HQ 957321 - Zing Interactive System; Signal Reading and Transmitting Device; Telephone Dialing Device; Hand-Held Receiving, Viewing, and Transmitting Unit; GRIs 3(b) and (c); Set; Explanatory Notes 3(b)(VIII) and (X); HQs 956654, 956518, 088044, 952835, 956490, 953472; 8517.40.50 - United States International Trade Commision Rulings

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HQ 957321

December 12, 1994

CLA-2 CO:R:C:M 957321 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8543.80.95

Mr. Frank R. Samolis
Patton Boggs, L.L.P.
2550 M Street, N.W.
Washington, D.C. 20037-1350

RE: Zing Interactive System; Signal Reading and Transmitting Device; Telephone Dialing Device; Hand-Held Receiving, Viewing, and Transmitting Unit; GRIs 3(b) and (c); Set; Explanatory Notes 3(b)(VIII) and (X); HQs 956654, 956518, 088044, 952835, 956490, 953472; 8517.40.50

Dear Mr. Samolis:

This is in response to your letter of November 15, 1994, on behalf of Zing Systems, LP, concerning the classification of certain components of the Zing interactive system under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The merchandise consists of components of the Zing interactive system, designed to enable cable-TV customers to participate in interactive programming. It is a three-part system consisting of a signal reading and transmitting device, a hand-held receiving, viewing, and transmitting unit, and a telephone dialing device. In HQ 956654, issued to you on November 3, 1994, on behalf of Zing Systems, LP, we provided the classification of the Zing interactive system and each of its components. You now request that we issue a decision on the classification of the signal reading and transmitting device, and the telephone dialing device, imported together and put up together for retail sale. You state that the hand-held receiving, viewing, and transmitting device will not be imported with the other two components.

In use, the signal reading and transmitting device is connected to a television or video cassette recorder (VCR), and reads data encrypted on the vertical blanking interval of the 2
television picture or video cassette, transmitting the data via infrared signal to the hand-held unit. The device is not similar to a cable-TV converter or decoder, and it does not receive or transmit an RF signal; its signal must be in baseband form. Also, the device is able to function with programming appearing on encrypted video cassettes; television reception is therefore not necessary.

The hand-held receiving, viewing, and transmitting unit, which will not be imported with the other two components, emits a sound when data is being transmitted to it, and displays the data received in the form of a text message on a 4-line liquid crystal display (LCD) screen. It can hold twelve such screens of data in its display memory. The user responds to the displayed message through the unit's keypad. The response is stored in a memory chip in the unit, and the user can use the unit to transmit stored information via infrared signal to the telephone dialing device. The hand-held unit does not control any functions; it only serves to receive, store, and transmit data.

The telephone dialing device utilizes a modem to establish a telephone link, and transmits the user's response back to the television programmer or a Zing company database. The user may respond to a variety of prompts from television advertisers and programmers. However, the device cannot be connected to a computer and is not designed to function as a two-way communications link. Also, the device cannot be used to dial any telephone number. It will only dial pre-programmed telephone numbers based upon the information it receives via infrared signal from the hand-held device.

The subheadings under consideration are as follows:

8517.40.50: [e]lectrical apparatus for line telephony or telegraphy, including such apparatus for carrier-current line systems; parts thereof: [o]ther apparatus, for carrier-current line systems: [o]ther: [t]elephonic.

The general, column one rate of duty for goods classifiable under this provision is 8.5 percent ad valorem.

8543.80.95: [e]lectrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: [o]ther machines and apparatus: [o]ther:
[o]ther.

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

ISSUE:

Whether the signal reading and transmitting device, and the telephone dialing device, put up together for retail sale, are classifiable as a set under the HTSUS.

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's). GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

In HQ 956654, issued to you on November 3, 1994, we held that the Zing signal reading and transmitting device is classifiable under subheading 8543.80.95, HTSUS. We also held that the Zing telephone dialing device is classifiable under subheading 8517.40.50, HTSUS.

To determine whether the two components are classifiable together as a set, 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 or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are generally indicative of the proper interpretation of these headings. 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. Therefore, for example, six fondue forks cannot be regarded as a set within the meaning of this Rule;

(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).

In HQ 965654, we held that all three of the components which make up the Zing interactive system, put up together for retail sale, constitute a set. The components are classifiable under two different headings; they are put up together to meet the activity of carrying out the interaction between the user and television and advertising programmers; and they are put up for sale directly to users.

Based upon the above criterion, it is our position that the signal reading and transmitting device, and the telephone dialing device, together meet the first and third requirements of Explanatory Note 3(b)(X). As the two components are classifiable in different headings and are put up for sale directly to users, the question is whether they are put up together to carry out a specific activity.

In HQ 956518, dated September 22, 1994, we dealt with the classification of a children's video learning aid called "Toby's Wonder Bone", which consisted of a video cassette and a stuffed dog possessing a computer chip. The dog would receive signals from the video cassette while in operation, allowing the dog to respond in various ways to actions, scenes, and conversations on the video cassette. Missing from these components was a plastic bone-shaped module. The module allowed children to interact with the dog and the video cassette by their pressing pads on the module to answer questions posed by the video cassette. Without the module, the children would be unable to interact with the dog and the video cassette. Even without the module, we held that the dog and the video cassette constituted a set under GRI 3(b) because they carry out the activity of educating children.

Similarly, even though the two Zing components are imported together without the hand-held unit, it is our position that they are dedicated for use to carry out the interaction between the user and television and advertising programmers. It is our understanding that the two components cannot be used for any other purpose. Therefore, under GRI 3(b), the two Zing components constitute a set. For rulings with similar holdings, see HQ 088044, dated April 4, 1991; HQ 952835, dated March 18, 1993; HQ 956490, dated August 19, 1994; and HQ 953472, dated March 21, 1994.

We must now determine which of the two components impart the essential character of the set. 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.

As with our holding in HQ 956654 that none of the three components of the complete set in that case imparted its essential character, we find that neither of the two components impart the essential character of the set in this case. Therefore, we must resort to GRI 3(c) which 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.

Because subheading 8543.80.95, HTSUS, occurs last in numerical order between it and subheading 8517.40.50, HTSUS, under GRI 3(c), the set is classifiable under that provision.

HOLDING:

The two components of the Zing interactive system, put up together for retail sale, constitute a set under the HTSUS. The set is classifiable under subheading 8543.80.95, HTSUS, as an other electrical machine, having an individual function, not specified elsewhere under chapter 85, HTSUS.

Sincerely,

John Durant, Director
Commercial Rulings Division

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