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HQ 959651




July 9, 1997

CLA-2 RR:TC:MM 959651 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 8443.59.50

Mr. Charles Spoto
Fritz Companies, Inc.
150-20 132nd Avenue
Jamaica, NY 11430

RE: Digital Color Printers; Printing Machinery; Automatic Data Processing (ADP) Units; Functional Unit; Legal Note 5 to Chapter 84; Legal Note 4 to Section XVI; EN 84.43; General EN to Chapter 84; HQs 088024 and 957491

Dear Mr. Spoto:

This is in response to your letter dated January 18, 1996, to the then Regional Commissioner of Customs, New York, on behalf of Bayer Corporation-AGFA Division, concerning the tariff classification of the AGFA Chromapress digital color printing system ("Chromapress") under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter was referred to this office for a response. We regret the delay in responding.

FACTS:

The merchandise, labeled as the Chromapress, is a 4-color digital printing system used in the graphic arts field for short-run, full color applications at high speeds. The Chromapress is an example of a relatively new type of commercial product known in the industry as short-run printing with digital presses or "digital print-on-demand". Instead of requiring the costly intermediate steps, such as mechanical art, film and plate-making, commonly associated with color printing, the Chromapress prints directly from digital data to paper. Images, text and line art can be created on any standard desktop publishing system that produces PostScript files. Completed jobs are sent to the Chromapress where the Raster Image Processor (RIP) converts the images into bitmaps which are stored internally and sent to CMYK (cyan, magenta, yellow, and black) image memory for printing on the web-fed printing engine containing two sets of four printing units (CMYK). One set of printing units is on each side of the paper, allowing for duplex printing in a single pass.

The Chromapress consists of several subsystems: a Macintosh design workstation/ server; a RIP multiprocessor; an engine controller; Chromapress print engine; a paper handling system; a cooling system; and software (ChromaPost, ChromaWatch, and ChromaWrite). The work station/server allows the user through the ChromaPost software to create a job description file containing OPI links, color management, and printing parameters, binding method and other job information. The work station/server also allows the user through the ChromaWatch, and ChromaWrite software to access all press controls, and track and manage jobs.

The paper handling system holds the paper rolls (the print web) used during the operation of the Chromapress. The paper handling system is designed so that paper rolls may be changed when a different paper size or grade is needed for a new job. The handling system also conditions the paper by monitoring the moisture content. The web drive motors in the print engine tower feed the paper from the paper handling system. The print engine tower contains eight print units (four on each side of the paper web) which utilize an array of light emitting diodes (LEDs) to place an electrostatic charge to distribute fine particles of pigment onto the paper. The paper is then cooled and cut before leaving the print tower. The paper is then cut into paper sheets, separating test prints from the finished product as it leaves the printing tower.

ISSUE:

Is the Chromapress digital color printer classifiable as an automatic data processing (ADP) printer, or as printing machinery 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 shall be determined according to the terms of the headings and any relative section or chapter notes.

Legal Note 4 to Section XVI, 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." The Chromapress consists of several subsystems (a Macintosh design workstation/ server; a RIP multiprocessor; an engine controller; Chromapress print engine; a paper handling system; and a cooling system) intended to contribute together to the clearly defined function of printing.

It has been suggested that the Chromapress is an ADP printer classifiable under heading 8471, HTSUS. Heading 8471, HTSUS, is governed by the terms of Legal Note 5 to Chapter 84, HTSUS, which provides, in relevant part:

(B) Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. Subject to paragraph (E) below, a unit is to be regarded as being a part of a complete system if it meets all the following conditions:

(a) It is of a kind solely or principally used in an automatic data processing system;

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

(c) It is able to accept or deliver data in a form (codes or signals) which can be used by the system.

(D) Printers, keyboards, X-Y coordinate input devices and disk storage units which satisfy the conditions of paragraphs (B)(b) and (B)(c) above, are in all cases to be classified as units of heading 8471.

(E) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.

It has been suggested that based upon Legal Note 5(B) and 5(D), the Chromapress is an ADP printer. However, the Chromapress is more than just an ADP printer, it is an entire printing system which acts as a functional unit designed to replace off-set printing presses. Legal Note 5(E) to chapter 84 clearly states that machines performing a specific function are to be classified in the heading appropriate to their respective functions.

The issue remains which of the above legal notes determines the classification of the subject merchandise. In HQ 957491, dated July 31, 1996, Customs stated that Legal Note 5(D) must be read in light of Legal Note 5(E) to chapter 84, HTSUS. Customs concluded that "while note 5(D) negates the sole or principal use requirement when considering the classification of printers, keyboards, X-Y coordinate input devices and disk storage units, note 5(E) provides a separate prerequisite to the classification of any ADP machine and, therefore, ADP unit."

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, the ENs 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 FR 35127, 35128 (August 23, 1989). General EN for Chapter 84, states that:

(E) MACHINES INCORPORATING OR WORKING IN CONJUNCTION WITH AN AUTOMATIC DATA PROCESSING MACHINE AND PERFORMING A SPECIFIC FUNCTION

In accordance with the provisions of the last paragraph of Note 5 to Chapter 84, the following classification principles should be applied in the case of a machine incorporating or working in conjunction with an automatic data processing machine, and performing a specific function:

(i) A machine incorporating an automatic data processing machine and performing a specific function other than data processing is classifiable in the heading corresponding to the function of that machine or, in the absence of a specific heading, in a residual heading, and not in heading 84.71.

(ii) Machines presented with an automatic data processing machine and intended to work in conjunction therewith to perform a specific function other than data processing, are to be classified as follows: the automatic data processing machine must be classified separately in heading 84.71 and the other machines in the heading corresponding to the function which they perform unless, by application of Note 4 to Section XVI or Note 3 to Chapter 90, the whole is classified in another heading of Chapter 84, Chapter 85 or of Chapter 90 [emphasis added].

According to the sales literature, the Chromapress allows the user "to run a wide range of printed materials. Almost any industry can use Chromapress to create short-run color documents--from real estate brochures to software documentation to full-color magazines. . . . Chromapress breaks down the traditional cost and time barriers to efficient short-run color printing." On December 5, 1993, The New York Times published an article titled "Gutenberg Goes Digital", which states, in part, that: "[a] new generation of presses is emerging that eliminates the metal plates, creating flexibility that should allow shorter press runs and even let the publisher make on-the-fly changes. A full-color advertising circular, for example, could carry a message tailored to each individual customer. . . . Two of the entrants in the plateless-press market are the E-Print 1000 by Indigo, Inc., of Rehovot, Israel , and the Chromapress by AGFA...." In an Print on Demand Business, September 1995 article, "Opportunities Abound in Digital Book Production", an AGFA line manager for Chromapress stated that the Chromapress and other products based on the Xeikon DCP-1 [a competitor's product] print engine are ideally suited for book publishing because of its web-fed perfecting (duplexing) printer.

Based upon the information in the above-cited articles, we find that the Chromapress is a functional unit by application of Legal Note 4 to Section XVI and Legal Note 5(E) to chapter 84, and is performing the specific function of short-run four color printing. Heading 8443, provides for printing machinery. Therefore, we find that the Chromapress is classifiable under heading 8443, HTSUS, as printing machinery.

We note that it has been suggested that the EN 84.43 for this heading limits printing machinery to those types of machines that print by means of the type, printing blocks, plates or cylinders of heading 8442, HTSUS. However, nothing in the legal text of heading 8443 provides for such limitations. Furthermore, "[i]t must also be remembered that the tariff statutes were enacted 'not only for the present but also for the future, thereby embracing articles produced by technologies which may not have been employed or known to commerce at the time of the enactment * * *.'" Nec America, Inc. v. United States, 8 CIT 184, 186(1984), citing Corporacion Sublistatica, S.A. v. United States, 1 CIT 120, 126, 511 F.Supp. 805, 809 (1981); See also Davis Turner & Co. v. United States, 45 CCPA 39, 41, C.A.D. 669 (1957). See also Simmon Omega, Inc. v. United States, 83 Cust.Ct. 14, C.D. 4815 (1979), and Trans-Atlantic Co. v. United States, 471 F.2d 1397, 60 CCPA 100, C.A.D. 1088 (1973), in which the courts have held that technological advancements and "improvement in the design of an article does not militate against its continuing to be a form of the named articles." See HQ 088024 (January 3, 1991), in which Customs held that the 3M Digital Matchprint Color Proofing System which uses digital data to produce proofs on paper stock for the printing industry was a technologically advanced, special purpose, printing proofing system and was classifiable under subheading 8443.50.50 [now 8443.59.50], HTSUS, as other printing machinery.

We further note that the merchandise includes software. Legal Note 6 to chapter 85, HTSUS, provides that "[r]ecords, tapes and other media of heading 8523 or 8524 remain classified in those headings, whether or not they are entered with the apparatus for which they are intended." In HQ 950675, dated January 7, 1992, Customs held that software, whether imported in floppy disk form or downloaded onto the system's hard disk drive, was classifiable under heading 8524, HTSUS, whether or not entered with the rest of the system. Therefore, the subject software should be classified separately under heading 8524, HTSUS. At the time of entry, the proper subheading shall be determined based upon what type of media the software is recorded on and whether or not it contains sounds and images.

HOLDING:

Based upon the application of Legal Note 4 to Section XVI, the AGFA Chromapress digital color printer is classifiable under subheading 8443.59.50, HTSUS, which provides for: "[p]rinting machinery, including ink-jet printing machines, other than those of heading 8471. . . : [o]ther printing machinery: [o]ther: [o]ther. . . ." The column one, general rate of duty is 1.3 percent ad valorem.
The software is classified within heading 8524, HTSUS, as recorded media. At the time of entry, the proper subheading shall be determined based upon what type of media the software is recorded on and whether or not it contains sounds and images.

Sincerely,

John Durant, Director
Tariff Classification Appeals Division

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