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HQ 959575




May 6, 1997

CLA-2 RR:TC:MM 959575 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8470.50.00

Port Director of Customs
300 S. Ferry Street
Terminal Island, CA 90731

RE: Protest 2704-96-100029; Everest Transaction System; POS Terminal;
Section XV, Note 3; Composite Machine; NY 855636; HQ 086121;
8471.92.10

Dear Port Director:

The following is our decision regarding Protest 2704-96-100029 concerning your action in classifying and assessing duty on the Everest Transaction System under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The merchandise consists of the Everest Transaction System, which is imported into the U.S. with the same number of Tranz 330 point of sale (POS) terminals. It is our understanding that the System is designed for use as a debit-payment transaction device for POS terminals. It enables existing POS terminals to register bank, credit, or private label cards, allowing consumers to initiate their own transactions through a built-in card reader and PIN-entry device. The System also possesses the capability to capture data and transfer funds. It incorporates a Motorola 68302 microprocessor, 12K ROM, 2 x 16 VFD dot matrix display, card reader, 18-key keyboard, and two peripheral connector ports.

The System, imported with POS terminals, was entered on June 17, 1995, under subheading 8470.50.00, HTSUS, as a cash register. The entry was liquidated on October 6, 1995, under subheading 8471.92.10, HTSUS, as a combined input/output unit. The protest was timely filed on January 4, 1996.

The subheadings under consideration are as follows:

8471.92.10: [a]utomatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included: [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:
[c]ombined input/output units.

The 1995 general, column one rate of duty for goods classifiable under this provision is 3 percent ad valorem.

8470.50.00: [c]alculating machines; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers:
[c]ash registers.

Goods classifiable under this provision receive duty-free treatment.

ISSUE:

Whether the System, imported with POS terminals, constitutes a composite machine and is classifiable under subheading 8470.50.00, as a cash register.

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.

Section XVI, note 3, HTSUS, states that:

[u]nless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.

It is our position that, if imported with POS terminals, the System and the POS terminal constitute a composite machine as defined in section XVI, note 3, HTSUS. As the System possesses a special port so as to connect to a terminal, the two machines are designed to be fitted together to perform complementary functions (i.e., operating as a fully functional POS terminal). Because the POS terminal performs the principal function of the two machines, both machines are classifiable under subheading 8470.50.00, HTSUS. This determination is made based upon the description of the merchandise and a full examination of the entry documents. See NY 855636, dated August 24, 1990, in which slip printers imported with POS terminals were held to be composite machines and classifiable under subheading 8470.50.00, HTSUS. See also HQ 086121, dated March 20, 1990.

As the System constitutes a composite machine with the POS terminal with which it is imported, it is no longer described by subheading 8471.92.10, HTSUS, and is therefore precluded from classification under that provision.

HOLDING:

The Everest Transaction System, imported into the U.S. with the same number of Tranz 330 point of sale (POS) terminals, is classifiable under subheading 8470.50.00, HTSUS, as a cash register.

The protest should be AFFIRMED 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 this 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
Tariff Classification

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