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HQ H012688

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August 31, 2007

CLA-2 OT:RR:CTF:TCM H012688 IOR

CATEGORY: CLASSIFICATION

Tariff No.: 8525.80.50

Lee Silberzahn

Manager, Compliance Systems
Sony Electronics Inc.
1 Sony Drive, MD 1E4
Park Ridge, NJ 07656

RE: Digital video camera

Dear Mr. Silberzahn:

This is in response to your ruling request of May 11, 2007, to the National Commodity Specialist Division (NCSD) New York, requesting a binding ruling on the classification under the Harmonized Tariff Schedule of the United States (HTSUS), of the Model NSC-GC1 digital camera, on behalf of Sony Electronics Inc. (“SEL”). Your ruling request was referred to this office by the NCSD for reply. In reaching our decision, we also considered the additional information submitted on August 24, 2007.

FACTS:

The article at issue is the Sony Model NSC-GC1 digital camera (“NSC-GC1). Shipments of the NSC-GC1 are expected to begin in August 2007. The documentation submitted for the NSC-GCI describes it as a “Network Sharing Camera”, and a “5Mega Pixels CMOS Camera”, and provides the following preliminary specifications. The specifications are as follows: still image file format: JPEG; still image resolution: 5M, 3:2, 3M, 1M, VGA; 1/2.5” size, 5.0 MEGA-pixel CMOS; movie file format: MPEG4 (.mp4); movie resolution – 4:3 recording only; 640x480(VGA) 30 fps/320x240(QVGA) 30 fps, 15fps; zoom digital zoom only: 4x; 2.4” LCD monitor (153K); no CVF; built-in flash; upload mark button; memory stick duo slot; monaural recording; NTSC/PAL selectable; PictBridge; built-in PC software; no MP3 function; no voice memo function; USB streaming; built-in 32MB internal memory (user area 8MB or none); built-in lithium-ion battery; continuous recording time: TBD; multi-language; USB 2.0.

You summarize the specifications, stating that the NSC-GC1 has 5 different grades of fineness of resolution for storing still images and in video mode can only record in 4:3 aspect with 2 different grades of resolution. You further explain that the NSC-GC1 captures and stores still images and video movies on Memory Stick Duo removable flash media, and that the NSC-GC1 has no significant internal capacity for storing images or video. The 32 MB internal memory is for storing the PC software applications. The number of still images and the duration time of video movies depend on the capacity of the flash memory. With the internal memory, the NSC-GC1 can store from one to 40 still images, depending on the resolution used, or from 10 seconds to 1:50 minutes of video, depending on the resolution used. The suggested retail price of the NSC-GC1 is $199.

The photo provided shows that the NSC-GC1 has a black rectangular shape with no protruding parts, and with the camera lens on one of the long narrow sides of the camera. The camera is shown in a vertical position as if it were standing on its shorter end, with the lens in front. The Sonystyle.com website describes the NSC-GC1 as a “sharing camcorder” and “MPEG4 net sharing camcorder.” The photo shows the camera is marked with “GC1 Net-Sharing Cam.” The brief description of the NSC-GC1 states “[c]apture high-quality digital video and broadcast it live to your friends and family over the Web with this compact, highly advanced camcorder.” Another description on the same web page states as follows:

Share your world. Shoot crystal clear footage with the NSC-GC1 MPEG4 net sharing camcorder and keep your viewers on the edge of their seats. Thanks to the 2.4” SwivelScreen™ LCD and SteadyShot® Picture Stabilization System, video will be easy to capture and a joy to watch. The long-lasting LITHIUM Ion battery system lets you enjoy the filming experience longer, while the USB interface enables you to share your memories with the world over the Internet.

None of the narrative information on the Sonystyle website refers to still image capabilities of the NSC-GC1. The still image features are mentioned in the specifications. In the specifications it is stated that the NSC-GC1 has recording capability up to six hours using an 8GB Memory Stick® media card, but does not address the number of still photographs that could be recorded using the same media card.

You assert that subheading 8525.80.40, HTSUS, and no other heading or subheading covers the NSC-GC1 in whole or in part. You assert that subheading 8525.80.40, HTSUS, which provides for “.digital still image video cameras” completely describes the NSC-GC1, in that the article uses “digital” technology, captures and stores “still images”, captures and stores “video”, and is a “camera.” You cite to NY Rulings R04505 and R04507, dated August 15, 2006, and R04381, dated July 21, 2006 in which digital cameras capable of capturing and storing digital still images and video were classified as “digital still image video cameras.” You assert that there is no material difference between the cameras which were classified in the NY Rulings and the NSC-GC1.

ISSUE:

Whether the NSC-GC1 is classified in subheading 8525.80.40, HTSUS, as a digital still image video camera, or in subheading 8525.80.50, HTSUS, as “other.”

