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NY 806637





Feburary 10, 1995

CLA-2-84:S:N:N1:110 806637

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.20.0090; 8524.90.4090; 9801.00.10; 8471.91.8085; 8471.92.3200; 8471.92.2000; 8471.92.8880

Mr. John-Paul Evans
Delmar International Inc.
3270 Orlando Drive
Mississauga, Ontario
L4VIC6, Canada

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of notebook and desktop computers from Canada.

Dear Mr. Evans:

In your letter dated January 26, 1995, on behalf of Vtech Computer Systems, you requested a ruling on the status of notebook and desktop computers from Canada under the NAFTA.

The goods in question involves notebook computers and desktop computers that are assembled in Canada with components that are manufactured in various countries such as South Korea, Japan, China, Singapore, Malaysia, and the United States.

The notebook computers, such as models 486 Notebook Series, and the Laser LT421, are assembled in Canada from components that originate in various countries. These computers incorporate flat panel displays, keyboards, processor units, storage devices, and power supplies, all in one common housing. They also include in the shipment software, such as DOS and WINDOWS, that is on magnetic media.

The desktop computers, such as models Laser 486 LP VL desktop series, and the Laser 486 VL tower series, are basically desktop or personal tower series processors, that consist of a processor unit (with incorporated storage units and power supplies), a CRT color monitor, a keyboard, a mouse, and software. Like the notebook computers, these units are assembled in Canada from components of various countries. Unlike the notebook computers, the desktop computers incorporate a processor unit, display unit, keyboard, and an additional input device, all of which are connectable, but in their own housings.

The components for both the notebook and desktop computers are claimed to originate from the following countries:
a. CPU and BIOS chips USA b. RAM chips Korea S. c. Motherboard w/o CPU chip China d. Floppy Disk Drive Japan e. Hard Disk Drive Singapore/Malaysia f. Power Supply China g. Computer casing China h. Keyboard China i. Software U.S.A. j. Fax/modem card U.S.A. k. Monitor S. Korea l. Mouse U.S.A. m. Research, Devl. & Assembling Canada
The applicable tariff provision for the Notebook 486 series of computers will be 8471.20.0090, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for digital automatic data processing machines, containing in the same housing at least a central processing unit and an input and output unit. The rate of duty is 3.5 percent ad valorem.

The software, noting Legal Note 6 to Chapter 85, is separately classifiable under HTS number 8524.90.4090. The duty rate is 7.8 cents per square meter of recording surface. Since the software is claimed to be of US origin, and if properly documented at time of importation, the software may become eligible for classification under HTS number 9801.00.10, as American Goods Returned.

The tariff language under 8471.91-8471.93 requires that processor, input, output, and storage units that are in their separate housings, be separately classified, noting the language of "whether or not entered with the rest of a system".

The applicable tariff provision for the processor portion of the desktop computers will be 8471.91.8085, HTS, which provides for other digital processing units. The rate of duty will be 3.5 percent ad valorem.

The applicable tariff provision for the CRT color monitor used with the desktop computer, will be 8471.92.3200, HTS, which provides for other display units, with color cathode-ray tube (CRT). The rate of duty will be 3 percent ad valorem.

The applicable tariff provision for the desktop keyboard will be 8471.92.2000, HTS, which provides for keyboards. The rate of duty will be free.

The applicable tariff provision for the desktop computer mouse will be 8471.92.8880, as other input units. The rate of duty will be 3 percent ad valorem. Since this article is claimed to be of US origin, and if properly documented at time of importation to be American Goods Returned, the mouse may be eligible under HTS number 9801.00.10, and thus free of duty.
The applicable tariff provision for the desktop computer software will be 8524.90.4090, HTS, which provides for other recorded media. The rate of duty will be 7.8 cents per square meter of recording surface. Since the software is claimed to be of US origin, and if properly documented at time of importation to be American Goods Returned, the software may be eligible under HTS number 9801.00.10, and thus free of duty.

NAFTA APPLICABILITY

Each of the non-originating materials used to make the Notebook computers has satisfied the changes in tariff classification required under HTSUSA General Note 12(t)/84.191. The Notebook computers will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements. Since the software is claimed to be originating material (U.S.A.), it would be eligible under NAFTA, as per the requirements of HTSUSA General Note 12 (b)(i).

As the completed desktop computers are classifiable under such HTS numbers as 8471.91.8085, 8471.92.3200, 8471.92.2000, and 8471.92.8880, each of these units must undergo a change in tariff classification if non-originating materials are used to assemble these units.

Each of the non-originating materials used to make the processor portion of the desktop computers has satisfied the changes in tariff classification required under HTSUSA General Note 12 (t)/84.191. The desktop processor units will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

A change in tariff classification does not occur for the CRT monitor and keyboard units for the desktop computer series. Therefore, the CRT monitor and keyboard units are not eligible for preferential tariff treatment under the NAFTA pursuant to General Note 12(b)(ii))A), HTSUS.

The software for the desktop computers under HTS number 8524, and the mouse for the desktop computer under 8471.92.8880, are claimed to be of US origin. If properly documented at time of importation that these are in fact originating materials, they would be eligible under NAFTA, as per the requirements of General

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is imported. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.

Sincerely,

Jean F. Maguire
Area Director

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