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HQ 965529




June 25, 2002
CLA-2 RR:CR:GC 965529 BJB

CATEGORY: CLASSIFICATION

TARIFF NO.: 8520.90.00; 8523.90.00

Mr. Sidney N. Weiss

675 Third Avenue

New York, NY 10017

RE: MP3 Music Recorder/Player Set; Internal flash memory

Dear Mr. Weiss:

This is in response to your letter of March 12, 2002, on behalf of Toshiba America Consumer Products Inc. (“Toshiba”), to the Customs National Commodity Specialist Division, New York, requesting the classification of an MP3 recorder/player, Model MEA-220, 64 MB flash memory card, CD software, owner’s manual, USB cable, headphones, and one AAA alkaline battery under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The Toshiba MP3 recorder/player, Model MEA-220, flash memory card, CD software, owner’s manual, USB cable, headphones, and one AAA alkaline battery are packaged together and advertised for retail sale.

The MP3 recorder/player, uses Moving Picture Experts Group’s (“MPEG-3”), Advanced Audio Coding (“AAC”), and other file formats that compress audio files. These audio file compression formats enable music to be downloaded from the Internet, or audio CDs, at an accelerated rate while minimizing the amount of memory required. Compressed audio data files are transferred from an ADP machine and recorded into the MP3 recorder/player’s (“MP3”) internal flash memory. MP3, AAC, SD Audio, Winmedia, and WAVE compressed audio files may also be recorded from an ADP machine onto the portable flash memory card and inserted into the MP3’s flash memory card slot.

The MP3 has 32MB of internal flash memory and a slot for inserting a flash memory card for additional memory. The device measures 2 inches by

2 inches by 0.5 an inch, weighs 1.5 oz., and has an audio jack socket to connect the pair of headphones. The MP3 also has an LCD screen on its face for play status, with standard play, pause, skip, fast forward, reverse, and volume control buttons located on one side. The device also has a USB cable compatible connector and a compartment for one AAA battery. The flash memory card has a 64 MB capacity.

In general, an MP3 has a microprocessor, a “digital signal processor chip” (“DSP chip”), digital-to-analog converter, and an amplifier. The microprocessor monitors the recorded audio files through the playback controls, displays information about the music playing, and sends directions to the DSP chip to instruct it exactly how to process the audio signal. The DSP chip pulls the MP3 audio files recorded in the flash memory and runs a decompression algorithm that undoes the MP3 audio file compression. The digital-to-analog converter turns the bytes back into waves, and the amplifier boosts the strength of the signal, sending it to the audio port where the earphones are connected. See www.howstuffworks.com/mp3-player.

ISSUES:

What is the classification of the MP3 recorder/player, Model MEA-220, 64 MB flash memory card, CD software, owner’s manual, USB cable, headphones, and AAA battery, imported together, under the HTSUS?

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), 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. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Customs position on the classification of an MP3 recorder/player substantially similar to the present good was addressed in Headquarters Ruling Letter (“HQ”) 963170, dated June 5, 2002 (copy enclosed). In that ruling, Customs determined that an MP3 recorder/player, also with 32 MB of internal flash memory, was classifiable at GRI 1, under subheading 8520.90.00, HTSUS, which provides for “[m]agnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other[.]” Accordingly, we incorporate the relevant LAW AND ANALYSIS section of HQ 963170 into this decision as it is dispositive of the classification of the subject MP3.

The other articles are each described under a different heading. As such, they cannot be classified according to GRI 1. Heading 4901, provides, in pertinent part, for printed books, brochures . . . and similar printed matter (owner’s manual). Heading 8506, provides, in pertinent part, for primary cells and primary batteries (AAA battery). Heading 8518, provides, in pertinent part, for microphones, . . . loudspeakers, . . . and headphones and earphones, whether or not combined with a microphone (headphones). Heading 8523, provides, in pertinent part, for prepared unrecorded media (flash memory card). Heading 8524, provides, in pertinent part, for other recorded media for sound or other similarly recorded phenomena (CD software). Heading 8544, provides, in pertinent part, for insulated cable, whether or not fitted with connectors (USB cable).

GRI 2(a) is also not applicable, however GRI 2(b) provides, in pertinent part, that “[t]he classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.”

GRI 3 provides, “when, by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.”

The EN to GRI 3(b) indicates that to meet the criteria of a set put up together for retail sale, “articles must:
consist of at least two different articles, which are, prima facie, classifiable in different headings;
consist of products or articles put up together to meet a particular need or carry out a specific activity; and
are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).”

Applying the GRI 3(b) EN criteria, these several different articles are, prima facie, classifiable in different headings. The articles work together to carry out the specific activity of recording audio files from another audio source onto the MP3’s internal flash memory, and portable flash memory card, for retrieval and replay.

The MP3 is imported and packaged together for direct sale with the flash memory card, CD software, owner’s manual, USB cable, headphones, and AAA battery. This is confirmed by information from the printed owner’s manual. Under these facts, the articles meet all three criteria of the GRI 3(b) EN, and therefore, form a set put up for retail sale.

To be classified at GRI 3(b), the set must be classifiable as if the set consisted of the one article that gives the whole its “essential character,” insofar as this criterion is applicable. EN VIII to GRI 3(b) provides that the characteristic which gives a set its “essential character” may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value or by the role of a constituent material in relation to the use of the goods.

In this case, the flash memory card (classifiable in heading 8523), CD software (classifiable in heading 8524), USB cable (classifiable in heading 8544), headphones (classifiable in heading 8518), and the MP3 recorder/player (classifiable in heading 8520), all support transferring and recording music files to the MP3 for listening. It is clear that the MP3 is the most important article in achieving this central purpose. The MP3 is the most valuable article in terms of marketability, for the importer, and in terms of utility, for the consumer. As such, we conclude that the MP3 imparts the “essential character” of the set.

At GRI 3(b) we find that the MP3 recorder/player set is described in subheading 8520.90.00, HTSUS, which provides for “[m]agnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other[.]” See also HQ 965587, issued June 19, 2002, and HQ 964936, issued June 18, 2002.

Chapter 85, Legal Note 6, HTSUS, provides that, “[r]ecords, tapes and other media of heading 8523 or 8524 remain classified in those headings when entered with the apparatus for which they are intended.” However, the note “does not apply to such media when they are entered with articles other than the apparatus for which they are intended.”

Applying the first sentence of the note, at GRI 1, the flash memory card remains separately classifiable in heading 8523, HTSUS. Applying the second sentence, the CD software is for use in an ADP machine. However, it is packaged with, and part of, the MP3 set. Therefore, because the CD software is entered with articles other than the apparatus for which it is intended, at GRI 3(b), it is classifiable with the MP3 set under subheading 8520.90.00, HTSUS.

HOLDING:

At GRI 3(b), the Toshiba MP3 recorder/player Model MEA-220, CD software, owner’s manual, USB cable, headphones, and AAA battery are a set classifiable in subheading 8520.90.00, HTSUS, which provides for “[m]agnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other[.]”

At GRI 1, the 64 MB flash memory card, when entered with the MP3 set remains classifiable under the subheading 8523.90.00, HTSUS, which provides for “[p]repared unrecorded media for sound recording or similar recording of other phenomena, other than products of chapter 37: Other.”

Sincerely,


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