, NY 10017-5699

RE: Revocation of NY 870564; D2-MAC/PAL Satellite Receiver; Integrated Receiver/Decoder; Explanatory Note 85.28; HQ 088255; Section XVI, Note 3; Section XVI, Note 2(a); 8528.10.80

Dear Ms. Gross:

This is in reference to NY 870564, dated February 3, 1992, in which you were advised of the classification of certain satellite receivers under the Harmonized Tariff Schedule of the United States (HTSUS). We are now reconsidering the proper classification of such receivers.

FACTS:

The merchandise consists of a D2-MAC/PAL satellite receiver with a wireless remote control unit. The unit is a single integrated receiver/decoder (IRD) with front panel controls and rear panel power supply connection and initiation switch. Signals from the receiver can cause a dish antenna to rotate to those positions in which it optimizes its collection of television signals broadcast from satellites in the atmosphere. The receiver transforms these signals into an NTSC (standard television broadcast signal) signal. The NTSC signal is then transmitted to a television (TV) receiver or video cassette recorder (VCR) receiver, either as RF signals which may be received on Channel 3 or 4 of a standard TV set, or as separate video and audio (left and right channel) signals for those products that can accommodate such connections. The receiver is marketed for residential use.

Once the user of the receiver programs it with the required information, the user can change channels on a TV or VCR merely by pressing a few buttons on a corresponding wireless remote control unit. The receiver responds by positioning the satellite dish accordingly, processing the signal from the antenna, and relaying it to the TV or VCR receiver to which it is connected for further processing.

ISSUE:

What is the proper classification of the subject satellite receiver 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.

In NY 870564, the subject receiver was held to be classifiable under subheading 8528.10.80, HTSUS, which provides for: "[t]elevision receivers (including video monitors and video projection television receivers), whether or not combined, in the same housing, with radiobroadcast receivers or sound or video recording or reproducing apparatus: [c]olor: [o]ther television receivers."

Heading 8525, HTSUS, provides for: "[t]ransmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus: [t]elevision cameras."

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. In part, Explanatory Note 85.28 (p. 1378) states:

[t]his heading covers television receivers (including video monitors and video projectors), whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus.

The heading includes:

(1) Television receivers of the kind used in the home (table models, consoles, etc.) including coin-operated television sets.

(2) Television apparatus for mounting in aircraft or spacecraft.

(3) Video tuners, intended to be used with or incorporated in, e.g., video recording or reproducing apparatus or video monitors. These tuners convert high-frequency television signals into signals usable by video recording or reproducing apparatus or video monitors. However, devices which simply isolate high-frequency television signals (sometimes called video tuners) are to be classified as parts in heading 85.29.

(4) Television receivers for industrial use (e.g., for reading instruments at a distance, or for observation in dangerous localities). With this apparatus the transmission is often by line.

(5) Video monitors which are receivers connected directly to the video camera or recorder by means of co-axial cables, so that all the high frequency circuits are eliminated. They are used by television companies or for closed circuit television (airports, railway stations, steel plants, hospitals, etc.).

(6) Video projectors, which enable the image normally reproduced on the screen of a video receiver to be projected on a large screen.

(7) Television apparatus of all types equipped to receive, memorize and display texts and messages.

In HQ 088255, dated December 17, 1990, an integrated receiver/decoder was held to be classifiable under heading 8525, HTSUS, instead of under heading 8528, HTSUS. In that ruling, it was stated that:

[m]ost importantly, . . ., we have learned that the IRD does not convert a NTSC into the end point signal intended to be displayed on a television picture tube. Instead, the IRD decodes a scrambled signal and produces a NTSC signal for further transmission and final reception and display.

Heading 8528, HTSUS, which provides for television receivers is actually a more narrow heading than it may at first appear. . .

Thus, the [Explanatory Note] to heading 8528, HTSUS, delineates end point apparatus where the image is received and displayed, such as: television receivers used in the home, video tuners intended to be used with or incorporated in video recording or reproducing apparatus or video monitors, video projectors, apparatus to memorize and display texts and messages.

The IRD is in the transmission path, but it is not at the end of the transmission path where final reception and viewing takes place. Its function is to receive and decode a scrambled signal that is subsequently transmitted or relayed, in the form of a NTSC signal, to be received and displayed at the end of the transmission path. Therefore, the IRD cannot be considered a "television receiver", as provided for under heading 8528, HTSUS.

It is our position that the subject receiver is not classifiable under heading 8528, HTSUS. The function of the receiver is to receive and decode a scrambled signal that is subsequently transmitted or relayed, in the form of an NTSC signal, to be received and displayed at the end of the transmission path. The end of the transmission path is the TV or VCR receiver, not the satellite receiver.

Following the holding in HQ 088255, we find that the receiver under consideration is described under heading 8525, HTSUS.

Section XVI, note 3, HTSUS, states that:

[u]nless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.

It is our position that the transmission function of the satellite receiver imparts its principal function. Although both transmission and antenna rotation functions are needed in order for a satellite dish video system to work properly, the signal converting circuitry must process and transmit the newly-gathered signal to the TV or VCR to which the system is connected.

Therefore, because the transmission function imparts the principal function of the receiver, it is our position that it is classifiable under subheading 8525.10.20, HTSUS, which provides for: "[t]ransmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus: [t]elevision cameras: [t]ransmission apparatus: [t]elevision."

HOLDING:

The D2-MAC/PAL satellite receiver is classifiable under subheading 8525.10.20, HTSUS. The general, column one rate of duty is 3.7 percent ad valorem.

EFFECT ON OTHER RULINGS

Pursuant to section 177.9(d)(1), Customs Regulations [19 CFR 177.9(d)(1)], NY 870564 is revoked in full.

Sincerely,

John Durant, Director

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