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HQ 959710




June 9, 1998

CLA-2 RR:CR:GC 959710 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.99.60, 8471.99.90, 8524.90.40

Port Director
U.S. Customs Service
555 Battery Street
San Francisco, CA 94111

RE: Protest 2809-1996-100580; VGA Signal Converter; ADP Units; Suitable for Physical Incorporation into ADP Machines; Software; Headings 8471, 8473, and 8525; Legal Note 5(B) to Chapter 84; Legal Note 6 to Chapter 85

Dear Port Director:

The following is our decision regarding Protest 2809-1996-100580, which concerns the classification of the AverKey and Aver 1000-V under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The subject merchandise consists of the Aver 1000-V and the AverKey. Both items convert a VGA signal from an automatic data processing (ADP) machine so that computer text, graphics, and pictures can be viewed on televisions or large-screen projectors. The Aver 1000-V is a printed circuit board assembly (PCBA) inserted into an ADP machine. The AverKey contains the same PCBA in a plastic chassis so that it can be connected to an ADP machine externally. The AverKey is equipped with "ports" to allow direct connection from the user's VGA chip and CPU to the external monitor or television screen. The merchandise is unable to transmit or receive RF signals for television purposes. According to the information provided, both types of merchandise are imported with 3.5 inch software discs.

The merchandise was entered in 1995 under subheading 8473.30.10, HTSUS, as parts and accessories for automatic data processing (ADP) machines. The entries were liquidated on February 9 and 16, 1996, under subheading 8471.99.90, HTSUS, as other ADP units. The protest was timely filed on May 7, 1996. Classification under subheading 8525.10.20, HTSUS, as television transmission apparatus, is also under consideration.

The 1995 subheadings under consideration, are as follows:

8471.99: Automatic data processing machines and units thereof. . . : [o]ther: [o]ther: [o]ther:

8471.99.60: Units suitable for physical incorporation into automatic data processing machines or units thereof . . . .

Goods classifiable under this provision have a column one, general rate of duty of free.

8471.99.90: [o]ther. . . .

Goods classifiable under this provision have a column one, general rate of duty of 3 percent ad valorem.

8473.30: Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8469 to 8472: Parts and accessories of the machines of heading 8471: Not incorporating a cathode ray tube:

8473.30.10: Printed circuit assemblies, other than for power supplies for automatic data processing machines. . . .

8473.30.50: Other: Other. . . .

Goods classifiable under these provisions have a column one, general rate of duty of free.

8525.10.20: Transmission apparatus for . . . television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus. . . : [t]ransmission apparatus: [t]elevision . . . .

Goods classifiable under this provision have a column one, general rate of duty of 3.3 percent ad valorem.

ISSUE:

Whether the Aver 1000-V and the AverKey are classifiable as ADP units or as parts and accessories of ADP machines under the HTSUS? If the merchandise are "units", does the classification differ based upon the fact that the Aver 1000-V is suitable for physical incorporation into the ADP machine while the AverKey is used only externally to the ADP machine?

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.

If the merchandise meets the terms of "units" under heading 8471, then they cannot be classified as "parts and accessories" of ADP machines under heading 8473. In 1995, Legal Note 5(B) to Chapter 84, HTSUS, defines units of ADP machines as follows:

Automatic 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 the following conditions:

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

(b) it is specifically designed as 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).

The Harmonized Commodity Description and Coding System Explanatory Notes (EN) 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). EN 84.71(I)(D), pages 1299-1300, states, in pertinent part, that:

This 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:

(5) Signal converting units. At input, these enable an external signal to be understood by the machine, while at output, they convert the output signals that result from the processing carried out by the machine into signals which can be used externally.

Both the Aver 1000-V and the AverKey accept a digital signal from the ADP machine and convert the output signals so that it can be used (i.e., displayed) on a television or a large-screen projector. Because of these capabilities as a signal converting unit, Customs finds that the subject merchandise meets the definition of Legal Note 5(B) to chapter 84, HTSUS, and are classifiable as ADP units under heading 8471.

It is well settled that classification is based upon the condition of an article at the time of importation. United States v. Citroen, 223 U.S. 407 (1911). The Aver 1000-V, is a PCBA designed for internal incorporation into the ADP machine and is therefore classifiable under subheading 8471.99.60, as units suitable for physical incorporation into ADP machines. The AverKey is designed to be connected to the ADP machine externally, and is therefore classifiable under subheading 8471.99.90, as other ADP units. Even though the two items perform the same function, they are classified in different subheading because of their physical differences based upon the condition of the merchandise at the time of importation.

The protestant claims that the subject merchandise is classifiable under heading 8473, HTSUS, as parts and accessories of ADP machines. Because the merchandise meets the terms of Legal Note 5(B) to chapter 84, and are classifiable as ADP units, the merchandise cannot be classified under heading 8473. We also note that the merchandise does not receive or transmit television signals that is broadcasted over the ether or through line transmission, but merely converts the ADP machine's digital signal into a format that is displayable on a television or monitor. Therefore, we find that the subject merchandise does not meet the terms of heading 8525, HTSUS, as television transmission apparatus.

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." Therefore, the 3.5 inch software disks should be classified separately under subheading 8524.90.40, HTSUS, which provides for: "[r]ecords, tapes, and other recorded media for sound or other similarly recorded phenomena . . . : [o]ther: [o]ther. . . . "

HOLDING:

The Aver 1000-V, which is a PCBA, is classifiable under subheading 8471.99.60, HTSUS, which provides for: "[a]utomatic data processing machines and units thereof. . . : [o]ther: [o]ther: [o]ther: [u]nits suitable for physical incorporation into automatic data processing machines or units thereof . . . ." Goods classifiable under this provision have a column one, general rate of duty of free.

The AverKey which is an external device, is classifiable under subheading 8471.99.90, HTSUS, which provides for: "Automatic data processing machines and units thereof. . . : [o]ther: [o]ther: [o]ther: [o]ther. . . ." Goods classifiable under this provision have a column one, general rate of duty of 3 percent ad valorem.

Based upon the application of Legal Note 6 to Chapter 85, HTSUS, the 3.5 inch software disks should be classified separately under subheading 8524.90.40, HTSUS, which provides for: "[r]ecords, tapes, and other recorded media for sound or other similarly recorded phenomena . . . : [o]ther: [o]ther. . . . " The general, column one rate of duty is 7.8 cents per square meter of recording surface."

Because reclassification of the merchandise as indicated above will partially result in the same rate of duty as claimed, you should allow the protest in part, and deny the protest in part. 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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