HQ 956855 - Protest 3501-93-100445; Incomplete Thermal Slip Printers; Controller Boards; Chapter 84, Note 5(B); ADP Units; HQs 955263 and 085226; Explanatory Notes 84.70(C), 84.73, 84.71(D), and General Explanatory Note (VII) to Section XVI; Kores Manufacturing Inc. v. U.S.; Parts; Section XVI, Notes 2 and 4; Functional Units; 8473.29.00 - United States International Trade Commision Rulings

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HQ 956855

May 1, 1995

CLA-2 R:C:M 956855 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.92.70; 8471.99.15

District Director
U.S. Customs Service
110 South 4th Street, Rm. 154
Minneapolis, MN 55401

RE: Protest 3501-93-100445; Incomplete Thermal Slip Printers; Controller Boards; Chapter 84, Note 5(B); ADP Units; HQs 955263 and 085226; Explanatory Notes 84.70(C), 84.73, 84.71(D), and General Explanatory Note (VII) to Section XVI; Kores Manufacturing Inc. v. U.S.; Parts; Section XVI, Notes 2 and 4; Functional Units; 8473.29.00

Dear District Director:

The following is our decision regarding Protest 3501-93-100445 concerning your action in classifying and assessing duty on incomplete thermal slip printers under the Harmonized Tariff Schedule of the United States (HTSUS). In preparing this ruling, we have considered a supplemental submission dated February 13, 1995, from counsel to the protestant.

FACTS:

The merchandise consists of incomplete thermal slip printers (model no. XS21) and controller boards, imported together in equal numbers. Slip printers are computer controlled devices designed to print a memo on a heat sensitive paper in rolls approximately 60 mm in width x 500 m in length. The printer mechanism is a 128 dot thermal printer with a resolution of 2.7 dots/mm. The unit is capable of printing all alphanumeric characters as well as custom graphics such as corporate logos and seasonal symbols. The printers are incorporated into various products, including lottery ticket dispensers, automatic tellers, medical equipment, credit card payment machines, and factory floor process control systems. It is our understanding that the printers are principally used with cash register/point-of sale machines. In all applications, the printer must be connected to a central processing unit (CPU) to operate. The printers are imported without their controller boards attached, and they do not possess any power supply or housing. When incorporated into finished equipment, the printer is controlled by a CPU working in conjunction with the controller board. The printer is connected to the CPU via a RS232C or Centronics interface, interface methods which are the familiar serial and parallel ports found on most personal computers. The printer driver also integrates directly into the Windows-based software environment.

The controller board is an electronic device which translates standard ASCII signals transmitted by the CPU into characters and other codes of use to the printer. The principal function of the controller board is to direct and regulate the operation of the printer by transmitting information from the CPU to the printer and instructing the printer what and how to print. The controller board includes several components necessary to adapt the data from the CPU into printed characters. In addition to data receiving and sending circuitry, it includes the character generator, media transport control mechanisms, the paper cutting signaling device, and circuitry to report printer status back to the CPU. The controller board consists of a printed circuit board with subsidiary boards rigidly attached to the larger board.

The merchandise was entered under subheading 8471.92.70, HTSUS, as other automatic data processing (ADP) printer units. The entries were liquidated on August 27, 1993, under subheading 8473.29.00, HTSUS, as other parts of the machines of heading 8470, HTSUS. The protest was timely filed on September 22, 1993.

ISSUE:

Whether the incomplete thermal slip printers are classifiable under subheading 8473.29.00, HTSUS, as other parts of the machines of heading 8470, HTSUS, or under subheading 8471.92.70, HTSUS, as other ADP printer units.

Whether the controller boards are classifiable under subheading 8473.29.00, HTSUS, as other parts of the machines of heading 8470, HTSUS, or under subheading 8471.99.15, HTSUS, as control or adapter units.

Whether the incomplete thermal slip printers and the controller boards, imported together in equal numbers, are classifiable as functional units under subheading 8471.92.70, HTSUS, as other ADP printer units.

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.

The subheadings under consideration are as follows:

8473.29.00: [p]arts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8469 to 8472: [p]arts and accessories of the machines of heading 8470: [o]ther.

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

8471.92.70: [a]utomatic data processing machines and units thereof; . . . : [o]ther: [i]nput or output units, whether or not entered with the rest of a system and whether or not containing storage units in the same housing: [o]ther: [p]rinter units: [o]ther.

Goods classifiable under this provision receive duty-free treatment.

8471.99.15: [a]utomatic data processing machines and units thereof; . . . : [o]ther: [o]ther: [c]ontrol or adapter units.

Goods classifiable under this provision receive duty-free treatment.

Chapter 84, note 5(B), HTSUS, states that:

[a]utomatic data processing machines may be in the form of systems consisting of a variable number of separately housed units. A unit is to be regarded as being a part of the complete system if it meets all of the following conditions:

(a) It is connectable to the central processing unit either directly or through one or more other units; and

(b) It is specifically designed to be part of such a system (it must, in particular, unless it is a power supply unit, be able to accept or deliver data in a form (code or signals) which can be used by the system).

Such units entered separately are also to be classifiable in heading 8471.

