CLA-2 RR:CR:GC 964372 BJB
Mr. Frank J. Desiderio
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
245 Park Avenue
New York, NY 10167
RE: MP3 Music Recorder/Player Wristwatch and Set; Internal flash memory
Dear Mr. Desiderio:
This is in response to a letter from your client, Casio, Inc. (“Casio”), dated June 19, 2000, to the Customs National Commodity Specialist Division, New York, requesting the classification of an MP3 recorder/player wristwatch, wristwatch band, USB cable, owner’s manual, CD software, interface/charger, battery, earphone, and earphone attachment, under the Harmonized Tariff Schedule of the United States (HTSUS). Your client’s letter and attachments were referred to this office for reply. In preparing this ruling, we also gave consideration to your letter of March 22, 2002, and additional submissions of May 3, and 10, 2002. We regret the delay in responding.
FACTS:
The Casio MP3 recorder/player wristwatch, wristwatch band, USB cable, owner’s manual, CD software, battery, interface/charger, earphone, and earphone attachment, are packaged together and advertised for retail sale.
The MP3 recorder/player wristwatch, also described as an “MP3 Wrist Audio Player,” is comprised of an MP3 recorder/player and a digital wristwatch. The MP3 recorder/player (“MP3”) uses Moving Picture Experts Group’s
(“MPEG-3”) file format that compresses audio files. This audio file compression format enables music to be downloaded from the Internet, or audio CDs, at an accelerated rate while minimizing the amount of memory required. Compressed audio data files are transferred from an ADP machine and are recorded into the MP3 recorder/player wristwatch’s (“MP3/watch”) internal flash memory.
The MP3/watch incorporates digital LCD timekeeping components, including function buttons for time and date displays, an alarm, and stopwatch. The MP3 component has 32 MB of internal flash memory. An audio jack socket is located on the left side to connect an earphone adapter and earphones. An LCD display screen is located on the face. The LCD display screen shows mode and function selections. Function buttons for the MP3 provide for MP3 play status, with standard playback functions, including, stop, pause, play, volume, forward, and reverse. Timekeeping function buttons provide for time, date, alarm, and stopwatch selections.
In general, an MP3 has a microprocessor, a “digital signal processor chip” (“DSP chip”), digital-to-analog converter, and an amplifier. The microprocessor monitors the recorded audio files through the playback controls, displays information about the music playing, and sends directions to the DSP chip to instruct it exactly how to process the audio signal. The DSP chip pulls the MP3 audio files recorded in the flash memory and runs a decompression algorithm that undoes the MP3 audio file compression. The digital-to-analog converter turns the bytes back into waves, and the amplifier boosts the strength of the signal, sending it to the audio port where the earphones are connected. See www.howstuffworks.com/mp3-player.
ISSUES:
(1) Is the MP3/wristwatch classifiable in heading 8519, HTSUS, as “other sound reproducing apparatus, not incorporating a sound recording device[,]” in heading 8520, HTSUS, as “other sound recording apparatus, whether or not incorporating a sound reproducing device[,]” or in heading 9102, HTSUS, as “[w]rist watches, pocket watches and other watches including stop watches, other than those of heading 9101[.]”
(2) What is the classification of the MP3/wristwatch, wristwatch band, USB cable, owner’s manual, CD software, interface/charger, battery, earphone, and earphone attachment, imported together, under the HTSUS?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined 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 may then be applied.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are generally indicative of the proper interpretation of these headings. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
I. Classification of the MP3/watch:
The MP3/watch consists of an MP3 and a wristwatch combined together. At
GRI 1, heading 8519, HTSUS, provides for “[t]urntables, record players, cassette players and other sound reproducing apparatus, not incorporating a sound recording device[.]” However, heading 8519, excludes devices that record sound. Heading 8520, HTSUS, provides for “[m]agnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing apparatus[.]” Heading 9102, HTSUS, provides for “[w]rist watches, pocket watches and other watches, including stop watches, other than those of heading 9101[.]” As the MP3/watch is prima facie classifiable in more than one heading, it is necessary to resort to GRI 2. GRI 2(a) does not apply. GRI 2(b), provides in pertinent part that, “[t]he classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.”
GRI 3 provides, “when, by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
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 materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, 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.”
Customs position on the classification of MP3 recorder/players similar to the subject MP3 was addressed in Headquarters Ruling Letter (“HQ”) 963170, dated June 5, 2002 (copy enclosed). In that ruling, Customs determined that an MP3 recorder/player, also with 32 MB of internal flash memory, was classifiable at GRI 1, under subheading 8520.90.00, HTSUS, which provides for “[m]agnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other[.]” Accordingly, we incorporate the relevant LAW AND ANALYSIS section of HQ 963170 into this decision as it is dispositive of the classification of the subject MP3 component. The MP3 component is, therefore, prima facie classifiable under subheading 8520.90.00, HTSUS.
The wristwatch component does not have a “case of precious metal or of metal clad with precious metal” as provided for wrist watches classifiable under heading 9101, HTSUS. Therefore, the subject wristwatch is, prima facie, classifiable under heading 9102, which provides, in pertinent part, for wrist watches “other than those of heading 9101[.]”
As noted above, 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 8520 and 9102, HTSUS, each refer to part only of the components of the MP3/watch. Accordingly, no heading provides a specific description of the merchandise, and it is necessary to apply GRI 3(b).
GRI 3(b), supra., provides that composite goods are classifiable as if they consisted of the component which gives them their “essential character.” EN VIII to GRI 3(b), provides that the “factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight, or value, or by the role of a constituent material in relation to the use of the goods.”
Applying the GRI 3(b) EN criteria, the essential character of the MP3/watch is imparted by the MP3. The MP3 constitutes the bulk of the good in both value and weight. It is also central in achieving the good’s main purpose, to support the recording and playing of audio files to the MP3 for listening in a highly portable manner. The watch component is of comparatively small value. Moreover, the watch’s LCD display, used to show various time functions, also serves to show the MP3 playing status, further supporting the importance of the MP3. The MP3/watch is, therefore, classifiable under subheading 8520.90.00, which provides for “[m]agnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other[.]”
II. Classification of USB cable, owner’s manual, CD software, interface/charger, battery, earphone, and earphone attachment:
The other articles are each described under a different heading. As such, they cannot be classified according to GRI 1. Heading 4901, provides, in pertinent part, for printed books, brochures . . .and similar printed matter (owner’s manual). Heading 8506, provides, in pertinent part, for primary cells and primary batteries (battery). Heading 8518, provides, in pertinent part, for microphones, . . . loudspeakers, . . . and headphones and earphones, whether or not combined with a microphone[;] parts thereof (earphones and earphone attachment). Heading 8524, provides, in pertinent part, for other recorded media for sound or other similarly recorded phenomena (CD software). Heading 8543, provides, in pertinent part, for electrical machines and apparatus, having individual functions, not specified or included elsewhere in Chapter 85 (interface/charger unit). Heading 8544, provides, in pertinent part, for insulated cable, whether or not fitted with connectors (USB cable).
III. Classification of the set:
Each of the goods listed above is a complete article imported together with the MP3/watch. GRI 2(a) is not applicable here. As previously noted, GRI 2(b) provides, that “[t]he classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.” Insofar as two or more headings, each refer to part only of the items, GRI 3(a) does not apply, and we must determine if the goods constitute a “set put up for retail sale” at GRI 3(b).”
The EN to GRI 3(b) indicates that to meet the criteria of a set put up together for retail sale, “articles must:
consist of at least two different articles, which are, prima facie, classifiable in different headings;
consist of products or articles put up together to meet a particular need or carry out a specific activity; and
are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards).”
Applying the GRI 3(b) EN criteria, these several different articles are, prima facie, classifiable in different headings. The articles work together to carry out the specific activity of recording audio files from another audio source onto the MP3/watch’s internal flash memory for retrieval and replay.
The MP3/watch is imported and packaged together for direct sale with the USB cable, owner’s manual, interface/charger, CD software, earphones and earphone adapter, and battery. This is confirmed by information you have provided and obtained from the Internet (e.g., www.web-watches.com.au/mp3/index.html). Under these facts, the articles meet all three criteria of the GRI 3(b) EN, and therefore, form a set put up for retail sale.
To be classified at GRI 3(b), the set must be classifiable as if the set consisted of the one article that gives the whole its “essential character,” insofar as this criterion is applicable. Applying the criteria of EN VIII to GRI 3(b), supra., we conclude that, in this case, the USB cable (classifiable in heading 8544), earphones and adapter (classifiable in heading 8518), the MP3/watch (classifiable in heading 8520), the CD software (classifiable in heading 8524), and interface/charger (classifiable in heading 8543), all support transferring and recording music files to the MP3/watch for listening. It is clear that the MP3/watch is the most important article in achieving this central purpose. The MP3/watch is the most valuable article in terms of marketability, for the importer, and in terms of utility, for the consumer. As such, we conclude that the MP3/watch imparts the “essential character” of the set.
At GRI 3(b) we find that the MP3/watch set is described in subheading 8520.90.00, HTSUS, which provides for “[m]agnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other[.]” See also HQ 965587, issued June 19, 2002, HQ 964936, issued June 19, 2002, and HQ 965529, issued June 25, 2002.
Chapter 85, Legal Note 6, HTSUS, provides that, “[r]ecords, tapes and other media of heading 8523 or 8524 remain classified in those headings when entered with the apparatus for which they are intended.” However, the note “does not apply to such media when they are entered with articles other than the apparatus for which they are intended.” The CD software is for use in an ADP machine. However, it too is packaged with the MP3 set. Therefore, because the CD software is entered with articles other than the apparatus for which it is intended, at GRI 3(b), it is part of the MP3/watch set classifiable under subheading 8520.90.00, HTSUS.
HOLDING:
At GRI 3(b), the Casio MP3/watch, USB cable, owner’s manual, CD software, battery, interface/charger, earphone and earphone adapter, are a set classifiable in subheading 8520.90.00, HTSUS, which provides for “[m]agnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other[.]”
Sincerely,
Myles B. Harmon, Acting Director
Commercial Rulings Division