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HQ 557345


September 8, 1993

CLA-2 CO:R:C:S 557345 DLD

CATEGORY: CLASSIFICATION

TARIFF NO.: 9810.00.60

District Director of Customs
300 Second Avenue South
Great Falls, Montana 59401

RE: Decision on Application for Further Review of Protest No. 3307-93-100015.

Dear Sir:

This protest was filed against your decision to liquidate as dutiable six (6) entries representing parts of a meteorological research radar system imported by the University Corporation for Atmospheric Research (UCAR).

FACTS:

The University Corporation for Atmospheric Research (UCAR) of Boulder, Colorado, imported in 1992, under six entries of the Customs port of Denver, Colorado, three parts of a Meteorological Research Radar System. On April 7, 1992, UCAR filed with Customs Headquarters Special Classification Branch, three applications (Commerce Form ITA-338P) for duty-free entry under subheading 9810.00.60, HTSUS, which allows duty-free treatment to scientific instruments and apparatus, provided certain criteria are met. One application was for a rotodome for a meteorological research radar system, another for a pair of antennas for a meteorological research radar system and the third for two intermediate frequency [IF] signal processors. The three applications were denied by Customs on December 23, 1992. All three were denied on the same grounds, namely, that the imported items were "components", within the meaning of subsection 301.2(k) of the joint regulations of the Department of Commerce and the Department of the Treasury (15 CFR 301.2(k)). These regulations govern duty-free entry under subheading 9810.00.60, HTSUS. Components are not eligible for duty-free treatment under this tariff number.

Accordingly, the six entries were liquidated as dutiable on February 5, 1993. A protest (Customs Form 19) under 19 CFR Part 174 was timely filed on May 4, 1993. This protest was forwarded to Customs Headquarters for further review on May 10, 1993, by the District Director, Great Falls, Montana. The present letter is Customs Headquarters' response to the application for further review of the protest.

LAW AND ANALYSIS:

The protestant bases his protest on three arguments:

1. The three items could not have been purchased in the U.S. at equal value.

2. The applicant saved the U.S. Government grant money by obtaining the three items from France.

3. Customs has the authority to determine the items to be "accessories", instead of "compo- nents", and hence entitled to duty-free entry.

With regard to item 1., the question of whether an item which can serve the applicant's purposes is obtainable in the U.S. is something for the Department of Commerce to determine. The Department of Commerce was never asked to rule on this because the application was denied by Customs. A denial by Customs ends the processing of the duty-free application at that point.

The argument of item 2., is irrelevant to any of the criteria of the regulations by which the Customs Service processes an application. It should be noted, however, that the granting of duty-free entry to otherwise dutiable foreign-made instruments necessarily entails a loss of revenue to the U.S. Government (in lost duties), which would not occur if domestic instruments had been acquired.

The argument of item 3. appears to be that under 15 CFR 301.2(k), Customs has "the latitude to use subjective judgement in making a ruling", and therefore could and should decide that the three items of the three UCAR applications are accessories and not components as Customs had determined. If the three imported items were considered accessories, they would be able to enter duty-free. UCAR cites a portion of 15 CFR 301.2(k) in support of this contention:

In determining whether an item is a component ineligible for duty-free consideration or an accessory eligible for such consideration, Customs shall take into account such factors as the item's complexity, novelty, degree of inte- gration and pertinency to the research purposes to be performed by the instrument as a whole.

Customs maintains that this sentence was intended to give guidance in how to determine whether an item is a component or an accessory. It was not meant to give Customs latitude in making this determination. Customs determined, based on 15 CFR 301.2(k) (including the above quoted sentence), the material submitted in the applications and previous experience in distinguishing components from accessories, that the three items (of the six entries) were "components" within the meaning of the regulations and hence ineligible for duty-free treatment. The denial letters contained this definition of a component:

Pursuant to subsection 301.2(k) of the regulations, components of an instrument are not eligible for duty- free treatment under subheading 9810.00.60, HTSUS (15 CFR 301.2(k)). A component is there defined as a part or assembly of parts which is substantially less than the instrument to which it relates and which enables the instrument to function at a specified minimum level. That is, a component is a necessary part of an instrument, but is not itself an instrument.

As quoted in the denial letters, Peter Hildebrand, Manager of the Remote Sensing Facility of UCAR said that the three items do not comprise one instrument but are merely "three components of the whole radar system." The protest states (p.1) that "[t]he 'instrument or apparatus' is a Meteorological Research Radar System, which is comprised of several components. Three of the components (1. a Rotodome, 2. a pair of antennas, and 3. intermediate frequency signal processors)... comprise the six entries...." [Emphasis added]. Again on page 3 of the protest, it is stated that "the three components (the Rotodome, the Antennas, and the Intermediate Frequency Signal Processors) are components of the Meteorological Research Radar System...." [Emphasis added]. The protest uses the word "component[s]" twenty-six times in discussing the imported items. Of course, the fact that UCAR may use the term "component" for an item is not a determining factor in whether Customs decides that an item is a component or not. Customs determination is based on the regulations and other criteria. However, it is assumed that UCAR has the common understanding of the meaning of the terms "instrument", "component" and "accessory". And Customs is in agreement that the three items of the six entries which UCAR characterized as "components" are indeed components within the meaning of the regulations.

The dictionary gives these definitions of "accessory" and "component" (The Random House Dictionary of the English Language, the Unabridged Edition, New York: Random House, 1966):
accessory n. 1. a subordinate or supplementary part, object, etc., used mainly for convenience, attractiveness, safety, etc., as a spotlight on an automobile or a lens cover on a camera.
component adj. 1. being or serving as an element (in something larger); composing; con- stituent: the component parts of a high-fidelity phonograph. n. 2. a com- ponent part; constituent: hi-fi components.

The question to be answered in the response to the present protest is whether the meteorological research radar system could function without any of the three imported items, the rotodome, the antennas or the intermediate frequency signal processors. The following is a short description of the three subjects of the three duty-free applications which comprise the items imported under the six protested entries. This description was part of each of the three denial letters:

The rotodome is a streamlined cylinder which, for the research, is attached to the rear of the fuselage of an Electra aircraft and which holds in its interior the two antennas, which serve as the antennas for an airborne meteorological research radar. The IF signal processors are located in the cabin of the aircraft in one of five U.S.-built racks containing other U.S. electronic components of the radar system. The radar signals are emitted from the two antennas in the rotating rotodome. The radar signals reflected back to the antennas are sent to the electronics in the cabin racks, which include the IF signal processors.

It is clear that the three items of the six entries under protest, the rotodome, the antennas and the intermediate frequency signal processors are necessary constituents of the meteorological research radar system and not optional equipment, that is to say, they are components and not accessories. Components are not eligible for duty-free treatment under subheading 9810.00.60, HTSUS.

HOLDING:

The six entries are affirmed to comprise three components of a larger instrument, the Meteorological Research Radar System. Inasmuch as components are not eligible for duty-free treatment under subheading 9810.00.60, HTSUS, you are directed to deny the protest.

Sincerely,

John Durant, Director

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