LAW AND ANALYSIS:

Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, 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 2007 HTSUS provisions under consideration are as follows:

8525 Transmission apparatus for radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video camera recorders:
Television cameras, digital cameras and video camera recorders:
Digital still image video cameras..
8525.80.50 Other.

The classification issue of the NSC-GC1, is at the subheading level. To determine in which subheading the NSC-GC1 is classified, we must employ GRI 6, which permits the comparison of same-level subheadings within a heading, in part by application of Rules 1 through 5, applied by the appropriate substitution of terms. There is no issue as to the applicable 6-digit subheading, the applicable one is subheading 8525.80.

The issue is at the 8-digit subheading level. Subheading 8525.80.40, HTSUS, provides for those articles commonly and commercially referred to as digital cameras, which perform still image capture. See, e.g., HQ 966072, dated September 4, 2003. HQ 966072 pertained to subheading 8525.40.40 HTSUS, which is subheading 8525.80.40 in the 2007 HTSUS. The scope of the heading did not change with the amendment of the HTSUS. The language in the subheading text, “digital still image video camera” is derived from a description of a digital still camera fitted with a Charge Coupled Device (CCD) and based on video recorder technology. Cameras which record still images using electronic sensors instead of film have been referred to as “still video cameras.” See HQ 960384, dated April 1, 1999, and HQ 960664, dated April 20, 1999. Video camera recorders, commonly and commercially known as “camcorders”, which perform sequential image capture, are classified in subheading 8525.80.50, HTSUS. Therefore, we do not agree that the inclusion of the term video in the subheading text indicates that the camera is capable of capturing and storing video. The NSC-GC1 performs the functions of both a digital still image video camera and a video camera.

Under Note 3 to Section XVI, HTSUS, the NSC-GC1 is considered to be a composite machine that has the functions of both a digital camera and video camera. Note 3 to Section XVI, HTSUS, provides that:

Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.

In HQ 966270, dated June 3, 2003, in footnote 4, it was stated that a principal use analysis could be helpful to establishing the principal function of composite machines. To determine the principal use, Additional U.S. Rule of Interpretation (AUSRI) 1 dictates how the tariff classification should be construed. See, e.g., Primal Lite, Inc. v. United States, 182 F.3d 1362 (Fed. Cir. 1999). AUSRI 1 provides that:

In the absence of special language or context which otherwise requires –

(a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.

It is the principal use of the class or kind of goods to which the imports belong, at or immediately prior to the time of importation, and not the principal use of the specific import that is controlling under the General Rules of Importation. See Group Italglass U.S.A., Inc. v. United States, 17 CIT 1177, 1177, 839 F. Supp. 866, 867 (1993). The class or kind of goods is limited to those with which the imported goods are “commercially fungible.” Primal Lite, Inc. v. United States, supra.

The courts have provided factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. These factors include: 1) general physical characteristics; 2) expectation of the ultimate purchaser; 3) channels of trade; 4) environment of sale (accompanying accessories, manner of advertisement and display); 5) usage of the merchandise; 6) economic practicality of so using the import; and 7) recognition in trade of this use. See Essex Manufacturing, Inc. v. United States, No. 2006-1, slip op. at 14 (Ct. Int’l Trade Jan. 3, 2006). See also Lenox Collections v. United States, 20 CIT 194, 196 (1996). See also United States v. Carborundum Co., 63 CCPA 98, 102, 536 F.2d 373, 377 (1976), cert denied, 429 U.S. 979 (1976); G. Heileman Brewing Co. v. United States, 14 CIT 614, 620 (1990); and Kraft, Inc. v. United States., 16 CIT 483, 489 (1992).

In the ruling request we are not provided with information that addresses each of the above factors. However, we will apply the facts we have to the factors to the extent possible.

General Physical Characteristics

The shape of the NSC-GC1 is similar to some types of digital still image cameras, however, unlike a digital still image camera, the NSC-GC1 is depicted as being something one holds horizontally as opposed to vertically. When viewed in the horizontal position, with the long narrow side being considered the front, it has more of an appearance of a video camera than a digital still image camera. The NSC-GC1 is also imprinted with the words “net-sharing cam.” The term “cam” is associated with video as opposed to still images. For example a “web cam” refers to a device that captures live video, and a “camcorder” refers to a video recorder.

With the internal memory, the NSC-GC1 can store from one to 40 still images, depending on the resolution used, or from 10 seconds to 1:50 minutes of video, depending on the resolution used. Any further quantity of photos or length of video that can be captured depends upon the capacity of the separate flash memory being used, and we do not take any such capacity into consideration. According to our research, the shooting time for video cameras generally ranges from 60 minutes to 6 hours, and the number of photos recorded generally ranges from 100 to 1,000. The number of photos and length of video depends on the mode being used and the type of photo. The storage capability of the NSC-GC1, using internal memory is at the low end for both still images and video. We do note that the NSC-GC1 captures still images in five grades of resolutions, and video in two grades of resolution. However, no information with regard to the significance of that factor was provided.

