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HQ 967759




August 11, 2005

CLA-2 RR:CTF:TCM 967759 KSH

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.50.0085

Stephen A. Jones
John P. Smirnow
King and Spalding LLP
1700 Pennsylvania Avenue N.W.
Washington, D.C. 20006-4706

RE: Classification of Specter FilmStream digital platform

Dear Messrs. Jones and Smirnow:

This letter is in response to your request of May 6, 2005, on behalf of your client, Thompson Broadcast and Media Solutions, for the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) of a Specter FilmStream digital platform (Specter FS).

FACTS:

The Specter FS is a high-capacity, uncompressed server-based system designed to store and process in real-time large amounts of digital data. The Specter FS is one component of a digital processing system identified as the Thompson video editing system. The Specter FS can be connected to a variety of video, audio, data processing and controller equipment. However, the Specter FS cannot perform video editing functions independently.

The Specter FS consists of two sub-units, the server and the format converter. The server is comprised of a Silicon Graphics, Inc. Origin 300 Supercomputer server, SGI 02 workstation, fibre channel disk arrays and supporting components. The format converter is comprised of input/output boards, interface boards, frame store board, image receive controller, clock processing and distribution board, connector board, power supply units and cooling system. Image data in DPX format is loaded and stored within the server. The data is streamed out to the format converter which converts the DPX data into different video and HD formats. The Specter FS allows users to store and conform work on a digital platform, use post-production software to access and/or manipulate this material and output the data in a chosen format.

ISSUE:

Whether the Specter FS is classified as an automatic data processing machine in heading 8471, HTSUSA, or in heading 8543, HTSUSA, as a video editing machine or system.

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). 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 GRI may then be applied.

The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUS by offering guidance in understanding the scope of the headings and GRI. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

Heading 8543, HTSUS, provides for “[e]lectrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter.” EN 85.43, HTSUS, states that "[t]his heading covers all electrical appliances and apparatus, not falling in any other heading of the Chapter, nor covered more specifically by a heading of any other Chapter of the Nomenclature, nor excluded by the operation of a Legal Note to Section XVI or this Chapter."

Heading 8471 provides for “[a]utomatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included.” Pursuant to the legal text of heading 8543, classification of the Specter FS in heading 8471, HTSUS, must be excluded before resorting to classification in heading 8543, HTSUS.

Automatic data processing (ADP) machines are defined in Note 5(A)(a) to Chapter 84, HTSUS, which states as follows:

5. (A) For purposes of heading 8471, the expression "automatic data processing machines" means:

(a) Digital machines, capable of (1) storing the processing program or programs and at least the data immediately necessary for execution of the program; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and, (4) executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run;

Although the Specter FS is one component of a digital processing system that together create a video editing system, the Specter FS, as imported, meets the terms of Note 5(A)(a)(1-4). The Specter FS is a digital machine that contains the main memory for storing the program and necessary data required to execute the program. See Note 5(A)(a)(1). There are no software or hardware blocks that would prevent these systems from being programmed by the user. Thus the Specter FS is freely programmable, in that its architecture is based upon an open system design. See Note 5(A)(a)(2). The server is capable of performing arithmetical computations as specified by the user. See Note 5(A)(a)(3). Finally, through hardware programs, the Specter FS is capable of executing, without human intervention, processing programs which require them to modify their execution, by logical decision during the processing run. See Note 5(A)(a)(4). For these reasons, the Spirit FS can be considered ADP machines for tariff purposes. Notwithstanding, Note 5(A) is subject to Note 5(E) to Chapter 84. Note 5(E) states as follows:

Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions, or, failing that, in residual headings.

Although the Specter FS contains hardware for use with video editing, the server and format converter are not restricted to this one specific function. Combined with the fact that there are no proprietary hardware or software blocks on the Specter FS to prevent the user from loading and/or running other programs, these machines fall outside of the scope of Note 5(E) to Chapter 84, HTSUS. See also HQ 960434, dated August 2, 2002.

It is noted that in World Customs Organization Compendium Opinion 8543.89/4, the Harmonized System Committee precluded classification of a video editing system, identified as the Media Composer 1000, within heading 8471, HTS, pursuant to Note 4 to Section XVI and Note 5(E) to Chapter 84, HTS, because the principal function of the system was found to be video editing and not data processing, even though the video processing was based on an ADP platform. The Committee took care to note, however, that the question put to the Committee has never been the separate classification of the different components in light of their different functions and can only be based on classification as a system. See HSC Doc. No. NC0741E1 (October 15, 2003). Unlike the Media Composer 1000, the Specter FS is imported as a single component that is incapable of performing video editing functions. As imported the Specter FS allows users to store and conform work on a digital platform, use post-production software to access and/or manipulate this material and output the data in a chosen format. The user may also load and/or run other programs not entered with the Specter FS.

Therefore, for the reasons stated above, the Specter FS is classified under heading 8471, HTSUS. As they are not imported with any output device, the Specter FS cannot be classified as a "system," and is thus classified under subheading 8471.50.0085, HTSUS, which provides for “Automatic data processing machines and units thereof; : Digital processing units other than those of subheading 8471.41 or 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units, Other.”

HOLDING:

The applicable subheading for the Specter FS will be 8471.50.0085, HTSUS, which provides for “[a]utomatic data processing machines and units thereof; : digital processing units other than those of subheading 8471.41 or 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units, other.” The general, column one rate of duty is free.

Sincerely,

Gail A. Hamill, Chief

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