CLA-2 CO:R:C:M 952297 RFA
District Director of Customs
1 East Bay Street
Savannah, GA 31401
RE: Protest No. 1704-90-000251; Ledascan System; Optical
Measuring and Checking System; Optical Reader; Automatic
Data Processing (ADP) machines; Section XVI, note 1(m);
heading 8471; EN 84.71; EN 90.31; functional unit; Chapter
90, Note 3; Section XVI, Note 4
Dear District Director:
The following is our decision regarding the request for
further review of Protest No. 1704-90-000251, which concerns the
classification of Ledascan System under the Harmonized Tariff
Schedule of the United States (HTSUS). The entry of the subject
merchandise was liquidated on September 21, 1990. The protest
was timely filed on October 19, 1990.
FACTS:
The merchandise, labeled as the "Ledascan" System, is a high
speed number verification system which is used with web-fed
presses or document conveyors. According to the literature,
"[t]he 'Ledascan' number verification system offers two major
benefits: (1) Ledascan is a 100% inspection system which can read
and verify numbers at web speeds of up to 600 ft/min. . . .(2)
Ledascan provides continuous monitoring which can be used to
guarantee high numbering print quality."
The two main components of the Ledascan are: eight charged-
coupled device (CCD) cameras which converts number-shapes into
digital images; and a dedicated high speed processing unit which
receives data from the camera and recognizes the characters. A
single camera is able to scan a "numbering field" up to sixteen
character-spaces wide, containing numerals, letters, punctuation,
symbols, or blanks. The dedicated processing unit is a purpose-
designed computer which has two distinct functions: character
recognition by converting digital camera output into characters
according to pre-set criteria; and comparison with numbers taken
from an external source, or mathematical number verification.
The system can store up to sixteen sets of instructions for
recognition and verification.
The CCD cameras require high intensity, even lighting which
is provided through a fiber optic cable to a small optical head.
The optical head is mounted close to the CCD cameras' lenses.
Kits incorporating cables and hardware to connect the cameras to
the dedicated processor unit were also imported.
The Ledascan System was entered under subheading 8471.99.90,
HTSUS, as other optical readers. The entry for the Ledascan
System was liquidated under subheading 9031.40.00, HTSUS, as
other optical measuring or checking instruments. The kits were
entered under subheading 8473.30.40, HTSUS, as parts and
accessories for ADPs or optical readers. The entry for the kits
was liquidated under subheading 9031.90.40, HTSUS, as parts of
other optical measuring or checking instruments.
The subheadings under consideration are as follows:
8471.99.90: . . .[m]agnetic or optical readers, machines
for transcribing data onto data media in
coded form and machines for processing such
data, not elsewhere specified or included
(con.): [o]ther (con.):. . . [o]ther: . . .
[o]ther:. . . [o]ther. . .
Goods classifiable under this provision have a general,
column one rate of duty of 3.7 percent ad valorem.
9031.40.00 [m]easuring or checking instruments,
appliances and machines, not specified or
included elsewhere in this chapter;. . .
[o]ther optical instruments and appliances
Goods classifiable under this provision have a general,
column one rate of duty of 10.0 percent ad valorem.
8473.30.40: [p]arts and accessories . . . : [p]arts and
accessories of the machines of heading 8471:
[n]ot incorporating a cathode ray tube. . .
Goods classifiable under this provision have a general,
column one free rate of duty.
9031.90.40 [m]easuring or checking instruments,
appliances and machines, not specified or
included elsewhere in this chapter;. . .
[p]arts and accessories: [o]f other optical
instruments and appliances. . .
Goods classifiable under this provision have a general,
column one rate of duty of 10.0 percent ad valorem.
ISSUE:
Whether the Ledascan System is classifiable as other optical
readers or as other optical measuring or checking instruments and
appliances under the HTSUS?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order. GRI 1 provides that classification shall be
determined according to the terms of the headings and any
relative section or chapter notes.
Section XVI, note 1(m) excludes articles provided for in
Chapter 90, HTSUS, from being classified in chapters 84 or 85.
Therefore, if the Ledascan System is provided for in chapter 90,
then consideration of chapter 84 is excluded.
According to the information provided, the Ledascan System
verifies or checks numbers and bar codes to determine if they are
in the proper sequence and meet print quality standards. The
term "checking" is not defined in the HTSUS. A tariff term that
is not defined in the HTSUS or in the Harmonized Commodity
Description and Coding System Explanatory Notes (EN) is construed
in accordance with its common and commercial meaning. Nippon
Kogasku (USA) Inc. v. United States, 69 CCPA 89, 673 F.2d 380
(1982). Common and commercial meaning may be determined by
consulting dictionaries, lexicons, scientific authorities and
other reliable sources. C.J. Tower & Sons v. United States, 69
CCPA 128, 673 F.2d 1268 (1982).
In United States v. Corning Glass Works, 66 CCPA 25,27, 586
F.2d 822, 825 (1978), the Court of Customs and Patent Appeals,
quoting Webster's Third New International Dictionary, 381 (1971),
stated:
"Check" is defined as "to inspect and ascertain the
condition of especially in order to determine that the
condition is satisfactory; *** investigate and insure
accuracy, authenticity, reliability, safety, or
satisfactory performance of ***; to investigate and
make sure about conditions or circumstances ***."
The Ledascan System uses the CCD cameras' optical lenses as
input devices for the images on the checks and converts the
images into electric signals. These electric signals are
compared to referenced characters in the memory of the processing
unit. The processing unit also compares numbering sequences in
production runs with numbering sequences calculated by the
Ledascan System. The processing unit can be programmed so that
when it discovers a discrepancy between the scanned information
and reference characters, it will (i) display a message on its
screen, or (ii) sound an alarm, or (iii) shut down the production
run. Based upon this description of how the Ledascan System
operates, we find that it meets the definition of "checking"
apparatus.
The Ledascan System is comprised of two main components:
eight CCD cameras and a dedicated processing unit. Chapter 90,
note 3 states that the provisions of note 4 to Section XVI apply
to Chapter 90. Section XVI, note 4 states:
Where a machine (including a combination of machines)
consists of individual components (whether separate or
interconnected by piping, by transmission device, 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 [or chapter 90], then the whole falls to be
classified in the heading appropriate to that function.
The subject merchandise is a functional unit that performs a
"checking" function as defined above. Therefore, we find that
the Ledascan System is classifiable under heading 9031, HTSUS, as
other optical checking and measuring instruments and appliances.
The importer argues that the merchandise should be
classified under heading 8471, HTSUS, as an optical reader based
upon the definition set forth in the ENs. The ENs constitute the
Customs Cooperation Council's official interpretation of the
HTSUS. While not legally binding, 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. EN
84.71, page 1300, states in pertinent part:
(II) MAGNETIC OR OPTICAL READERS, MACHINES FOR TRANSCRIBING
DATA ONTO DATA MEDIA IN CODED FORM AND MACHINES FOR
PROCESSING SUCH DATA, NOT ELSEWHERE SPECIFIED OR INCLUDED
This group comprises a wide range of machines,
many being electro-magnetic or electronic, which
usually complement each other and are generally used in
systems for compiling statistics or for accounting or
other operations.
The group includes magnetic or optic readers,
machines for transcribing data onto data media in coded
form and machines which process data and which decode
the result.
The group includes machines only if they are not
elsewhere specified or included. . . .
(A) MAGNETIC OR OPTICAL READERS
Magnetic or optical readers read characters,
generally in a special form, and convert them into
electric signals (impulses) which can be directly used
by machines for transcribing or processing coded
information. . . .
(2) OPTICAL READERS. These do not require the use
of special ink. The characters are read directly by a
series of photoelectric cells and translated on the
binary code principle.
The readers described above are classified in this
heading only if presented separately. When combined
with other machines (e.g., machines for transcribing
data onto data media in coded form and machines for
processing such data in coded form) they are classified
with those machines provided they are presented with
them.
The importer argues that the optical scanners (CCD cameras)
together with the processing unit which makes up the Ledascan
System, meets the definition of an optical reader. Webster's II
New Riverside University Dictionary, 978-79 (1988), defines
"read" as "to examine and grasp the meaning of (written or
printed characters, words or sentences; . . . to interpret the
meaning or nature of through close examination or observation.
. . ."
However, we find that the Ledascan System does not meet the
definition of an optical reader because it does not "read" data
to be used in compiling statistics or for accounting other such
operations. The Ledascan System does not "read" but "checks" or
verifies the data against pre-programed standards for number
accuracy as well as print quality. The function of the entire
unit is specifically provided for in heading 9031, HTSUS, as
other optical measuring or checking instruments or appliances.
Therefore, classification of the merchandise under heading 8471,
HTSUS, is inappropriate.
Because the Ledascan System is a functional unit, we find
that the parts which make up the kit are classified with the
functional unit under subheading 9031.40.00, HTSUS.
HOLDING:
For the foregoing reasons, we find that the Ledascan System
is classifiable under subheading 9031.40.00, HTSUS, as other
optical measuring or checking instruments.
Based upon the above reasoning, you should deny the protest
for the Ledascan System in full. Because the rate of duty under
the classification indicated above for the kit is the same as the
liquidated rate, you should deny the protest in full. A copy of
this decision should be attached to the Customs Form 19 and
provided to the protestant as part of the notice of action on the
protest.
Sincerely,
John Durant, Director
Commercial Rulings Division