INCOMPLETE THERMAL SLIP PRINTERS

Based upon chapter 84, note 5(B), HTSUS, it is our position that the printers are ADP units. They are connectable to a CPU indirectly through the controller board, and they are designed to be a part of an ADP system. In particular, through the use of the controller board, they are able to accept data in a form which can be used by an ADP system. Because they are imported without their power supply, housing, or controller board attached, the printers are described under subheading 8471.92.70, HTSUS, as other (other than assembled) printer units. See HQ 955263, dated January 19, 1994, and HQ 085226, dated October 26, 1989.

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). In part, Explanatory Note 84.70(C) (p. 1295) states:

(C) CASH REGISTERS

This group comprises cash registers whether or not incorporating a calculating device. . .

They may also incorporate or work in conjunction with devices such as multipliers for increasing their calculating capacity, calculators of change due, automatic change dispensers, trading stamp dispensers, credit card readers, check digit verifiers, or appliances for transcribing all or part of the data on transactions onto data media in coded form.

This heading also covers cash registers working in conjunction, on-line or off-line, with an automatic data processing machine and cash registers which use, for example, the memory and microprocessor of another cash register (to which they are linked by cable) to perform the same functions.

In part, Explanatory Note 84.73 (p. 1304) states that:

[s]ubject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), this heading covers parts and accessories suitable for use solely or principally with the machines of heading 84.69, 84.70, 84.71, or 84.72. . .

Whether an article is a part of another article depends on the nature of the so-called "part" and its usefulness, function and purpose in relation to the article in which it is designed to serve. Kores Manufacturing Inc. v. U.S., 3 CIT 178, 179 (1982), aff'd appeal No. 82-83 (C.A.F.C. 1983).

Based upon the descriptions given in Explanatory Notes 84.70 and 84.73, we find that the printers are also described under subheading 8473.29.00, HTSUS, as parts of cash registers/point-of-sale terminals. As they print out necessary information for the user of the terminals, they are essential to the completion of those articles.

Section XVI, note 2, HTSUS, states that:

[s]ubject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:

(a) Parts which are goods included in any of the headings of chapters 84 and 85 (other than headings 8485 and 8548) are in all cases to be classified in their respective headings;

(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;

(c) All other parts are to be classified in heading 8485 or 8548.

In accordance with section XVI, note 2(a), HTSUS, because the printers are goods described under subheading 8471.92.70, HTSUS, they are so classifiable. The printers are precluded from classification under subheading 8473.29.00, HTSUS.

CONTROLLER BOARDS

In part, Explanatory Note 84.71(D) (p. 1299) states:

(D) SEPARATELY PRESENTED UNITS

[t]his heading also covers separately presented constituent units of data processing systems. Constituent units are those defined in Parts (A) and (B) above as being parts of a complete system.

Apart from central processing units and input and output units, examples of such units include:

(4) Control or adaptor units such as those to effect interconnection of the central processing unit to other digital data processing machines, or to groups of input or output units which may comprise visual display units, remote terminals, etc.

The controller boards meet the definition of control or adapter units given in Explanatory Note 84.71(D). Their function is to effect the interconnection of the CPU to the subject printers. They also meet the terms of chapter 84, note 5(B), HTSUS, for ADP units. Therefore, the controller boards are classifiable under subheading 8471.99.15, HTSUS, as control or adapter units. See HQ 085226.

With regard to classification under subheading 8473.29.00, HTSUS, as parts of heading 8470, HTSUS, we note that the controller boards are parts of the subject printers, which are parts of the cash registers/point-of-sale terminals. Therefore, the controller boards are more specifically described as parts of printer units. However, based upon section XVI, note 2, HTSUS, because the controller boards are goods classifiable under subheading 8471.99.15, HTSUS, they are precluded from classification as parts.

INCOMPLETE THERMAL SLIP PRINTERS and CONTROLLER BOARDS AS FUNCTIONAL UNITS

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 claimed that the incomplete thermal slip printers and the controller boards constitute functional units, in that they contribute together to function as an unassembled printer unit under subheading 8471.92.70, HTSUS.

In part, General Explanatory Note (VII) to section XVI, HTSUS (p. 1133), states:

(VII) FUNCTIONAL UNITS

(Section Note 4)

[t]his Note applies when a machine (including a combination of machines) consists of separate components which are intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or, more frequently, Chapter 85. . .

(emphasis supplied).

Because the controller board is a part of the printer, and will be attached to the printer before it is operational, it is not a separate, "individual component" and therefore, with the incomplete printer unit, cannot constitute a functional unit. To hold otherwise would allow parts and the articles to which they are parts, imported together but unattached, to constitute functional units, thereby expanding the meaning of section XVI, note 4, HTSUS, and contradicting the rules set forth with regard to the HTSUS.

HOLDING:

The incomplete thermal slip printers are classifiable under subheading 8471.92.70, HTSUS, as other ADP printer units.

The controller boards are classifiable under subheading 8471.99.15, HTSUS, as control or adaptor units.

Because reclassification of the merchandise as indicated above will result in a lower rate of duty than claimed, you are instructed to GRANT the protest in full.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act, and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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See also:

Tariff No.: 8473.29.00 - Parts and accessories of machines of heading 8470, nesi