HQ 955279 - Observation Systems; Section XVI, Note 4; Functional Units; GRI's 3(b) and 3(c); Explanatory Note 3(b)(VIII); 8525.30.00 - United States International Trade Commision Rulings

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HQ 955279

November 8, 1993

CLA-2 CO:R:C:M 955279 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8528.20.00

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

RE: Observation Systems; Section XVI, Note 4; Functional Units; GRI's 3(b) and 3(c); Explanatory Note 3(b)(VIII); 8525.30.00

Dear Ms. Gross:

This is in response to your letter of October 12, 1993, on behalf of Philips Consumer Electronics Company, to the Area Director of Customs, New York Seaport, concerning the classification of observation systems under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter has been referred to this office for a response.

FACTS:

The merchandise consists of observation systems (model nos. 22MS405T, VS22415R, VS22475R, and VS32405R). Each system is comprised of a CCD camera with an integrated 4mm fixed focus lens, 33 feet of coaxial cable, camera mounting brackets with all of the necessary hardware, spare plugs for adjusting cable length, and a monochrome video monitor. The systems are used for the observation of both indoor and outdoor locations for security purposes.

The subheadings under consideration are as follows:

8525.30.00: [t]elevision cameras.

The general, column one rate of duty for goods classifiable under this provision is 4.2 percent ad valorem.

8528.20.00: [t]elevision receivers (including video monitors and video projectors), whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus: [b]lack and white or other monochrome.

The general, column one rate of duty for goods classifiable under this provision is 5 percent ad valorem.

ISSUE:

Whether the observation systems are classifiable under subheading 8525.30.00, HTSUS, as television cameras, or under subheading 8528.20.00, HTSUS, as monochrome television receivers.

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.

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.

It is our position that, under section XVI, note 4, HTSUS, the components which make up the observation systems constitute functional units which are intended to contribute together to a clearly defined function, which is to observe the activity occurring in an indoor or outdoor location. We must now determine which heading in the HTSUS best describes that function.

Because the observation systems are composite goods, we must consult GRI 3(b). It 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. 54 Fed. Reg. 35127, 35128 (August 23, 1989). Explanatory Note 3(b)(VIII) (p. 4) states that:

[t]he factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.

The two components within the observation systems which may impart the essential character of those systems are the CCD camera and the video monitor. Both components play a major role in relation to the use of the observation systems, in that without either the camera or the monitor, the systems would be useless. Consequently, we cannot determine one component which singularly imparts the essential character of the observation systems.

GRI 3(c) states that:

[w]hen goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

Under GRI 3(c), the observation systems are classifiable under subheading 8528.20.00, HTSUS, as that provision occurs last in the HTSUS between it and subheading 8525.30.00, HTSUS.

HOLDING:

The observation systems are classifiable under subheading 8528.20.00, HTSUS, as monochrome television receivers.

Sincerely,

John Durant, Director
Commercial Rulings Division

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