HQ 0951644 - Protest No. 0401-91-100191; Unburnished Cookies (Media); 19 CFR 177.9(d)(1); HQ 085845; NY 837610; NY 837610 Amendment revoked; 53 Fed. Reg. 38045; 54 Fed. Reg. 6433; 54 Fed. Reg. 13406; 56 Fed. Reg. 36775; Royal Business Machines, Inc., et al v. U.S. - United States International Trade Commision Rulings

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HQ 951644

April 23, 1993

CLA-2 CO:R:C:M 951644 LTO

CATEGORY: CLASSIFICATION

TARIFF NO.: 8523.20.00

District Director
U.S. Customs Service
Thomas P. O'Neill, Jr. Federal Building
10 Causeway Street, Room 603
Boston, Massachusetts 02222-1052

RE: Protest No. 0401-91-100191; Unburnished Cookies (Media); 19 CFR 177.9(d)(1); HQ 085845; NY 837610; NY 837610 Amendment revoked; 53 Fed. Reg. 38045; 54 Fed. Reg. 6433; 54 Fed. Reg. 13406; 56 Fed. Reg. 36775; Royal Business Machines, Inc., et al v. U.S.

Dear Sir:

This is our decision on Protest No. 0401-91-100191, dated April 3, 1991, which concerns the classification of unburnished media or "cookies" under the Harmonized Tariff Schedule of the United States (HTSUS). The protestant, Kao Infosystems Company (KIC), also seeks the reliquidation of entries subject to this protest without the assessment of antidumping duties.

FACTS:

The articles in question are mylar polyethylene disks known as "cookies" from Japan. Before importation, the cookies are coated with a thin film of magnetic particles. After importation, the subject merchandise will be magnetized, mounted on an aluminum center hub, and enclosed within a plastic casing. The disks will then be ready for formatting.

On September 29, 1988, the U.S. Department of Commerce issued an affirmative preliminary antidumping determination for 3.5" microdisks and media from Japan, and instructed the Customs Service to assess antidumping deposits on items covered by the determination [Case A-588-802]. 53 Fed. Reg. 38045 (September 29, 1988). Because KIC imported unburnished cookies that were - 2 -
found to be classifiable under subheading 8523.20.00, HTSUS (prepared unrecorded magnetic disks), the tariff number specified in the preliminary determination, Customs began assessing antidumping duties on KIC entries. Commerce subsequently issued an affirmative final antidumping determination and order. 54 Fed. Reg. 6433 (February 10, 1989); 54 Fed. Reg. 13406 (April 3, 1989).

Counsel for the protestant contends that in February 1989, Customs officials suggested to KIC that the cookies they were importing were not covered by Commerce's antidumping determination and advised KIC to obtain a classification ruling to that effect. In a letter dated February 29, 1989, to Customs in New York, the protestant requested a binding classification ruling concerning the cookies.

In NY 837610, dated March 13, 1989, it was determined that the cookies were not "magnetic," and they were held to be classifiable under subheading 8523.90.00, HTSUS ("other prepared unrecorded media"). At this time, the protestant states that Customs stopped collecting antidumping duties on KIC entries.

KIC continued to import the cookies free of antidumping duties until April 1990. At this time, Customs rejected a KIC entry on the grounds that the cookies were in fact covered by Commerce's scope determination (based on a Customs laboratory report that indicated that the disks were "magnetized"). Customs began assessing antidumping duties on KIC entries, including those entries made by KIC following the March 13, 1989, ruling that had not yet been liquidated.

On June 8, 1990, New York issued another ruling (NY 837610 Amendment) which purportedly modified the ruling of March 13, 1989. This amended response to the protestant's February 29, 1989, request for a classification ruling, stated that the subject merchandise was classifiable under subheading 8523.20.00, HTSUS.

On June 26, 1991, Commerce issued a scope ruling to the protestant concerning KIC's unburnished cookies. 56 Fed. Reg. 36775 (August 1, 1991). This ruling stated that the cookies were within the scope of their earlier, affirmative final antidumping determination.

The protestant states that, in reliance on NY 837610, they imported a large number of cookies between March 1989 and April 1990. They claim that because of their reliance on this ruling, and because of subsequent actions taken by Customs officials (specifically, the issuance of NY 837610 Amendment and the retroactive assessment of antidumping duties on KIC entries made
after March 1989 until April 1990 that had not yet been liquidated), they have suffered severe business hardship.

ISSUES:

1. Whether the unburnished cookies are classifiable under subheading 8523.20.00, HTSUS, which describes prepared unrecorded magnetic disks for the recording of other phenomena.

2. Whether the entry can be reliquidated without antidumping duties regardless of the scope determination made by the U.S. Commerce Department concerning the application of these duties to 3.5" microdisks and coated media thereof from Japan.

LAW AND ANALYSIS:

1. Classification

The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states in pertinent part that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes . . . ."

The articles in question are covered by heading 8523, HTSUS, which provides for "[p]repared unrecorded media for sound recording or similar recording of other phenomena." The subheadings at issue are as follows:

8523.20.00 Magnetic discs

8523.90.00 Other

In NY 837610, dated March 13, 1989, the unburnished cookies were held to be classifiable under subheading 8523.90.00, HTSUS. In NY 837610 Amendment, dated June 8, 1990, this ruling was purportedly modified and the cookies were held to be classifiable under subheading 8523.20.00, HTSUS. However, according to section 177.9(d)(1) of the Customs Regulations [19 CFR 177.9(d)(1)], "[m]odification or revocation of a ruling letter shall be effected by Customs Headquarters . . . ." This office has recognized that "under current instructions the New York office cannot modify or revoke its rulings." See HQ 085845, dated June 27, 1990. Thus, the June 8, 1990 ruling was without effect and is hereby revoked. We must now consider whether the articles in question are classifiable under subheading 8523.20.00, HTSUS, or subheading 8523.90.00, HTSUS.

Counsel for the protestant contends that the cookies are not "magnetized" or "magnetically charged," but merely "magnetic," - 4 -
and argues, therefore, that the cookies cannot be classified as magnetic disks. We disagree.

The Harmonized Commodity Description and Coding System Explanatory Note (EN) to heading 8523, HTSUS, pg. 1372, states that the heading includes "media for magnetic recording, e.g., discs or cards (of plastics or paper) . . . either capable of being magnetised or so rendered by coating with a lacquer containing dispersions of magnetic powder or by electrolytic deposit of a ferromagnetic coating (e.g., for magnetic wire) [emphasis added]." The articles in question are coated with a thin film of magnetic particles prior to the time of importation. Thus, while the cookies are not "magnetised," they are "capable of being magnetised" and are therefore, classifiable as magnetic disks under subheading 8523.20.00, HTSUS.

2. Anti-dumping duties

Counsel for the protestant requests that the entries of unburnished cookies be reliquidated without antidumping duties. Because antidumping scope and tariff classification have fundamental differences, the tariff classification of the unburnished cookies by Customs does not affect the Commerce Department's antidumping scope determination. The Court of International Trade has stated:

The Court distinguishes between the authority of the Customs Service to classify according to tariff classifications [19 U.S.C. 1500] and the power of the agencies administering the antidumping law to determine a class or kind of merchandise. The determinations under the antidumping law may properly result in the creation of classes which do not correspond to classifications found in the tariff schedules or may define or modify a known classification in a manner not contemplated or desired by the Customs Service.

Royal Business Machines, Inc., et al v. U.S., 1 CIT 80, 87 (CIT 1980), 507 F.Supp. 1007, aff'd 669 F. 2d 692 (1982).

Thus, the Commerce Department's antidumping scope determination applies to the merchandise named in that determination regardless of where Customs classifies that merchandise, and Customs is not empowered to grant the relief now sought by the protestant.

HOLDING:

The unburnished cookies are properly classifiable under - 5 -
subheading 8523.20.00, HTSUS, which provides for "[p]repared unrecorded media for sound recording or similar recording of other phenomena . . . [m]agnetic discs." The corresponding rate of duty for articles of this subheading is 4.2% ad valorem.

Commerce's final antidumping scope determination of June 26, 1991 [56 Fed. Reg. 36775] is unaffected by this ruling. Thus, the protestant's request for reliquidation of the entries subject to this protest without the assessment of antidumping duties must be denied.

Accordingly, the protest should be denied 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

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