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HQ W968273




October 12, 2006

CLA-2 RR:CTF:TCM W968273 HkP

CATEGORY: CLASSIFICATION

TARIFF NO.: 8504.40.95

Mr. W. Robb Lane
Import Compliance Manager
Ericsson, Inc.
6300 Legacy Drive
Plano, TX 75024

RE: Revocation of NY K83213; DC/DC power converters from China

Dear Mr. Lane:

This is in reference to New York Ruling Letter (“NY”) K83213, issued to you on March 10, 2004, on behalf of your company, Ericsson, Inc. (“Ericsson”). In NY K83213, U.S. Customs and Border Protection (“CBP”) classified Ericsson’s PKM, PKL, PKJ, and PKB series of DC to DC converters as hybrid integrated circuits under subheading 8542.60.0095 of the Harmonized Tariff Schedule of the United States (“HTSUS”). We have reviewed NY K83213 and found it to be incorrect. This letter sets forth the correct classification.

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 was published on August 16, 2006, in the Customs Bulletin, Volume 40, No. 34. No comments were received in response to this notice.

FACTS:

NY K83213 described the manufacture of the subject merchandise as follows:

The PKM, PKL, PKJ, and PKB series are all manufactured on Fire Retardant, level 4 (FR4), printed circuit board (PCB) material. The parts, capacitors, resistors, diodes, transistors, integrated circuits (ICs), etc., are soldered onto the PCB using a thick film process, in two stages. Stage one involves lamination of a copper foil onto an insulating polyamide substrate. In stage two, a conductive pattern is photo-exposed onto the copper, which is then layered with solder and a protective coating is applied to the substrate. The printed circuit board is then sent to Ericsson Simtek Electronics Co., Ltd., in China where the substrate is populated with discrete and passive and active components, directly onto the conductive pattern. It is then heat-bonded.

CBP concluded that because of “the indivisible combination of the passive elements, obtained by thick-film technology, and active elements, obtained by semiconductor technology, which were mounted directly onto a single insulating substrate”, these converters were classifiable as hybrid integrated circuits under subheading 8542.60.00, HTSUS.

It is now CBP’s position that the manufacturing process described is neither thin- nor thick-film technology and, accordingly, the subject merchandise are not hybrid integrated circuits as defined by the HTSUS.

ISSUE:

What is the correct classification of Ericsson’s PKM, PKL, PKJ, and PKB series DC/DC power converters?

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 2 through 6 may then be applied in order.

The HTSUS provisions under consideration are as follows:

8504 Electrical transformers, static converters (for example, rectifiers) and inductors; parts thereof: 8504.40 Static converters:
Other ..

8542 Electronic integrated circuits and microassemblies; parts thereof: 8542.60.00 Hybrid integrated circuits ..

Heading 8542, which is in Chapter 85, HTSUS, provides for electronic integrated circuits. Note 5(b) to Chapter 85, HTSUS, provides, in pertinent part:

“Electronic integrated circuits and microassemblies” are: Hybrid integrated circuits in which passive elements (resistors, capacitors, interconnections, etc.) obtained by thin- or thick-film technology and active elements (diodes, transistors, monolithic integrated circuits, etc.) obtained by semiconductor technology, are combined to all intents and purposes indivisibly, on a single insulating substrate (glass, ceramic, etc.). These circuits may also include discrete components.

The Electrical Engineering Handbook (the “Engineering Handbook”) (Richard C. Dorf, Ed.) explains that thick film resistors are formed by screen printing on a substrate, usually alumina, followed by sintering at approximately 800 degrees Celsius for 10 minutes. At 1104. The Oxford English Dictionary (www.askoxford.com) states that to “screen-print” is to “force ink on to (a surface) through a prepared screen of fine material so as to create a picture or pattern.” More generally, the Engineering Handbook explains, “deposited film resistors are formed by depositing resistance films on an insulating substrate which are etched and patterned to form the desired resistive network. Depending on the thickness and dimensions of the deposited films, the resistors are classified into thick-film and thin-film resistors.” At 13. See generally Headquarters Ruling Letter (“HQ”) 961050, dated May 1, 2000, regarding the manufacturing of hybrid integrated circuits.

In NY K83213, we are told that the converters under consideration are formed by laminating copper foil onto a polyamide substrate, which is then photo-exposed to a conductive pattern. The copper is then layered with solder and a protective coating applied. We find this process to be different from the thick-film process described above. We note that, in order to be considered a “hybrid integrated circuit”, Note 5(b) to Chapter 85, HTSUS, requires (1) the passive elements to be obtained by thin- or thick-film technology, and (2) the active elements to be obtained by semiconductor technology. The subject converters do not fulfill the terms of Note 5(b), because their passive elements are not manufactured using thick- or thin-film technology. Consequently, the subject converters are not classifiable in heading 8542, HTSUS.

Heading 8504, HTSUS, provides for, inter alia, static converters. The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80. Explanatory Note 85.04(II)(D) indicates that direct current converters, by which direct current is converted to different voltages, are included in the group “electrical static converters”. Because the subject converters convert direct current to different voltages, we find that they are properly classified in heading 8504, HTSUS.

HOLDING:

By application of GRI 1, Ericsson’s PKM, PKL, PKJ, and PKB series of DC to DC converters are correctly classified in heading 8504, HTSUS, and are specifically provided for in subheading 8504.40.95, HTSUS, which provides for: “Electrical converters, static converters (for example, rectifiers) and inductors; parts thereof: Static converters: Other.”

The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.

EFFECT ON OTHER RULINGS:

NY K83213, dated March 10, 2004, 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 and Trade Facilitation Division

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