HQ 0956284 - Mini Compact Disc Stereo Systems; Stereo Integrated Amplifiers/Tuners; Dual Stereo Cassette Decks/Compact Disc Players; Remote Controls; Flat Cables; Sets; GRI 3(b); Explanatory Note 3(b)(X); Functional Units; Section XVI, Note 4; HQ 950882; Universal Electronics, Inc. v. U.S.; 19 CFR 177.7(b); 8519.99.00 - United States International Trade Commision Rulings

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HQ 956284
July 7, 1994

CLA-2 CO:R:C:M 956284 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8527.32.00; 8520.31.00; 8544.51.80

Mr. Dennis Heck
Tower Group International, Inc.
Castelazo & Associates
5420 W. 104th Street
Los Angeles, CA 90045-6069

RE: Mini Compact Disc Stereo Systems; Stereo Integrated Amplifiers/Tuners; Dual Stereo Cassette Decks/Compact Disc Players; Remote Controls; Flat Cables; Sets; GRI 3(b); Explanatory Note 3(b)(X); Functional Units; Section XVI, Note 4; HQ 950882; Universal Electronics, Inc. v. U.S.; 19 CFR 177.7(b); 8519.99.00

Dear Mr. Heck:

This is in response to your letter of April 14, 1994, on behalf of Aiwa America, Inc., concerning the classification of mini compact disc stereo systems under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The merchandise, which will be made in Singapore, consists of three types of mini compact disc stereo systems, all with a remote control. After importation into the U.S., the systems will be repackaged with U.S.-sourced speakers and then sold to the public. System NSX-D603 consists of a stereo integrated amplifier/tuner (model no. RX-N603), with a clock, and a dual stereo cassette (player/recorder) deck/compact disc player (model no. FD-N603). System NSX-D606 consists of a stereo integrated amplifier/tuner (model no. RX-N606), with a clock, and a dual stereo cassette (player/recorder) deck/compact disc player (FD-N606). System NSX- D707 consists of a stereo integrated amplifier/tuner (model no. RX- N707), with a clock, and a dual stereo cassette (player/recorder) deck/compact disc player (model no. FD-N707). The systems' components are designed for either horizontal or vertical placement. In each system, connection of the amplifier/tuner to the cassette deck player is effected by a specially designed flat cable included with each system.

The subheadings under consideration are as follows:

8519.99.00: [t]urntables, record players, cassette players and other sound reproducing apparatus, not incorporating a sound recording device: [o]ther sound reproducing apparatus: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 3.9 percent ad valorem.

8520.31.00: [o]ther magnetic tape recorders incorporating sound reproducing apparatus: [c]assette type.

The general, column one rate of duty for goods classifiable under this provision is 3.9 percent ad valorem.

8527.32.00: [r]eception apparatus for radiotelephony, radiotelegraphy or radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: [o]ther radiobroadcast receivers, including apparatus capable of receiving also radiotelephony or radiotelegraphy: [n]ot combined with sound recording or reproducing apparatus but combined with a clock.

The general, column one rate of duty for goods classifiable under this provision is 6 percent ad valorem.

8544.51.80: [i]nsulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors . . . : [o]ther electric conductors, for a voltage exceeding 80 V but not exceeding 1,000 V: [f]itted with connectors: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 5.3 percent ad valorem.

ISSUES:

Whether, for classification purposes, the three mini compact disc stereo systems are sets.

If not, whether the three mini compact disc stereo systems are classifiable as functional units.

If not, whether the components of the three mini compact disc stereo systems are classifiable under the HTSUS provisions which individually describe them.

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.

Because it is claimed that the systems are sets, we must consult GRI 3(b) which states that:

[m]ixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.

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. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). Explanatory Note 3(b)(X) (p. 4) states that:

[f]or the purpose of this Rule, the term "goods put up in sets for retail sale" shall be taken to mean goods which:

(a) consist of at least two different articles which are, prima facie, classifiable in different headings . . .;

(b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and

(c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).

Inasmuch as after importation into the U.S., the systems are repackaged with U.S.-sourced speakers before they are put up for sale to the public, the systems cannot be classifiable as sets because they are not "put up in a manner suitable for sale directly to users without repacking."

Section XVI, note 4, HTSUS, states that:

[w]here a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.

The systems cannot be classifiable as functional units because they are not "intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85." The amplifiers/tuners and the cassette decks/compact discs are classifiable under separate headings. Therefore, the systems fail the test as set forth under section XVI, note 4, HTSUS.

Because the systems are neither sets nor functional units, their components must be classifiable under the HTSUS provisions which individually describe them.

It is clear that the combination amplifiers/tuners are classifiable under subheading 8527.32.00, HTSUS.

However, it is claimed that the cassette decks/compact discs are classifiable under subheading 8519.99.00, HTSUS. HQ 950882, dated August 7, 1992, is cited as support for this classification. HQ 950882 dealt with the classification of combination stereos incorporating a radio, dual cassette deck, record player, and graphic equalizer. The issue in that case was whether dual cassette tape players incorporate tape players which are incapable of recording for the purposes of heading 8527, HTSUS. Because the subject cassette decks/compact discs do not contain reception apparatus, heading 8527, HTSUS, is not applicable. Because the issue in HQ 950882 was specific to the provisions under heading 8527, HTSUS, we do not consider it relevant to the instant case.

Heading 8519, HTSUS, excludes goods which incorporate a sound recording device. Because the cassette decks/compact discs incorporate a sound recording device, they are precluded from classification under heading 8519, HTSUS.

It is, however, our position that the cassette decks/compact discs meet the terms of heading 8520, HTSUS, and are classifiable under subheading 8520.31.00, HTSUS.

The flat cable included with the systems is classifiable under subheading 8544.51.80, HTSUS.

With regard to the remote controls, it has come to our attention that similar merchandise is the subject of an action before the U.S. Court of International Trade in Universal Electronics Inc. v. U.S. (Court No. 93-11-00740).

Section 177.7(b), Customs Regulations [19 CFR 177.7(b)], states:

[n]o ruling letter will be issued with respect to any issue which is pending before the [U.S.] Court of International Trade, the [U.S.] Court of Appeals for the Federal Circuit, or any court of appeal therefrom. Litigation before any other court will not preclude the issuance of a ruling letter, provided neither the Customs Service nor any of its officers or agents is named as a defendant.

Because the issues in Universal Electronics appear to be similar to those in this case concerning the remote controls, it would be imprudent to rule on the subject merchandise. Consequently, under 19 CFR 177.7(b), we cannot issue a ruling on the remote controls at this time.

HOLDING:

Because the systems are neither sets nor functional units, their components must be classifiable under the HTSUS provisions which individually describe them.

The stereo integrated amplifiers/tuners are classifiable under subheading 8527.32.00, HTSUS, as other radiobroadcast receivers.

The dual stereo cassette decks/compact disc players are classifiable under subheading 8520.31.00, HTSUS, as other magnetic tape recorders incorporating sound reproducing apparatus.

The flat cables included with the systems is classifiable under subheading 8544.51.80, HTSUS, as other electric conductors fitted with connectors.

Sincerely,

John Durant, Director

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