CLA-2 CO:R:C:G 086537 JMH
District Director
55 Erieview Plaza
Cleveland, OH 44114
RE: Internal Advice 8/90, parts of consumer transaction
terminals and automatic teller machines
Dear Sir:
This request for internal advice was initiated by a letter
dated November 22, 1989, from the law firm of Steptoe & Johnson.
Our decision follows.
FACTS:
The articles in question are components of modular delivery
systems (MDSs) imported from England. The components include
circuit card assemblies, card readers, cash dispensing mechanisms
and currency cassettes. The components are used with consumer
transaction terminals (CTTs), secure interior automated teller
machines (ATMs), through-the-wall drive-up ATMs and teller assist
cash dispensing systems.
The subject CTT is a free-standing unit which is directly
connected to a host computer. Its capabilities include
displaying and printing information, transferring funds between
bank accounts, handling stop payment processing, formatting
account statements, providing information on loans, stock market
conditions and bank services, crediting or debiting a debit card,
and acting as a point-of-sale device when a debit card is used as
the means of purchase.
The various ATM models are stand-alone units which are
directly connected to a host computer. They are used in retail
banking facilities. The ATMs perform automatic banknote
dispensing functions, deposit receipt, statement printing, and
account transfer functions.
The teller assist cash dispensers are stand alone units that
are cassette based, high speed, cash dispensers. They are
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designed for use in financial institutions as a quick and simple
method from which the teller dispenses cash. These dispensers
can operate on-line attached to an intelligent terminal or off-
line with an alphanumeric audit printer. The software package
used with the dispensers enables the machines to dispense
currency, balance figures, provide unit status messages, banknote
management, and error recovery. The teller assist cash
dispensers can also be used with a high speed electronic coin
dispenser.
The circuit card assemblies are composed of printed circuit
boards, including the motherboard and smaller circuit card
assemblies. These assemblies control the functions of the CTT
and the ATMs.
The card readers are electronic mechanisms which read the
magnetic strip information on a bank card and pass the
information to the host computer. The card reader is able to
write information on the card. The card readers are used with
the CTT and the ATMs.
There are two cash dispensing mechanisms at issue. Both
provide fast, efficient, and secure handling of banknotes. The
first cash dispensing mechanism is of modular design. The
mechanism may be used with ATMs or the teller assist dispensing
mechanisms. It provides rear delivery of banknotes, with front
access for the servicing and replenishing of notes. The
banknotes are stored in cassettes and loaded into feed modules
from the front of the device. The mechanism accommodates two to
six currency cassettes. The second cash dispensing mechanism is
similar to the first. The two differences are that the second
provides only front access to the notes and dispenses only up to
four denominations.
The currency cassettes in question are used in conjunction
with the cash dispensing mechanisms. The banknotes are placed
into the cassettes which are then placed in the dispensing
mechanisms. The cassette has its own security for the removal
and replenishment of banknotes. The cassettes are for use with
ATMs and the teller assist dispensing mechanism.
ISSUE:
Whether the parts in question are properly classified within
heading 8473, HTSUSA, as parts of automatic data processing
machines.
LAW AND ANALYSIS:
The classification of merchandise under the HTSUSA is
governed by the General Rules of Interpretation (GRI's). GRI 1,
HTSUSA, states in part that "for legal purposes, classification
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shall be determined according to the terms of the headings and
any relative section or chapter notes..." The circuit card
assemblies, card readers, cash dispensers, cassettes and parts of
such components used in consumer transaction terminals and ATMs
are not included in the terms of any heading. Therefore, the
section and chapter notes must be examined.
Machinery and mechanical appliances are classified within
the headings of Section XVI, HTSUSA. Section XVI, Note 2,
HTSUSA, governs the classification of parts of machinery and
mechanical appliances. If parts are not included in any of the
headings within Chapters 84 and 85, HTSUSA, then they are to be
classified with the machines with which they are solely or
principally used. Section XVI, Note 2(a) and (b). Therefore,
the classification of the MDSs must be determined so to classify
the parts in question.
In accordance with GRI 1, the terms of the heading must first
be examined when determining the ATMs classification. The ATMs
are specifically provided for within heading 8472, HTSUSA, as
"Other office machines...banknote dispensers..." Tariff
classifications governed by use are determined by the principal
use of the article in question. Additional U.S. Rules of
Interpretation 1(a), HTSUSA. Although the ATMs have several
uses, the principal use is as a banknote dispenser. The proper
classification for the secure interior ATMs and the through-the-
wall drive-up ATMs is within subheading 8472.90.20, HTSUSA, as
"Other office machines...banknote dispensers...Automatic banknote
dispensers and other coin or currency handling machines..."
Heading 8472 also specifically describes the teller assist
cash dispenser. This device is a banknote dispenser. No
distinction exists for dispensers used by bank customers or by
bank tellers. Therefore, the teller assist cash dispenser is
also classified within subheading 8472.90.20, HTSUSA, as "Other
office machines...banknote dispensers...Automatic banknote
dispensers and other coin or currency handling machines..."
The CTT, unlike the ATMs and the teller assist cash
dispenser, is not specifically covered by any heading.
Therefore, GRI 1 requires the use of the applicable section and
chapter notes. Chapter 84, Note 5(A), HTSUSA, defines "automatic
data processing machines (ADPS)." For a machine to be an ADP it
must have four characteristics. The machine must (1) store the
processing program and the data necessary for that program, (2)
be freely programmable by the user, (3) perform arithmetic
calculations required by the user, and (4) execute a program
without human intervention. The CTT in question is not freely
programmable, nor is it able to execute a program without human
intervention. Therefore, the CTT is not an ADP under Chapter 84,
Note 5(A).
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Chapter 84, Note 5(B), HTSUSA, provides for ADP systems made
of separate units. This note states:
A unit is to be regarded as being a part of the
complete system if it meets all of the following
conditions:
(a) It is connectable to the central processing unit
either directly or through one or more units; and
(b) It is specifically designed as part of such a
system (it must, in particular, unless it is a
power supply unit, be able to accept or deliver
data in a form (code or signals) which can be used
by the system.
Such units entered separately are also to be classified
in heading 8471.
The CTT is directly connected to the host computer. The CTT
is designed to work with the computer system. Furthermore, the
CTT's design has the physical and technical features of an ADP.
It is the opinion of this office that the CTT is an ADP,
classifiable within 8471. The CTT acts as an input/output device
for the computer system. The proper classification for the CTT
is within subheading 8471.92.10, HTSUSA, as "[ADP] machines and
units thereof...Other...Input or output units whether or not
entered with the rest of the system and whether or not containing
storage units in the same housing...Combined input/output
units..."
The circuit card assemblies and the card readers are equally
usable as parts of both the CTT and ATMs. The assemblies and the
card readers are subject to Section XVI, Note 2. Since there are
no headings of chapter 84 or 85 which describe the circuit
assemblies or the card readers, they must be classified according
to the machine with which they are solely or principally used.
Section XVI, Note 2(a) and (b). Since both parts are not solely
used with one machine, it must be determined which of the
machines, the CTT or the ATMs, with which they are principally
used. The use of ATMs in this country clearly dominates over the
use of CTTs. The circuit card assemblies and the card readers in
question are principally used with ATMs and are classified as
parts of ATMs. The appropriate classification for the circuit
card assemblies and the card readers is within subheading
8473.40.20, HTSUSA, as "...Parts and accessories of the machines
of heading 8472...Of automatic banknote dispensers and other coin
or currency handling machines of subheading 8472.90.20..."
The cash dispensing mechanisms and the currency cassettes
are principally used with banknote dispensers -- the ATMS and
the teller assist dispensing mechanism. In accordance with
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Section XVI, Note 2(b), these cash dispensing mechanisms and
cassettes are properly classified within subheading 8473.40.20,
HTSUSA, as "...Parts and accessories of the machines of heading
8472...Of automatic banknote dispensers and other coin or
currency handling machines of subheading 8472.90.20..."
HOLDING:
The consumer transaction terminal is a unit of an automatic
data processing system within the meaning of Chapter 84, Note
5(B), HTSUSA. The CTT is properly classified within, subheading
8471.92.10, HTSUSA, as "[ADP] machines and units
thereof...Other...Input or output units whether or not entered
with the rest of the system and whether or not containing
storage units in the same housing...Combined input/output
units..."
The through-the-wall ATMs and the teller assist dispensing
mechanism are banknote dispensers. Banknote dispensers are
specifically provided for within heading 8472, HTSUSA. The
appropriate classification for the ATMs and the teller assist
dispensing mechanism is within subheading 8472.90.20, HTSUSA, as
"Other office machines...banknote dispensers...Automatic banknote
dispensers and other coin or currency handling machines..."
The circuit card assemblies and the card readers, although
used with both the CTT and the ATMs, are principally used with
the ATMs. Therefore, they are parts of banknote dispensers and
classified within subheading 8473.40.20, HTSUSA, as "...Parts and
accessories of the machines of heading 8472...Of automatic
banknote dispensers and other coin or currency handling machines
of subheading 8472.90.20..."
The cash dispensing mechanisms and the currency cassettes
are principally used with banknote dispensers -- the ATMS and
the teller assist dispensing mechanism. Therefore, they are
parts of banknote dispensers and classified within subheading
8473.40.20, HTSUSA, as "...Parts and accessories of the machines
of heading 8472...Of automatic banknote dispensers and other coin
or currency handling machines of subheading 8472.90.20..."
You should inform the internal advice applicant of this
decision.
Sincerely,
John Durant, Director
Commercial Rulings Division