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 > 2004 HQ Rulings > HQ 966772 - HQ 966839 > HQ 966799

Previous Ruling Next Ruling
HQ 966799




March 15, 2004

CLA-2 RR:CR:GC 966799 DBS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8528.12.97

Ms. Madeline B. Kuflik
Panasonic
One Panasonic Way 3B-6
Secaucus, NJ 07094

RE: Revocation of NY G82574; set top boxes; Information Technology Agreement

Dear Ms. Kuflik:

On October 3, 2000, the National Commodity Specialist Division of this office issued to you on behalf of Matsushita Television and Network Systems New York (NY) G82574, which classified a set top terminal in subheading 8528.12.92, Harmonized Tariff Schedule of the United States (HTSUS). We have reconsidered NY G82574 and the additional information sent to Customs on October 30, 2003, and have determined the classification to be incorrect.

Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of the above identified ruling was published on February 4, 2004, in the Customs Bulletin, Volume 38, Number 6. No comments were received in response to the proposed action.

FACTS:

In NY G82574 the product at issue, a set top box (set top terminal) identified as model TZ-PCD2000, was described as follows:

The set top terminal is equipped with a tuner and is designed to receive both analog (NTSC) and digital (QAM) cable television broadcast signals via a RF cable. The tuner receives, demodulates and converts the television broadcast signal for direct viewing on to the television set. This model has the capability to communicate by sending a signal back to the cable headend via the same RF cable. This particular model does not incorporate a modem and has output terminals for both composite video and S-video signals.

In review of the treatment of set top boxes Customs has previously classified, Panasonic was asked to provide additional information to Customs regarding the model TZ-PCD2000 set top box. Additional facts presented pertinent to this ruling include that the box is only used for cable television reception. It has an out of band (OOB) communications link that is used by the cable company to authenticate the cable box in the cable system and is used by the customer to order pay-per-view. You stated that the box does not have any Internet capability.

ISSUE:

Whether the classification of the TZ-PCD2000 set top box falls in subheading 8528.12.92, HTSUS, as a set top box which has a communications function, or in subheading 8528.12.97, HTSUS, as other reception apparatus for television.

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 (ENs) may be utilized. ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUS provisions under consideration are as follows:

8528 Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors:

Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus:

8528.12 Color:

Other:

Other:

Other:

8528.12.92 Set top boxes which have a communications function

8528.12.97 Other

We affirm that the set top box at issue is reception apparatus for television at GRI 1. Therefore, classification at the heading level is not at issue. Once the heading is no longer at issue, we turn to GRI 6, which provides:

For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.

When the Information Technology Agreement (ITA) went into effect on July 1, 1997, pursuant to Presidential Proclamation No. 7011 (62 FR 35909 (July 2, 1997)), the U.S. created various new provisions to implement the agreement. The amendments set forth in Presidential Proclamation No. 7011 are based on the framework established in the Declaration on Trade in Information Technology Products, which, together with its Annex, constitute the ITA. See 62 FR 35909, para. 1. The Annex is comprised of two attachments. Attachment A, Section 1 lists the Harmonized System (HS) headings and subheadings covered by the ITA. (The HS is the international agreement on which the HTSUS is based.) Attachment A, Section 2 lists certain semiconductor manufacturing and testing equipment and parts thereof to be covered by the ITA. Attachment B is a positive list of specific products to be covered by the ITA wherever they are classified in the HS (emphasis added). See Attachment A and Attachment B, Annex of the ITA.

Among the amendments adopted by the U.S. were two new subheadings for "set top boxes which have a communications function." One is found under heading 8525, HTSUS, which provides in relevant part for transmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television. The other is under heading 8528, HTSUS, enumerated above. The tariff term "set top boxes which have a communication function" is found in the positive list of specific products set forth in Attachment B. The type of product intended to be covered by the ITA is described as "a microprocessor-based device incorporating a modem for gaining access to the Internet, and having a function of interactive information exchange." Presidential Proclamation No. 7011. Therefore, Customs considers this description to provide the minimum requirements for a set top box to be classified as "set top boxes which have a communications function."

The ITA requires that these set top boxes be microprocessor-based devices. That is, they must contain a microprocessor. In addition to a microprocessor, the ITA requires that these set top boxes incorporate a modem for gaining access to the Internet. Modems are devices that transmit digital data by modulating and demodulating a signal. A modem alone does not provide access to the Internet. In simple terms, to gain access to the Internet, a modem is used to connect to an Internet Service Provider (ISP), and the ISP connects the user to the Internet. Hence, the ITA requires that these microprocessor-based set top boxes must be able to gain access to the Internet, not simply incorporate a modem.

The ITA also requires that this class of set top boxes has a function of interactive information exchange. As the Internet provides a user with the ability to have interactive information exchange, Customs considers the existence of a modem for gaining access to the Internet to indicate that a set top box has a function of interactive information exchange. Other factors, such as an RJ11 telephone jack, or may also be indicative of interactive information exchange.

It is unclear from the facts provided whether the instant set top box is a microprocessor-based device. However, the model TZ-PCD2000 set top box it is designed only for cable television reception. It does not have a modem or any other means to gain access to the Internet. Without access to the Internet, it does not satisfy the ITA requirements of a "set top box which has a communications function." Therefore, it is inconsequential that it may have a function of interactive information exchange via the OOB channel. Accordingly, it is not classified in subheading 8528.12.92, HTSUS.

In the event that merchandise is not found to be classifiable under a specific subheading, it is then classified as "other." The "other," or "basket," provision of a subheading should be used only if there is no tariff category that more specifically covers the merchandise. See DMV USA v. United States, Slip. Op. 2001-99, 9 (C.I.T. August 10, 2001), citing Rollerblade, Inc. v. United States, 116 F. Supp. 2d 1247, 1251 (C.I.T. 2000); see also GRI 3(a) ("The heading which provides the most specific description shall be preferred to headings providing a more general description."). As there is no specific provision for a set top box that is reception apparatus for television but does not satisfy the requirements of the ITA, it falls to be classified in subheading 8528.12.97, HTSUS.

This decision is consistent with Headquarters Ruling Letter (HQ) HQ 966742, dated December 15, 2003, in which we discussed the ITA requirements and classified a set top box that satisfied them in subheading 8528.12.92, HTSUS. See also HQ 966669, dated January 12, 2004. In addition, the set top box here is factually distinguishable from other set top boxes Customs has classified in subheading 8528.12.92, HTSUS, in rulings such as NY I87893, dated October 31, 2002, NY D82241, dated September 28, 1998 and NY F80216, dated December 14, 1999, because the set top boxes in those rulings all have modems and can access the Internet.

For the foregoing reasons, we find NY G82574 to be incorrect.

HOLDING:

The set top box model TZ-PCD2000 is classified in subheading 8528.12.97, HTSUS, which provides for "Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus: Color: Other: Other: Other: Other."

EFFECT ON OTHER RULINGS:

NY G82574, dated October 3, 2000, is hereby REVOKED. In accordance with 19 U.S.C 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: