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 > 2005 HQ Rulings > HQ 563295 - HQ 966997 > HQ 966765

Previous Ruling Next Ruling
HQ 966765




January 14, 2005

CLA-2 RR: CR: GC 966765 TPB

CATEGORY: CLASSIFICATION

TARIFF NO.: 8543.89.9695

Port Director
U.S. Customs and Border Protection
San Francisco International Airport
San Francisco , CA 94125-1867

RE: Stacked Memory Modules; Protest # 2809-02-100710; Reconsideration of HQ 965020

Dear Port Director:

This is our decision on Protest Number 2809-02-100710, filed by counsel on behalf of Atmel Corporation (“Atmel”/”Protestant”) on September 26, 2002, requesting further review of HQ 965020, dated May 13, 2002, pursuant to 19 C.F.R. § 174.24 and §174.25. That ruling classified certain memory boards under heading 8543, Harmonized Tariff Schedule of the United States (“HTSUS”). Specifically, Protestant indicated that they were providing new facts and legal arguments that were not addressed in that previous Customs and Border Protection (“CBP”) ruling. Protestant indicates that based on this new information, the goods in question could be classified under any one of a number of subheadings under headings 8523, 8529, 8541, or 8548, HTSUS.

We have reviewed this ruling in light of the original submission of November 6, 2001, supplemental information provided for that ruling in the reconsideration request, and additional facts and arguments provided in Protestant’s submission dated October 4, 2002. Further, we have also considered information provided by the importer in a teleconference with this office on December 9, 2004 and supplemental information that followed that teleconference.

For the reasons set forth below, HQ 965020 is affirmed.

FACTS:

The merchandise in question are described in HQ 965020 as follows:

The subject memory boards are described as being composed of a single flash memory integrated circuit and a single static random access memory (“SRAM”) integrated circuit. These chips are placed one on top of the other and glued together with epoxy. They are then wire-bonded to a lead-frame. The lead-frame is composed of two signal layers to prevent shorting of the circuits. The memory boards are incorporated into electronic products requiring compact SRAM and flash memory storage. You have submitted three different lists of memory board model numbers, including a schedule with 61 different product model numbers. Your April 25 and 26, 2002 submissions reference additional memory board model numbers. You state all of these model numbers are “Flash/SRAM double-stacked memory chips,” and “differ only in the amount of memory of the chips and in the pin configurations of the modules.”

ISSUE:

Are the semiconductor devices classifiable in heading 8523, which provides for prepared unrecorded media, heading 8529, which provides for parts of cellular telephones; heading 8541, which provides for diodes, transistors and similar semiconductor devices, heading 8543, which provides for electrical machines and apparatus not specified or included elsewhere, or heading 8548, which provides for electrical parts of machinery, not specified or included elsewhere in Chapter 85?

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.

Classification of merchandise is based upon their condition as imported. See U.S. v. Citroen, 223 U.S. 407 (1912). As indicated in the “Facts” section above, the merchandise imported into the United States is described as being composed of a single flash memory integrated circuit and a single static random access memory (“SRAM”) integrated circuit, placed one on top of the other and glued together with epoxy which are then wire-bonded to a lead-frame.

The HTSUS provisions under consideration are as follows:

8523 Prepared unrecorded media for sound recording or similar recording of other phenomena, other than products of chapter 37:

8529 Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528: 8541 Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light emitting diodes; mounted piezoelectric crystals; parts thereof:

8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter:

8548 Waste and scrap of primary cells, primary batteries and electric accumulators; spent primary cells, spent primary batteries and spent electric accumulators; electrical parts of machinery or apparatus, not specified or included elsewhere in this chapter:

In Protestant’s submission of October 4, 2002, Atmel indicates that GRI 1 requires the application of Legal Note 2 to Section XVI. Specifically, that Section XVI Legal Note 2(b) and 2(c) are applicable to this merchandise

Section XVI Note 2 reads, in pertinent part, as follows:

2. Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:

(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;

(c) All other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8485 or 8548.. Protestant claims that Note 2(b) to Section XVI requires classification according to the particular machine or parts provisions, as appropriate, and that heading 8529 is appropriate because the double stacked memory is a part used in cell phones (Atmel Protest and AFR: Stacked Memory; October 4, 2002, pg. 6). Protestant also claims that pursuant to Note 2(c) to Section XVI, that heading 8548 is also a possible classification (ibid.).

It is Atmel’s contention that the stacked chips presently at issue are principally used as parts of mobile cellular telephone and therefore are classified under heading 8529, HTSUS. To be classified in this heading, a good must be principally used with the apparatus of headings 8525 to 8528, HTSUS.

When applying a “principal use” provision, we first must ascertain the class or kind of goods involved. Only then can it be decided whether the subject merchandise is a member of that class. E.M. Chemicals v. United States, 20 C.I.T. 382, 388 (Ct. Int'l Trade, 1996). It is the principal use of the class or kind of goods to which the import belongs, and not the principal use of the specific import, that is controlling. Group Italglass U.S.A., Inc., v. United States, 17 C.I.T. 1177 (Ct. Int'l Trade, 1993) (Court granting plaintiff’s motion in limine limiting plaintiff’s burden of proof on the issue of principal use).

The courts have offered guidance when making “class or kind” determinations. Factors that are taken into consideration include: general physical characteristics; expectation of the ultimate purchaser; channels of trade; environment of sale (accompanying accessories, manner of advertisement and display), and; the use, if any, in the same manner as merchandise which defines the class. See Lenox Collections v. United States, 19 Ct. Int'l Trade 345, 347 (1995); Kraft, Inc. v. United States, 16 Ct. Int'l Trade 483 (1992); G. Heileman Brewing Co. v. United States, 14 CIT 614 (1990). See also United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F.2d 373 (1976), cert. denied, 429 U.S. 979 (1976). Although none of these factors on their own are determinative, they are probative as to the class or kind of merchandise that these products belong.

General Physical Characteristics

Protestant indicates that the general physical characteristics of the merchandise are designed so as to operate in cell phones. We find that while it is true that the general physical characteristics of the merchandise do allow them to be used in cell phones, it is more accurate to say that the general physical characteristics are such that they may be used in the mobile industry (which includes cellular telephones, personal digital assistants (PDAs), notebook computers, camcorders, etc.) and in industries in which the most advantageous use of space is critical, such as aerospace, military and other telecommunications. Stacked chips have been designed to meet the demands of applications requiring greater amounts of memory and smaller footprints.

Expectation of the ultimate purchaser

Protestant indicates that the expectation of Atmel’s purchasers is to use the modules in cellular telephones. Research of a variety of websites, including Intel, Sharp Microelectronics, Fujitsu and Atmel show that stacked chips are imported with no designation as to their ultimate use. Stacked chips are presented under the “memory” or “semiconductor” product lists on these websites. Thus, the expectation of a purchaser of a stacked chip would be to receive a memory module with a small footprint and low power consumption.

Channels of trade and environment of sale

Protestant indicated that they only sell to cell-phone makers and that the environment of sale is in cell phones. However, as indicated above, the channels of trade appear to be semiconductor manufacturing companies rather than companies that manufacture cellular telephones or parts of cellular telephones. They are marketed and advertised as space saving, high performance devices.

Usage of the merchandise

Another factor that the courts instruct us to consider in determining the class or kind of the merchandise is the use, if any, in the same manner as merchandise which defines the class. Protestant has provided CBP with a Revised Statement of Mr. Carey Louie, Atmel Production Manager (Exhibit C) in which it states that Mr. Louie’s industry and technical expertise leads him to believe that the double stacked Flash/SRAM memory devices are principally used in cellular telephones.

Further, Protestant has provided documentation, in the form of an excerpt taken from Electronic Trend Publications, 5th Edition of Advanced IC Packaging Markets and Trends, publication, January 2002 (Exhibit D), which indicates that cell phones are the predominant location for use of a stacked package (75%). However, it remains unclear as to what the numbers cited to actually represent. The excerpt goes on to state that

In 2001, about 170 million stacked packages have gone into an estimated 400 million cell phones. Some of these cell phones have multiple stacked packages within them, so the actual penetration rate is not merely 170 million divided by 400 million (over 40 percent). It is more likely that the penetration rate is less than 30 percent.

Nonetheless, it seems clear that this survey represents that cellular telephones account for a large percentage of the usage of stacked integrated circuits.

We must note, however, as Atmel has disclosed, that this particular data is taken from worldwide sales, and is not representative of the United States. In support of Protestant’s request for CBP to accept this data as representative of U.S. data, they cite to United States v Border Brokerage Company, Inc., 59 CCPA 151, C.A.D 1058, 461 F.2d. 1383 (1972). The Court of Customs and Patent Appeals, in that case, held that evidence of the chief use of plastic planting bullets in the province of British Columbia was probative with respect to what its chief use in the United States might be. Under older tariff schedules, namely the Tariff Schedule of the United States (TSUS), classifications controlled by use, other than actual use, were determined according to "chief use." "Chief use" was defined as "that use which exceeds all other uses." The concept of "chief use," however, caused administrative difficulties for Customs. It was therefore replaced by the concept of "principal use" when the Harmonized Tariff Schedule of the United States Annotated was enacted. See Lenox Collections v. United States, 20 CIT 194 at 196 (1996).

While prior TSUS cases may be instructive in interpreting identical language in the HTSUS, they are not dispositive. H.R. Conf. Rep. No. 100-576, at 549-50 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 1582-83. As explained in the House Conference Report accompanying the Omnibus Trade and Competitiveness Act of 1988, which enacted the HTSUS, “[i]n light of the significant number and nature of changes in nomenclature from the TSUS to the HTSUS, decisions by the Customs Service and the courts interpreting the nomenclature under the TSUS are not to be deemed dispositive in interpreting the HTSUS.”

Atmel provided further submissions on December 13, 2004 indicating that stacked die are “parts” of cellular telephones. As indicated above, Citroen requires that CBP classify merchandise in its condition as imported. As imported, there is no indication that these devices are “parts” of cellular telephones, or “parts” of any electronic device that benefits from a small package that can control a variety of functions. Although Atmel indicates that the stacked die contain vital “code operating data” for the cellular telephone to operate, this information is not present on the stacked die when it is imported.

While Protestant does explain how Atmel’s customers intend to use the stacked chips, it is the principal use of the class or kind of goods to which the imports belong, and not the principal use of the specific imports that is controlling under the Rules of Interpretation. Still, evidence of the actual use of the imported goods could, depending upon the quantum of proof, have some minimal relevant probative value on the issue of principal use. Similarly, evidence of the principal use of the specific imports is relevant to the principal use of the class or kind of goods to which the imported goods belong. “[E]vidence of the actual or principal use of the specific imports standing alone could not, absent their constituting the entire class or kind of goods under consideration, make a prima facie case on the issue of principal use where the controlling issue is the principal use of the class or kind to which the merchandise belongs.” Group Italglass U.S.A. at 1177, fn. 1.

Based upon the above information, giving the appropriate weight to the new information supplied by the importer, and the Lenox factors used above in determining principal use, CBP remains unconvinced that the principal use of the stacked chips in their condition as imported is as parts of cellular telephones under heading 8529, HTSUS.

In the alternative, Protestant indicates that double-stacked memory is classifiable in heading 8541, HTSUS, as transistors, diodes and similar devices. To support this, Atmel provides technical descriptions of the modules (Exhibit E) and an article on how flash memory works from a website (Exhibit F). We note that the information provided by Protestant in Exhibit E of this reconsideration is substantially identical to information provided in Exhibit H of HQ 965020 and is, in fact, the technical information for the other of the two modules of which Protestant requested a ruling for in HQ 965020. Atmel claims that Exhibit F demonstrates “that way in which the electrical transistors maintain electrical potentials using ‘resistivity on the application of an electric field’ in accordance with the definition of ‘transistors’ found in Legal Note 5(a) to Chapter 85. “ Protestant claims that Atmel’s information indicates that SRAM operates in a slightly different, but similar, manner which also relies upon the same types of resistivity potential differences caused in electromagnetic fields.

CBP does not consider this information to be a new fact or a new legal argument pursuant to 19 C.F.R. §174.25. HQ 965020 ruled on the legal argument as to whether the merchandise was classifiable under heading 8541, HTSUS. It correctly held that once one incorporates (in the mass) passive circuit elements (capacitors, resistors, interconnections) with active circuit elements (transistors, diodes) an integrated circuit (IC) is created and therefore heading 8541, HTSUS is inapplicable. IC’s are not classified under heading 8541, HTSUS, regardless of the fact that the capacitors and resistors may contribute to improving a single function of the transistors.

Protestant also claims that the merchandise could be classified under heading 8523, HTSUS. However, that argument was addressed in HQ 965020.

The provisions of 19 C.F.R. §174.25(b)(3) reads as follows:

(3) A statement of any facts or additional legal arguments, not part of the record, upon which the protesting party relies, including the criterion set forth in § 174.24 which justifies further review. A showing of facts that support the allegations of a criterion set forth in § 174.24(c) will constitute a ground for the granting of further review in circumstances where the applicant’s inability to affirmatively make the allegations described in paragraph (b)(2) of this section would otherwise result in its denial.

While we note Protestant’s disagreement with the conclusion reached in that ruling, Atmel has presented no new facts for CBP to reconsider and therefore CBP will not re-examine that aspect of the ruling.

Based on the information that has been presented, we find that HQ 965020 correctly classified the merchandise under heading 8543.89.96, HTSUSA and is hereby affirmed. See also HQ 965848, dated November 14, 2002, in which CBP held that stacked memory chips were classifiable under heading 8543, HTSUS, rather than heading 8542, HTSUS, which provides for electronic integrated circuits and microassemblies; parts thereof.

HOLDING:

For the reasons stated above, the stacked chips are classified under heading 8543.89.9695, HTSUSA, which provides for “[e]lectrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: other machines and apparatus: Other: Other: Other: Other: Other.”

You are instructed to DENY the protest.

In accordance with the Protest/Petition Processing Handbook (CIS HB, January 2002, pp. 18 and 21), 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 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 make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

EFFECT ON OTHER RULINGS:

HQ 965020, dated May 12, 2002, is affirmed.

Sincerely,

Myles B. Harmon, Director

Previous Ruling Next Ruling

See also: