CLA-2 R:C:M 958082 LTO
Ms. Madeline B. Kuflik
Panasonic Company
One Panasonic Way
Secaucus, New Jersey 07094
RE: S-3 Security System (Video Doorphone); HQ 081783 revoked; HQ
082289 revoked; camera unit; monitor unit; HQs 087404,
088748, 957722; GRI 3; composite good; EN to GRI 3(b); EN to
section XVI; section XVI, notes 3 and 4; subheading 8517.81.00
Dear Ms. Kuflik:
This is in reference to HQ 081783, issued to you on April
21, 1988, and HQ 082289, issued to you on December 8, 1989, which
concerned the classification of a security system and components
thereof under the Harmonized Tariff Schedule of the United States
(HTSUS). After further review, we have determined that it is
necessary to revoke HQ 081783 and HQ 082289. Pursuant to section
625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended
by section 623 of Title VI (Customs Modernization) of the North
American Free Trade Agreement Implementation Act, Pub. L. No.
103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed
revocation of HQ 081783 and HQ 082289 was published August 2,
1995, in the Customs Bulletin, Volume 29, Number 31.
FACTS:
The subject merchandise is the S-3 Security System (also
referred to as the "Video Doorphone" intercom system), which is
intended to provide video and audio communication between a
visitor at the door of a residence and the occupant outside. The
system consists primarily of two components, a camera unit and
monitor unit. The
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camera unit, or "door unit" (model VA-9020), consists of a CCD
camera, microphone and speaker, while the monitor unit (model
VA-9010) consists of a video monitor with single-line telephone,
which can also be used for outgoing and incoming calls.
ISSUE:
Whether the S-3 Security System is classifiable, according
to note 3 or 4 to section XVI, HTSUS, under heading 8517, HTSUS,
which provides for telephonic apparatus.
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) to the HTSUS
govern the classification of goods in the tariff schedule. GRI 1
states, in pertinent part, that "for legal purposes,
classification shall be determined according to the terms of the
headings and any relative section or chapter notes . . . ."
The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs) constitute the official interpretation of
the Harmonized System. While not legally binding, and therefore
not dispositive, the ENs provide a commentary on the scope of
each heading of the Harmonized System, and are generally
indicative of the proper interpretation of these headings. See
T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
In HQ 081783, the S-3 Security System was classified
according to note 3 to section XVI, HTSUS, as other telephonic
apparatus under subheading 8517.81.00, HTSUS. In HQ 082289, the
System's camera unit and monitor unit, when imported separately,
were also classified under subheading 8517.81.00, HTSUS.
The system's camera unit incorporates a microphone and
speaker, while its monitor unit incorporates a telephone.
Classification of these units, when imported separately, is based
on note 3 to section XVI, HTSUS, which provides as follows:
composite machines consisting of two or more machines
fitted together to form a whole and other machines
adapted 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.
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The audio (telephone, speaker and microphone) and video
(camera or monitor) components of the camera unit and monitor
unit are equally important to the overall functioning of each
unit. It is therefore our opinion that it is not possible to
determine which component performs each unit's "principal
function." Thus, in accordance with
GRI 1, note 3 to section XVI, HTSUS, and based on the principles
of GRI 3(c) (see General EN to section XVI, pg. 1133), the camera
unit is classifiable under subheading 8525.30.90, HTSUS, which
provides for other television cameras, while the monitor unit is
classifiable under subheading 8528.20.00, HTSUS, which provides
for black and white or other monochrome video monitors. See HQ
087077, dated March 27, 1991 (wherein we stated that there are no
HTSUS legal notes or ENs that provide for "unfinished" functional
units). See also HQ 957722, dated May 12, 1995 (although not
specified, a CCD camera and monitor, imported separately, were
similarly classified in accordance with note 3 to section XVI,
HTSUS). HQ 082289 must therefore be revoked.
As there is no single heading that covers all of the
components of this system, it is necessary to resort to GRI 3,
HTSUS, which governs the classification of goods that are, prima
facie, classifiable under two or more headings. GRI 3(a)
requires that the heading which provides the most specific
description shall be preferred to headings providing a more
general description. However, when two or more headings each
refer to part only of the components contained in a composite
good, those headings are to be regarded as equally specific in
relation to those goods. Headings 8525 and 8528, HTSUS, each
refer to part only of the components of the S-3 Security System.
Accordingly, no heading provides a specific description of the
system.
GRI 3(b), HTSUS, provides that "composite goods consisting
of different materials or made up of different components, . . .
which cannot be classified by reference to 3(a), shall be
classified as if they consisted of the material or component
which gives them their essential character, insofar as this
criterion is applicable." The system consists of components
which are separable but can be attached by cables. The
components are "adapted one to the other and are mutually
complementary," in that they form a system that is designed to
provide audio and video communication. See EN to GRI 3(b), pg.
4. Moreover, as the camera unit and monitor unit have specially
designed housings and/or mounting brackets, "the design and
intended use of these components would prevent them from normally
being sold separately." See HQ 087404, dated December 7, 1990;
HQ 957722. Thus, the system is a GRI 3(b) composite good, and it
is classifiable as if consisting of the component which gives the
system its "essential character."
The various components of the camera unit and monitor unit
work together to provide audio and video communication. The
microphone and speaker of the camera unit and the telephone of
the monitor unit function together to provide two-way audio
communication. The camera of the camera unit and the monitor of
the monitor unit - 4 -
function together to provide one-way video communication. As
both units are necessary to perform either audio or video
communication, it is our opinion that they play an equal role in
relation to the use of the system, and that neither gives the
system
its essential character. Thus, it is necessary to resort to GRI
3(c), which states that "[w]hen goods cannot be classified by
reference to 3(a) or 3(b), they shall be classified under the
heading which occurs last in numerical order among those which
equally merit consideration." Accordingly, the S-3 Security
System is classifiable under heading 8528, HTSUS, specifically
under subheading 8528.20.00, HTSUS, and HQ 081783 must be
revoked.
The S-3 Security System cannot be classified according to
note 3 to section XVI, HTSUS. The system consists primarily of
two components, a camera unit and monitor unit, which are
connected together by cables. It does not consist of machines
"fitted together to form a whole." See General EN to section
XVI, pg. 1133 (machines must be "incorporated one in the other or
mounted one on the other, or mounted on a common base or frame or
in a common housing"). Further, the system does not consist of
machines adapted to perform "complementary or alternative
functions." See General EN to section XVI, pg. 1132 (i.e.,
"machine-tools for working metal using interchangeable tools,
which enable them to carry out different machining operations
. . . ."). Thus, reference to note 3 to section XVI, HTSUS, in
this instance is misplaced.
Finally, we note that the system cannot be classified
according to note 4 to section XVI, HTSUS, as a "functional
unit." While the system does consist of individual components,
interconnected by electric cables or other devices, the
components do not "contribute together to a clearly defined
function covered by one of the headings in chapter 84 or chapter
85 . . . (emphasis added)."
HOLDING:
The S-3 Security System is classifiable under subheading
8528.20.00, HTSUS, which provides for black or white video
monitors. The corresponding rate of duty for articles of this
subheading is 5% ad valorem.
If imported separately, the camera unit is classifiable
under subheading 8525.30.90, HTSUS, which provides for other
television cameras (3.8% ad valorem). The monitor unit is
classifiable under subheading 8528.20.00, HTSUS, which provides
for black and white or other monochrome video monitors.
In accordance with 19 U.S.C. 1625(c)(1), this ruling will
become effective 60 days after publication in the Customs
Bulletin. Publication of rulings or decisions pursuant to 19
U.S.C. 1625(c)(1) does not constitute a change of practice or
position in accordance with section 177.10(c)(1), Customs
Regulations (19 CFR 177.10(c)(1)).
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EFFECT ON OTHER RULINGS:
HQ 081783, dated April 21, 1988, and HQ 082289, dated
December 8, 1989, are revoked.
Sincerely,
John Durant,
Director
Commercial Rulings Division