CLA-2 CO:R:C:G 087975 MBR
District Director
U.S. Customs Service
10 Causeway Street
Boston, MA 02222
RE: Internal Advice Request 64/90; Classification of Toll
Collection Equipment; Cash Register; Functional Unit; Parts
Dear Sir:
This is in reply to your request for Internal Advice 64/90,
dated August 14, 1990, concerning the classification of Toll
Collection Equipment imported by the Massachusetts Turnpike
Authority, manufactured in Japan by Toshiba.
FACTS:
The merchandise, as imported, consists of 65 lane
controllers, 65 toll terminals (also known as validators), 55
receipt printers, 80 ticket transports, and 3 automatic ticket
issue machines (ATIM). The Massachusetts Turnpike Authority
intends to use the merchandise in several system configurations,
outlined below, to collect tolls for road usage.
System A: (3 Entrance Ticket Systems)
1 Lane Controller
1 Toll Terminal
1 Ticket Transport
3 ATIM
System B: (55 Exit Ticket Systems)
1 Lane Controller
1 Toll Terminal
1 Ticket Transport
1 Receipt Printer
System C: (7 Entrance or Exit Ticket Systems)
1 Lane Controller
1 Toll Terminal
1 Ticket Transport
-2-
15 Ticket Transports are imported as additional spare parts
The Lane Controller connects and regulates the activity of
the systems components and is connected to the main computer in
the toll plaza. It contains an SRC main memory board with
software designed to receive, store, and format data for
transmission to the main computer.
The Toll Terminal consists of a keyboard, keypad, message
display, and indicators which allow the toll collector to open
and close the toll lane, control the traffic lights, and register
vehicle classifications.
The Ticket Transport prints and encodes/decodes magnetic
toll tickets. This information consists of the vehicle
classification, number of axles, toll plaza number, lane number,
date, time, collector ID#, and ticket serial number. Upon
exiting the toll road, another ticket transport reads the
magnetic code and determines the sum of money due.
The ATIM (Automatic Ticket Issuing Machine) also contains a
ticket transport mechanism, however, it functions on a preset
vehicle transaction data program and cannot be used for exiting
vehicles or collection of money.
The Receipt Printer prints toll transaction receipts.
Printed on the receipt is the vehicle classification, toll amount
paid, date, plaza number, collector ID#, and receipt serial
number.
ISSUE:
Are the Toll Collection Systems classifiable in subheading
8470.50.00, HTSUSA, which provides for: "[c]alculating machines;
accounting machines, cash registers, postage-franking machines,
ticket-issuing machines and similar machines, incorporating a
calculating device: [c]ash registers," or in subheading
8470.90.00, HTSUSA, which provides for: "[c]alculating machines;
accounting machines, cash registers, postage-franking machines,
ticket-issuing machines and similar machines, incorporating a
calculating device: [o]ther?"
LAW AND ANALYSIS:
Classification of merchandise under the HTSUSA is in
accordance with the General Rules of Interpretation (GRI's). GRI
1 provides that classification is determined according to the
terms of the headings and any relative section or chapter notes.
The Toll Collection Systems are prima facie classifiable
under the following subheadings:
-3-
8470.50.00 Calculating machines; accounting machines, cash
registers, postage-franking machines, ticket-issuing
machines and similar machines, incorporating a
calculating device: Cash registers
* * * * * * * * * * * * *
8470.90.00 Calculating machines; accounting machines, cash
registers, postage-franking machines, ticket-issuing
machines and similar machines, incorporating a
calculating device: Other
The Harmonized Commodity Description and Coding System
Explanatory Notes (EN) regarding "Cash Registers" provided for in
subheading 8470.50.00, HTSUSA, page 1295, state in pertinent
part:
These machines are used in shops, offices, etc., to provide
a record of all transactions (sales, services rendered,
etc.) as they occur, of the amounts involved, the total of
the amounts recorded and, in some cases, the code number of
the article sold, quantity sold, time of transaction, etc.
The data are introduced manually by means of a keyboard and
a stop, lever or handle. Like calculating and accounting
machines, however, some cash registers have ancillary
facilities for the automatic input of recurrent or pre-set
data (e.g., card or tape readers).
Usually, the result is visually displayed and printed, at
the same time, on a ticket for the customer and on a
tallyroll which is periodically removed from the machine for
checking purposes.
These machines are often combined with a till or drawer in
which the cash is kept.
They may also incorporate or work in conjunction with
devices such as...appliances for transcribing all or part of
the data on transactions onto data media in coded form.
This heading also covers cash registers working in
conjunction, on-line or off-line, with an automatic data
processing machine.
The Harmonized Commodity Description and Coding System
Explanatory Notes (EN), although not dispositive, should be
looked to for the proper interpretation of the HTSUSA. See 54
Fed. Reg. 35128 (August 23, 1989).
The instant merchandise is used to "provide a record of all
transactions" (for both the patron and the toll facility), "as
they occur," for the "services rendered" (use of the toll road),
"of the amounts involved," and also records the vehicle
classification, number of axles, toll plaza number, lane number,
date, time, collector ID#, and ticket serial number. "Data are
introduced manually by means of a keyboard, and a magnetic card
reader is used to retrieve "automatic input of recurrent or pre-
set data." "The result is visually displayed and printed, at the
same time, on a ticket for the patron." "These machines are
combined with a till or drawer in which the cash is kept." These
systems also utilize "appliances for transcribing all or part of
the data onto media in coded form." This merchandise also works
"in conjunction, on-line or off-line, with an automatic data
processing machine." Therefore, the instant merchandise
precisely meets the parameters of the EN for subheading 8470.50,
HTSUSA, governing "Cash registers."
Section XVI, Legal Note 4., provides direction in the
classification of a combination of machines intended to
contribute to a clearly defined function in chapter 84:
Where a machine (including a combination of machines)
consists of individual components (whether separate or
interconnected by piping, by transmission devices, by
electric cables or by other devices) intended to contribute
together to a clearly defined function covered by one of the
headings in chapter 84 or chapter 85, then the whole falls
to be classified in the heading appropriate to that
function.
Clearly, the instant toll collection systems are a
combination of individual components intended to contribute
together to the clearly defined function of cash registers. See
HQ 086121, dated March 20, 1990, for a similar holding regarding
computerized, magnetic card reading point-of-sale terminals.
The court in United States v. Willoughby Camera Stores,
Inc., 21 CCPA 322, 324, T.D. 46,851 (1933), stated: "It is a
well-established rule that a 'part' of an article is something
necessary to the completion of that article. It is an integral,
constituent, or component part, without which the article to
which it is to be joined, could not function as such article."
(Emphasis in original). Therefore, since the additional 15
ticket transports are an integral, constituent, component part
necessary to the proper functioning of these cash registers, they
are properly classifiable as parts of cash registers.
Furthermore, Section XVI, Legal Note 2, states, in pertinent
part:
(a) Parts which are goods included in any of the headings
of chapters 84 and 85 (other than headings 8485 and
8548) are in all cases to be classified in their
-5-
respective headings;
(b) Other parts, if suitable for use solely or principally
with a particular kind of machine, or with a number of
machines of the same heading (including a machine of
heading 8479 or 8543) are to be classified with the
machines of that kind...
The ticket transports are not goods included in any of the
headings of chapters 84 or 85, however, they are suitable for use
solely or principally with cash registers and are, therefore, to
be classified as parts of these machines in subheading
8473.29.00, HTSUSA.
HOLDING:
The instant Toll Collection Equipment, imported by the
Massachusetts Turnpike Authority, manufactured in Japan by
Toshiba, are classifiable in subheading 8470.50.00, HTSUSA,
which provides for: "[c]alculating machines; accounting machines,
cash registers, postage-franking machines, ticket-issuing
machines and similar machines, incorporating a calculating
device: [c]ash registers." The rate of duty is Free.
The 15 additional ticket transports are classifiable in
subheading 8473.29.00, HTSUSA, which provides for: "[p]arts and
accessories (other than covers, carrying cases and the like)
suitable for use solely or principally with the machines of
headings 8469 to 8472: [p]arts and accessories of the machines of
heading 8470: [o]ther." The rate of duty is 3.9 percent ad
valorem.
Sincerely,
John Durant, Director
Commercial Rulings Division