Based on the fact that the NSC-GC1 has the appearance of a video camera and is called a “cam,” we find that the general physical characteristics of the NSC-GC1 indicate that it is a video camera as opposed to a still image video camera. As the storage capability using the internal memory only is low for both still images and video, it has little or no bearing on the principal function of the NSC-GC1.

Expectation of the Ultimate Purchaser

The advertising literature on the Sonystyle website is geared entirely to the video camera capabilities of the NSC-GC1. Based on this criterion, we find the expectation of the ultimate purchaser to be that they are purchasing a video camera.

Channels of Trade

We do not have any information with respect to channels of trade. Therefore, this factor does not help us determine the principal function of the subject camera.

Environment of Sale

Next, we consider the environment in which the merchandise is advertised and displayed. The only information we have with respect to this criterion is the Sonystyle web site. The website has one category for cameras and camcorders, and within that category the NSC-GC1 is found both under digital cameras and camcorders. The description for the NSC-GC1 in each states “capture quality digital video and broadcast it live over the Web.” Further, the narrative description of the NSC-GC1 on the Sonystyle website is limited to the video camera aspects of the article. Based on this criterion, we find that the NSC-GC1 is sold as a video camera.

Usage of the Merchandise

We do not have any information with respect to usage of the merchandise. Therefore, this factor does not help us determine the principal function of the subject camera.

Economic Practicality of So Using the Product

The NSC-GC1 appears to be in the low-price range of digital still image video cameras, and at the low-price range of video cameras. Therefore, while we do not have evidence of the usage of the NSC-GC1, given the price range, it would be economically practical to use it as a video camera. Given the emphasis on the video capability and the physical make-up adapted for video use, it would not be economically practical to use the NSC-GC1 principally as a digital still image camera. Based on this criterion, we find that the NSC-GC1 has the characteristics of a video camera.

Recognition in Trade of this Use

The crave.cnet.com website has published a review of the NSC-GC1, dated July 17, 2007, in which it refers to the NSC-GC1 as a “new pocket camcorder.”
http://crave.cnet.com/8301-1_105-9745833-1.html. The website refers to itself as a blog from CNET about new “gadgets”. CNET is a website that provides news and reviews about new items in technology and consumer electronics. The website states that the NSC-GC1 is targeted at the “You Tube crowd” “You tube” is a video sharing website where users can upload, view and share video clips. , which indicates that it is targeted for use as a video camera. Another website, camcorderinfo.com, has published a review of the NSC-GC1, dated July 18, 2007, which refers to the NSC-GC1 as a “new camcorder” and states that the specs of the NSC-GC1 “make it clear that Sony has geared the NSC-GC1 toward a young, hip crowd of online video makers. http://www.camcorderinfo.com/content/Sony-NSC-GC1-Pushes-Online-Video-32962.htm. Both reviews indicate that the NSC-GC1 is a video camera, and take little notice of its still image capability. Based on this criterion, we find that the NSC-GC1 has the characteristics of a video camera.

Based on the above factors, we must determine the principal function of the subject camera and whether such a determination can be made. We conclude that there are sufficient factors, in particular the general physical characteristics, environment of sale, and the recognition in trade, that support the conclusion that the NSC-GC1 has the principal function of a video camera. With respect to the cameras classified in NY Rulings R04505, R04507, and R04381, the NSC-GC1 is distinguishable because in its description and advertising the video capability is emphasized over the still image capability.

Therefore, on the basis of GRIs 1 and 6, and Note 3 to Section XVI, HTSUS, we find the NSC-GC1 is classified in subheading 8525.80.50, HTSUS, as: “Transmission apparatus for radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video camera recorders: Television cameras, digital cameras and video camera recorders: Other.”

HOLDING:

By application of GRIs 1 and 6, and Note 3 to Section XVI, HTSUS, the Sony NSC-GC1 digital video camera is classified in subheading 8525.80.50, HTSUS, as: “Transmission apparatus for radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video camera recorders: Television cameras, digital cameras and video camera recorders: Other” with a column one, general duty rate of 2.1%.

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 the internet at www.usitc.gov/tata/hts/.

Sincerely,

Gail A. Hamill, Chief
Tariff Classification and

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See also:

• Tariff No.: 8525.40.40 - Digital still image video cameras
• Tariff No.: 8525.80.40 - Digital still image video cameras
• Tariff No.: 8525.80.50 - Television cameras, digital cameras and video camera recorders, NESOI