United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1998 HQ Rulings > HQ 960954 - HQ 961085 > HQ 961070

Previous Ruling Next Ruling
HQ 961070




October 8, 1998

CLA-2 RR:CR:GC 961070 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517.40.70

Port Director of Customs
Building #77
Jamaica, NY 11430

RE: Protest 1001-97-102414; Free View II Multimedia Delivery System

Dear Port Director:

The following is our decision regarding Protest 1001-97-102414 concerning your action in classifying and assessing duty on the Free View II Multimedia Delivery System ("Free View") under the Harmonized Tariff Schedule of the United States (HTSUS). We regret the delay of our response.

FACTS:

Based upon the limited information provided by the protestant, the Free View appears to include a 19 inch chassis fitted with "Eurocards 3U high", cabling, video and keyboard cards, and power supply. The literature indicates that it is designed to support a Bloomberg information system, itself consisting of a monitor, specialized keyboard, and controller. The systems work together to provide financial data and information from various financial news services to financial market dealing/trading rooms. The Free View delivers this information over existing structured, twisted-pair cable, and is capable of delivering high-resolution data and graphics. The Free View is capable of connecting to and supporting the Bloomberg system up to 200 meters from the framework of a public telephone network.

The merchandise was entered on October 17, 19, 24, 30, November 16, 20, 21, 24, 29, December 15, 18, 19, 21, 27, 1995, and January 2, 1996, under subheading 8471.99.15, HTSUS (the precursor to 1996 subheading 8471.80.10, HTSUS), as an automatic data processing (ADP) unit. The 22 entries were liquidated on December 27,
1996, and January 10, 17, and February 8, 1997, under subheading 8517.40.70, HTSUS (the precursor to 1996 subheading 8517.50.60, HTSUS), as other telegraphic apparatus, for carrier-current line systems.

The ACS record for the entries shows that nineteen of the entries were liquidated timely by Customs. Thereafter, Customs reliquidated these entries within the statutory 90-day period. In some cases, there was an intervening liquidation also within the statutory 90-day period under 19 U.S.C. ?1501. Three of the entries, according to the ACS record, deemed liquidated under 19 U.S.C. ?1504 and were thereafter reliquidated by Customs, apparently in the belief that 19 U.S.C. ?1501 was applicable to a deemed liquidation.

The subject protest was filed on March 28, 1997. Protestant is alleging that the entries deemed liquidated by operation of law or, in the alternative, that the merchandise was improperly classified by Customs.

ISSUE:

Whether the Free View is classifiable under subheading 8471.99.15, HTSUS, as an ADP unit, or under subheading 8517.40.70, HTSUS, as other telegraphic apparatus, for carrier-current line systems.

Whether the subject entries deem liquidate by operation of law.

LAW AND ANALYSIS:

CLASSIFICATION

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 1995 HTSUS provisions under consideration are as follows:

8471 Automatic data processing machines and units thereof; *****:

Other:

8471.99 Other:

8471.99.15 Control or adapter units.

8517 Electrical apparatus for line telephony or telegraphy, including such apparatus for carrier-current line systems; parts thereof:

8517.40 Other apparatus, for carrier-current line systems:

Other:

8517.40.70 Telegraphic.

Because the protestant claims classification of the Free View in heading 8471, HTSUS, we must consult chapter 84, note 5(B), HTSUS, which describes ADP units. It states that:

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 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 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).

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

After a review of the literature describing the Free View, it is our position that protestant has not provided sufficient information demonstrating that the Free View meets requirements (a) and (b) above, in that it is connectable to a central processing unit and it is specifically designed as part of an ADP system. Without explanation, the protestant states that classification of the Free View in heading 8471, HTSUS, is consistent with the holdings in HQ 952812, dated December 30, 1992, HQ 951165, dated October 14, 1992, and HQ 951331, dated September 18, 1992. However, based upon the limited description of the Free View, it does not appear to be similar to the items at issue in those rulings. Therefore, because the Free View does not meet the description of an ADP unit in chapter 84, note 5(B), it is precluded from classification in heading 8471, HTSUS, specifically under subheading 8471.99.15, HTSUS.

We must now determine whether the Free View is a good described by heading 8517, HTSUS. 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 85.17 (p. 1472) states that:

[t]he term "electrical apparatus for line telephony or line telegraphy" means apparatus for the transmission between two points of speech or other sounds (or of symbols representing written messages, images or other data), by variation of an electric current or of an optical wave flowing in a metallic or dielectric (copper, optical fibres, combination cable, etc.) circuit connecting the transmitting station to the receiving station.

The heading covers all such electrical apparatus designed for this purpose, including the special apparatus used for carrier-current line systems.

It is our understanding that the Free View is a dedicated system for transmission of financial market information, in the form of data and graphics, over a telephone line utilizing twisted-pair cabling. In fact, the Free View utilizes RJ 45 connectors which are used for the transmission of data over standard telephone wire. Therefore, in that the Free View is apparatus for the transmission between two points of speech or other sounds or symbols over a telephone line, we are satisfied that it is described in Explanatory Note 85.17. Consequently, we find that the Free View is classifiable in heading 8517, HTSUS, specifically under subheading 8517.40.70, HTSUS.

DEEMED LIQUIDATION

Initially, we note that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. ?1514 and 19 CFR Part 174). The final liquidations occurred between January 10 and February 8, 1997. The subject protest was filed on March 28, 1997.

Under 19 U.S.C. ?1504, as amended (see section 641, Pub. L. No. 103-182, 107 Stat. 2204), an entry not liquidated within one year from the date of entry shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record, unless liquidation is extended, as provided in that section, or suspended as required by statute or Court order.

Section 501 of the Tariff Act of 1930, as amended (19 U.S.C.

A liquidation made in accordance with section 1500 of this title or any reliquidation thereof made in accordance with this section may be reliquidated in any respect by the Customs Service, notwithstanding the filing of a protest, within ninety days from the date on which notice of the original liquidation is given or transmitted to the importer, his consignee or agent. * * *

Protestant claims that the reliquidations under 19 U.S.C. entries deemed liquidated pursuant to 19 U.S.C. ?1504. The subject protest fails with respect to nineteen of the entries.

Liquidation is the final computation or ascertainment of the duties . . . accruing on an entry." 19 C.F.R. ?159.1 (1997). Recently, the Court of International Trade ("CIT") discussed the different types of liquidation and their legal consequences. See LG Electronics U.S.A., Inc. v. United States, Slip Op. No. 97-179 (Dec. 31, 1997). As opposed to a "deemed" liquidation which occurs by operation of law within one year from the date of entry, the concept of an "automatic" liquidation was created by Customs. The CIT noted, in LG Electronics, supra, that the Customs Automated Commercial System ("ACS") is programmed to automatically liquidate entries in their 50th week, unless liquidation has been suspended or extended. When an entry liquidates automatically a notice of liquidation is issued at the duty rate deposited upon entry. The automatic liquidation procedure was instituted by Customs in order to avoid deemed liquidations and, thus, preserve the right of Customs to reliquidate an entry. The court noted that with respect to the automatic liquidations "had liquidation of the entries actually occurred" there would have been a decision by Customs. The court found that there was no decision by a Customs officer to protest. The issue before the court was whether the programming error which caused the computer to ignore the fact of suspension information was not a decision which could be protested. Also, the court had enjoined Customs from liquidating those entries. The court characterized the actions as "[a]ll that occurred here was the triggering of a notice without any individualized decision by any Customs officer to act on the entries. This is not a liquidation under the statute in effect at the time." The court was examining automatic liquidations within the context of a protestable decision.

The subject protest is distinguishable from LG Electronics. The issue here is whether an automatic liquidation is a liquidation under 19 U.S.C. ?1500 and, thus, subject to the voluntary reliquidation procedures under 19 U.S.C. ?1501. We conclude that it is and, therefore, that nineteen of the subject entries did not deem liquidate. As stated by the CIT in LG Electronics, liquidation of an entry can occur two ways: by operation of law under 19 U.S.C. ?1504(a), or by order of Customs under 19 U.S.C. ?1500. The subject entries automatically liquidated on the 50th week after the date of entry. Thereafter, within the statutory 90 day period, the entries were reliquidated. The automatic liquidations precluded the entries from liquidating by operation of law. As stated above, the LG Electronics, supra, court was only looking at automatic liquidations with respect to whether they involve a decision by a Customs officer to act on the entries and, thus, trigger the 90-day protest period in 19 U.S.C. ?1514. If the entries did not deem liquidate they can only have been liquidated pursuant to 19 U.S.C. ?1500. That is the only other available vehicle to liquidate an entry. A liquidation made in accordance with 19 U.S.C. ?1500 may be reliquidated by Customs within 90 days from the original liquidation. Thus, we conclude that the subject nineteen entries were properly and timely reliquidated by Customs.

Three of the entries subject to this protest, however, did liquidate by operation of law. Regarding entries no. K88-XXXX466-2, K88-XXXX467-0, and K88-XXXX626-1, the subject protest must be granted. The ACS record for entries 466-2 and 467-0 shows that the entries were liquidated two times. Liquidation would have occurred on October 11, 1996, if Customs had not unset it. Thereafter, both entries deemed liquidated on October 18, 1996, one year after the date of entry. These were the first liquidations. The entries were liquidated on January 10, 1997, within 90 days from the date of the deemed liquidation. As to entry 626-1, the ACS record shows that liquidation would have occurred on December 27, 1996, but was unset by Customs without any further action. Thereafter the entry was liquidated on January 10, 1997. The instant entry deemed liquidated on January 2, 1997 (one year after the date of entry). Where liquidation has occurred by operation of law, Customs cannot reliquidate pursuant to 19 U.S.C. ?1501 because a deemed liquidation is not a liquidation made in accordance with 19 U.S.C. ?1500. The ability to reliquidate under ?1501 is limited to liquidations that are done pursuant to 19 U.S.C. ?1500. Thus, these three entries deemed liquidated as entered.

HOLDING:

CLASSIFICATION

The Free View II Multimedia Delivery System is classifiable under subheading 8517.40.70, HTSUS, as other telegraphic apparatus, for carrier-current line systems. With respect to the classification issue, the protest should be DENIED.

DEEMED LIQUIDATION

The subject protest should be GRANTED with respect to entries K88-XXXX467-0, K88-XXXX626-1 and K88-XXXX466-2. The protest should be DENIED, with respect to the deemed liquidation argument, for the other 19 entries.

In accordance with Section 3(A)(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the Protestant no later than 60 days from the date of this letter. Any reliquidation of these entries in accordance with this 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

Previous Ruling Next Ruling

See also: