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NY M84961




July 28, 2006

CLA-2-85:RR:NC:1:108 M84961

CATEGORY: CLASSIFICATION

TARIFF NO.: 8525.10.90; 8543.89.9795 ; 9801.00.10

Mr. Brian F. Walsh
Barnes, Richardson & Colburn
303 East Wacker Drive, Ste. 1100
Chicago, IL 60601

RE: The tariff classification and marking status of wireless microphone systems and a guitar system under the North American Free Trade Agreement (NAFTA) from China; Article 509

Dear Mr. Walsh:

In your letter dated June 28, 2006, on behalf of Shure Incorporated, you requested a tariff classification ruling and marking determination on wireless microphone systems and a guitar system under NAFTA. Samples are being returned as requested.

The subject merchandise, based on the submitted samples and information, is referred to as the “PGX Shure Wireless Microphone Systems.” This merchandise encompasses three systems: The PGX Instrument System, the PGX Guitar System, and the PGX Handheld System.

The PGX Instrument System includes the following:
a clip-on condenser instrument microphone (inclusive of a condenser cartridge assembly and a microphone assembly), which is wholly produced in Mexico and shipped to China. This microphone, featuring a gooseneck with a clip-on clamp, is stated to detect sound information as changes in air pressure patterns, which they interpret into electric current. This electric current can then be amplified and sent to a speaker to convert back to audio waves.
a bodypack transmitter, which is stated to be assembled in China using a Taiwanese printed circuit board and other minor US components, is a wireless transmitter that attaches to a belt, waistband or guitar strap to enable hands-free mobility. This transmitter receives the audio signals in the form of electrical signals from the microphone and converts the signals into RF signals and transmits these signals in a certain frequency.
a diversity receiver, which is stated to be assembled in China using a Taiwanese printed circuit board and other minor US components, is a wireless device that converts the reception of the RF signals from the above-stated transmitter into audio signals. It is stated that this receiver outputs the signal to other devices that are used to convert electric signals into sound (e.g., mixer, amplifier, and speakers).
an AC adapter which is wholly manufactured in China.
two AA batteries which are purchased directly from a US battery manufacturer and then shipped to China.
a cable management device which originates in Mexico for shipment to China.
a user guide which is printed in the US and shipped to China.
a plastic carrying case which is produced in the US with specially designed interior foam for supporting the various system components.

The PGX Guitar System includes the following:
an instrument cable, which is wholly produced in China, connects a guitar or bass to a bodypack transmitter.
a bodypack transmitter, assembled in the United States at the importer’s facility, that is stated to be comprised of domestic components and a Taiwanese printed circuit board, which is then shipped to China. It is stated that this transmitter is a wireless device, which similarly operates as the above-described transmitter of the PGX Instrument System.
a diversity receiver, assembled in the United States at the importer’s facility, that is stated to be comprised of domestic components and a Taiwanese printed circuit board, which is then shipped to China. This article is a wireless device that similarly operates as the above-described receiver of the PGX Instrument System.
an AC adapter that is wholly produced in China.
two AA batteries which are purchased directly from a US battery manufacturer and then shipped to China.
a user guide which is printed in the US and shipped to China.
a plastic carrying case which is produced in the US with specially designed interior foam for supporting the various system components.

The PGX Handheld System includes the following:
a wireless handheld microphone, assembled in the United States at the importer’s facility, that consists of a wireless microphone head, wholly manufactured in Mexico, and a handle portion, wholly made in China, which contains the microphone’s transmitter; it is stated that these two components will be screwed together to form a finished-wireless, handheld microphone in China.
a diversity receiver, assembled in the United States at the importer’s facility, that is stated to be comprised of domestic components and a Taiwanese printed circuit board, which is then shipped to China. This article is a wireless device that similarly operates as the above-described receiver of the PGX Instrument System.
an AC adapter that is wholly produced in China.
two AA batteries which are purchased directly from a US battery manufacturer and then shipped to China.
a user guide which is printed in the US and shipped to China.
a plastic carrying case which is produced in the US with specially designed interior foam for supporting the various system components.

It is stated that the components of each system, which make up sets for tariff classification purposes, will be put up together in their fitted plastic carrying case in China. This plastic case is then placed in an additional cardboard retail packaging in China in noting that this retail packaging will bear the artwork and display system information including its contents, capabilities, and a country of origin marking legend. Further, this system will be ready for retail sale upon importation into the United States.

You claim that the PGX Instrument System should be classified under subheading 8518.10.8030, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Microphones and stands therefor: Other: Microphones.” Further, you claim that the PGX Guitar System should be classified under subheading 8544.41.8000, HTSUS, which provides for other electric conductors, for a voltage not exceeding 80V, fitted with connectors, other.

These claims are substantiated in stating that the input devices (the microphone for the PGX Instrument System and the instrument cable for the PGX Guitar System), based on the reasoning in NY Ruling K83794, impart the essential character of these sets. It is argued that the input-microphone components of the PGX Instrument System and the Guitar System are very similar in function to the microphone found to impart the essential character of the system under consideration in NY K83794 in that the entire systems are designed around its function and use by an individual.

The essential character of the set in NY K83794 was imparted by the wireless microphone with a self-contained transmitter and since the PGX Instrument System is also found to operate as a wireless microphone, consideration of classification under heading 8518, HTS, is precluded. Further, with respect to the PGX Guitar System, the essential character is imparted by the bodypack transmitter of US origin in producing infrared communication between the transmitter and the receiver.

It should be noted that under NAFTA, there are certain prohibitions in the law against the transshipment of originating goods outside the territories of the NAFTA countries. In particular, Section 16 of Part 181, Appendix (19 C.F.R. Part 181, Appendix), states:

A good is not an originating good by reason of having undergone production that occurs entirely in the territory of one or more of the NAFTA countries that would enable the good to qualify as an originating good if subsequent to that production
the good is withdrawn from customs control outside the territories of the NAFTA countries; or
the good undergoes further production or any other operation outside the territories of the NAFTA countries, other than unloading, reloading, or any other operations necessary to preserve the good in good condition, such as inspection, removal of dust that accumulates during shipment, ventilation, spreading out or drying, chilling, replacing salt, sulphur dioxide, or other aqueous solutions, replacing damaged packing materials and containers and removal of units of the good that are spoiled or damaged and present a danger to the remaining units of the good, or to transport the good to the territory of a NAFTA country.

According to your submission, the various components of these sets will be shipped to China, some of which will require further processing, to be put up together (with other system components of Chinese origin) as a set in a retail-packed condition. Consequently, these components will be removed from customs control and subject to further production in a non-NAFTA country. Pursuant to Section 16 of Part 181, Appendix, the subject sets will not be eligible for NAFTA preferential tariff treatment.

The applicable subheading for the PGX Instrument System and the PGX Handheld System will be 8525.10.90, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Transmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras; still image video cameras and other camera recorders; digital cameras: Transmission apparatus: Other. The rate of duty will be free.

The applicable subheading for the PGX Guitar System will be 8543.89.9795, HTSUS, which provides for “Electrical machines and apparatus, having individual functions, not specified or included elsewhere ... : Other machines and apparatus: Other: Other: Other: Other: Other”. The rate of duty will be 2.6 percent ad valorem.

Since the bodypack transmitter, imparting the essential character of the PGX Guitar System is of US origin, this office finds that subheading 9801.00.10, HTS, would apply to this component. This subheading provides for the duty-free entry of products of the U.S. that are returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided there has been compliance with the documentary requirements of section 10.1, Customs Regulations (19 C.F.R. §10.1).

Based on T.D. 91-7, when the bodypack transmitter (produced in the United States from domestic and foreign components) of the PGX Guitar System meets the conditions and requirements of this tariff provision, a classification allowance (from the full value of the set) is made for the cost or value of the bodypack transmitter.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.

In reference to marking, you are inquiring not only on the proper marking for the complete systems (sets) from China but also on the proper marking for the individual components of the handheld microphone, comprising the PGX Handheld System, which is imported into the United States and assembled at the importer’s facility.

It is stated that based on Section 102.11(b) of the NAFTA marking rules, you feel that the individual components of the handheld microphone should be marked with the country of origin of Mexico, since the essential character of this merchandise is imparted by the microphone head.

It is also stated, in regard to Section 102.11(c), that the PGX Instrument System, the PGX Guitar System, and the PGX Handheld System, possessing the input devices which impart the essential character of these sets, should reflect Mexico, China, and Mexico, respectively, as the proper countries of origin. Alternatively, you state that if more than one component is found to impart the essential character, then this merchandise should be marked to reflect the countries of origin of the input devices, the transmitters, and the receivers.

You also argue that only the above-stated components (the input devices, transmitters, and receivers) should be marked since marking the remaining components of these sets would be overly cumbersome. You support this position in citing HQ ruling 734569 dated March 17,1993 and T.D. 91-7. You note in extracting a quote from the HQ decision that Customs ruled that the burden of the importer would be minimized in not marking all of the components from a variety of countries, comprising theses kits/sets, since the country of origin of the major components would be the ultimate purchaser’s interest. Further, you extract a statement from the above Treasury Decision, in regard to substantial transformation analysis, which calls for a common sense approach in which the marking of every item may be impractical, because the items in the collection of goods are too numerous.

It is also requested, based on Section 134.22 of the Customs Regulations, that only the retail-packed containers of the sets be marked, thereby exempting from marking the above individual components.

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.

Section 134.45(a)(2) of the regulations, provides that "a good of a NAFTA country may be marked with the name of the country of origin in English, French or Spanish.” Section 134.1(g) of the regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules.

As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.

With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable.

With respect to the marking of the complete systems/sets, in reference to the PGX Instrument System and the PGX Handheld System, Section 102.11(c) of the NAFTA marking rules reads: “(c) Where the country of origin cannot be determined under paragraph (a) or (b) of this section and the good is specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, the country of origin of the good is the country of all the materials that merit equal consideration for determining the essential character of the good.

Based on this marking regulation, this office has determined that the PGX Instrument System should be marked to reflect the countries of origin of the input device, the transmitter, and the receiver, which merit equal consideration for determining the essential character. Therefore, in reference to Section 102.11(c), the proper countries of origin for this system will be Mexico for the clip-on condenser instrument microphone and China for the bodypack transmitter and the diversity receiver.

In regard to the PGX Guitar System, this office disagrees that the marking of each component in the set would be cumbersome with respect to the number of components and countries involved (in this case one foreign country). It should be noted that in HQ ruling 734569 there were more articles in the kit and it was clearly stated in the ruling that “this departure from requiring each component in a set to be marked with country of origin is strictly limited to the facts in the instant case.” Moreover, the example in the Treasury Decision, T.D.91-7, addressed a collection of goods that were comprised of numerous articles, which is not the case in reference to the subject set. In fact, in this decision, it was ruled that the marking of the individual components of a set was “consistent with the purpose of the marking statute since the ultimate purchaser’s decision as to whether to buy the set might be influenced by the country of origin of any of the items in the set, whether or not an item gives the set its essential character.”

The above-noted components for the PGX Instrument System and all of the above-stated components of the PGX Guitar System, found to be of Mexican and/or Chinese origin, should be conspicuously, legibly and permanently marked in satisfaction of the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134. Moreover, this office notes for your information that the Federal Trade Commission (FTC) has jurisdiction over the marking of U.S.-made articles. Any inquiries on that subject should be directed to: Federal Trade Commission, Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508.

An article is excepted from marking under 19 U.S.C. 1304 (a)(3)(D) and section 134.32(d), Customs Regulations (19 CFR 134.32(d)), if the marking of a container of such article will reasonably indicate the origin of such article. Accordingly, if Customs is satisfied that the article will remain in its container until it reaches the ultimate purchaser and if the ultimate purchaser can tell the country of origin of the above-described components of each set by viewing the containers in which they are packaged, the individual articles would be excepted from marking under this provision.

Therefore, marking the retail-packed cartons, according to the above-cited marking requirements, in which the specified components of each set are imported and sold to the ultimate purchaser in lieu of marking the articles themselves is an acceptable country of origin marking for this imported merchandise provided the port director is satisfied that the article will remain in the marked retail-packed boxes until they reach the ultimate purchaser.

Your inquiry does not provide enough information for us to give a marking ruling on the individual components of the handheld microphone of the PGX Handheld System, which subsequently affects the marking ruling on the PGX Handheld System. Your request for this marking ruling should include the following information: a description of the condition of each component at the time of its US importation (in regard to how it is packed and what accessories or other articles may be packed with each component); the time difference between the US importation of the microphone head and the handle containing the transmitter (noting they are produced in two different countries); if these components are being imported together, please state from where they were shipped and how they were packed upon importation; a sample of each component in its packed condition at the time of its US importation and a sample of this article when assembled before being shipped to China; an detailed explanation of the assembly operation on this handheld microphone in the US; and a description of all the work performed on this microphone in China. When this information is available, you may wish to consider resubmission of your request. We are returning any related samples, exhibits, etc. If you decide to resubmit your request, please include all of the material that we have returned to you.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19CFR Part 181).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Michael Contino at 646-733-3014.

Sincerely,

Robert B. Swierupski
Director,

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