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HQ 963997




APRIL 13, 2001

CLA-2 RR:CR:GC 963997 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9013.80.90

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

RE: Protest 2704-99-102674; Automatic Mastering System

Dear Port Director:

This is our decision on Protest 2704-99-102674, filed against your classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of an automatic master recording or mastering system. The entry under protest was liquidated on July 2, 1999, and this protest timely filed on September 29, 1999. The entry under protest also includes a compact disc replicating machine for making digital video discs (DVDs) from master discs called “stampers.” The classification of this replicating machine is not at issue here.

Counsel for the protestant presented additional facts and legal arguments at a meeting in our office on January 30, 2001. These were confirmed in submissions, dated March 19 and April 11, 2001.

FACTS:

The merchandise under protest is the AM 100 Automatic Mastering System (the AM 100), a series of machines or components used to produce metal-coated glass discs containing digitally-encoded audio data. These discs will be further processed by separate machines into master discs called “stampers.” Stampers are then used in a separate process to mass-produce compact discs (CDs). The AM 100 essentially cleans and polishes the glass disc substrates, coats the surface with a chemical photoresist and cures the disc. A laser beam recorder, a machine utilizing a high density laser beam, then burns a pattern of digital data in the photoresist using input from U-matic, CD and 8 mm Exabyte data tapes. Finally, another component chemically removes exposed portions of the photoresist to produce so-called “pits” and “lands,” which represent the digital data
in the photoresist, then applies a thin conductive coating of nickel over the disc, in a process called “sputtering.” A programmable personal computer which monitors all process parameters using appropriate software is housed separately from but connected electrically to the AM 100. Except for the programmable PC, all of the components that comprise the AM 100 are within the same housing. This merchandise is similar in all material respects to in-line mastering systems of the type described in HQ 962354, dated July 23, 1999.

The AM 100 was entered under a provision of heading 8520, HTSUS, for other sound recording apparatus. The entry was liquidated, however, under a provision of heading 8479, HTSUS, for machines and mechanical appliances not specified or included elsewhere in Chapter 84. In a memorandum supporting this protest, dated September 29, 1999, and in its submission of March 19, 2001, counsel for the protestant makes the following arguments in favor of the heading 8520 classification: the AM 100 is a composite machine under Section XVI, Note 3, HTSUS, the principal function of which, to produce pits in the surface of the photoresist-coated glass substrate by the laser beam encoder, is sound recording under that heading; because heading 8520 includes all sound recording devices whatever the intended purpose, the laser beam method is advanced technology substantially similar to groove type recording apparatus classified in heading 8520; this technology is recognized by a statistical breakout under subheading 8520.90.00 for optical disc recorders. Alternatively, counsel maintains the AM 100 is a functional unit under Section XVI, Note 4, HTSUS, and that heading 8520 is appropriate to the function it performs. In its March 19, 2001 submission, counsel reiterates the heading 8520 claim and makes an alternative claim under heading 8471, as automatic data processing machines and units thereof. Specifically, counsel contends that the AM 100 is a machine for transcribing data onto data media in coded form and which processes such data.

The HTSUS provisions under consideration are as follows:

Automatic data processing machines and units thereof; machines for transcribing data onto data media in coded form and machines for processing such data

8479 Machines and mechanical appliances, having individual functions, not specified or included elsewhere in [chapter 84]:

Other machines and mechanical appliances:

Other

8520 other sound recording apparatus, whether or not incorporating a sound reproducing device:

Other

9013 lasers; other optical appliances and instruments, not specified or included elsewhere in [chapter 90]:

Other devices, appliances and instruments:

9013.80.90 Other

ISSUE:

Whether AM 100 is a composite machine or a functional unit under Section XVI, Notes 3 or 4; whether it is a composite good under GRI 3.

LAW AND ANALYSIS:

Under General Rule of Interpretation (GRI) 1, Harmonized Tariff Schedule of the United States (HTSUS), goods are to be classified according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6. GRI 3(b) states in part that composite goods made up of different components shall be classified as if consisting of the component which gives the goods their essential character.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. Though not dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS. Customs believes the ENs should always be consulted. See T.D. 89-80. 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

Section XVI, Note 1(m), HTSUS, excludes articles of Chapter 90, HTSUS. So, if the AM 100 is classified in any heading of that chapter, it cannot be classified in heading 8520 or in heading 8471, as counsel claims. In HQ 962939, dated July 8, 1999, laser transfer machines or encoders - one component of a mastering system - were found to be classifiable as other optical appliances and instruments, in subheading 9013.80.90, HTSUS. Subsequently, HQ 962354, dated July 23, 1999, held that an in-line mastering system that included a laser transfer machine or encoder, all the components of which were in the same housing, was a composite good under GRI 3(b), with the encoder imparting the essential character. The whole was found to be classifiable in subheading 9013.80.90. The principles of these rulings are incorporated by reference in this decision.

However, we should note that neither of the cited rulings addressed heading 8520. Before proceeding to a discussion of that heading, however, counsel addresses the validity of the heading 9013 classification. The argument is that certain ENs on p. 1600 exclude from heading 9013 lasers which have been adapted to perform quite specific functions by adding ancillary equipment consisting of special devices (e.g., work-tables, work-holders, means of feeding and positioning workpieces, means of observing and checking the progress of the operation, etc.) and which, therefore, are identifiable as working machines, medical apparatus, control apparatus, measuring apparatus, etc. The ENs continue by excluding from heading 9013 machines and appliances incorporating lasers, and state that insofar as their classification is not specified in the Nomenclature, they should be classified with the machines or appliances having a similar function. These ENs clearly apply to lasers incorporated into other devices or to which other components have been added, in either case resulting in a device classifiable in a heading other than 9013. Examples cited in the ENs include machine tools that remove metal by laser (heading 8456); laser soldering, brazing or welding machines and apparatus (8515); and, laser apparatus specially used for medical purposes (9018). In our opinion, these ENs address only the issue of why lasers to which other devices are attached cannot be classified as lasers. The cited rulings classified laser transfer machines and mastering systems incorporating laser transfer machines not as lasers, but as other optical appliances or instruments, not specified or included elsewhere. Moreover, in this case, in addition to the laser, the AM 100 mastering system includes significant additional optical elements, i.e., the AOM or acoustic optic modulator which
transforms the laser beam into pulses and the recording optics which direct the laser beam through optical lenses - which are optical elements described by heading 9001 - to reduce the laser beam’s diameter to the appropriate size. In our opinion, these ENs do not describe automatic mastering systems and, thus, do not serve as authority to eliminate them from heading 9013.

Counsel’s bases its heading 8520 claim on Section XVI, Note 3 and Note 4, HTSUS, on the basis that the function which the AM 100 System performs being to record sound in digital format; alternatively, under GRI 3(a), HTSUS, heading 8520 provides a more specific description for the AM 100 than does heading 9013. Section XVI, Note 1(m), HTSUS, notwithstanding, the ENs on p. 1481 define the term “sound recording apparatus” as apparatus which, on receiving a suitable audio-frequency vibration generated by a sound-wave, so modifies a recording medium as to enable it to be used subsequently to reproduce the original sound-wave. Broadly speaking, a sound recording apparatus comprises a device which modifies the recording medium, and a mechanism which moves this device in relation to the recording medium.” Counsel’s claim is that the AM 100 uses a laser to create a spiral of pits of predefined depth and width which is an advancement in technology over so-called groove type sound recording apparatus which is among the main types of sound recording apparatus described in the ENs. In this type, a stylus cuts a groove in a recording medium mounted on a support, with the groove varying in form according to the variations recorded. We do not agree that the AM 100 functions as sound recording apparatus of this type. In our opinion, the process involved is one of data transfer of digital information that does not involve the recording of a sound wave. There is no evidence of a sound wave the audio-frequency of which the AM 100 utilizes to modify a recording medium. Also, the digitally-encoded master is used to produce plastic disc-shaped replicas sputter coated with aluminum on one side. The master, itself, can neither be played nor heard on a standard disc player, i.e., it cannot reproduce the original sound wave. Concerning the statistical breakout under subheading 8520.90.00 for optical disc recorders, we note that statistical annotations and other matters formulated under section 484(f), Tariff Act of 1930, as amended (19 U.S.C. 1484(e)), are not part of the Harmonized Tariff Schedule of the United States legal text and, consequently, are not legally binding for classification purposes. See Harmonized Tariff Schedule of the United States (2001), Preface to the 13th. Edition. Likewise, Customs has recognized that not all devices that incorporate lasers or other optical elements are necessarily classifiable in Chapter 90, because they may possess significant electrical or mechanical features. See HQ 962354, supra. However, in this instance the claim under heading 8520 has not been substantiated.

Counsel’s alternative claim is under heading 8471, as machines for transcribing data onto data media in coded form and machines for processing such data. Again, Section XVI, Note 1(m), HTSUS, notwithstanding, the ENs on p. 1407 describe machines of heading 8471 for transcribing data onto data media in coded form. Among the machines described are those that transcribe in code (punched holes, magnetic spot, etc.) the data to be used in subsequent processing operations, and machines for transferring coded information from one type of data medium to another type (e.g., from punched cards to magnetic tape or vice versa) or to transfer it to another medium of the same type. The latter category includes reproducing machines which are used to produce all or part of the data on master cards or tape by making new cards or tape. In our opinion, machinery used to produce metal-coated glass discs containing digitally-encoded audio data possess no demonstrated similarity to the machines described in the cited ENs. For this reason, heading 8471 does not apply.

HOLDING:

Under the authority of GRI 1, the AM 100 Automatic Mastering System is provided for in heading 9013. It is classifiable in subheading 9013.80.90, HTSUS.

The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

John Durant, Director
Commercial Rulings Division


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