CLA-2 RR:CR:GC 965762 KBR
Dennis Heck
Yamaha Corporation of America
6600 Orangethorpe Avenue
P.O. Box 6600
Buena Park, CA 90622-6600
RE: Reconsideration of PD C87740; Home Theater Sound System
Dear Mr. Heck:
This is in reference to Port Decision (PD) C87740, issued to you by the Port Director at Otay Mesa, on May 29, 1998, concerning the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of a home theater sound system. We have reviewed PD C87740 and have determined that the classification provided is incorrect.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice was published on July 31, 2002, in Vol. 36, No. 31 of the Customs Bulletin, proposing to modify PD C87740. No comments were received in response to this notice. This ruling modifies PD C87740 by providing the correct classification for the home theater sound system.
FACTS:
PD C87740 concerns the Yamaha AV-S7 CinemaStation System. The system consists of a control center/center channel speaker unit, a subwoofer/200 watt power amplifier, and four satellite speakers. The control center allows the user to command the various functions, such as Cinema DSP, HiFi DSP, and Dolby Pro Logic. Although the control center/center channel speaker has the infra-red remote control receiver and LED indicator lights, the actual signal processor is located within the same cabinet as the amplifier and subwoofer. The amplifier generates 200 watts of total power, with 50 watts going to the subwoofer and 30 watts to each of the five speakers. The system is designed to turn a television into a “surround sound” system. All the components of the system are imported, and will be sold, in the same carton.
In PD C87740, it was determined that the home theater sound system was classifiable as loudspeakers, whether or not mounted in their enclosures, other, under subheading 8518.29.80, HTSUS. We have reviewed that ruling and determined that the classification of the home theater sound system is incorrect. This ruling sets forth the correct classification.
ISSUE:
What is the proper classification under the HTSUS of the subject home theater sound system?
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that virtually all goods are classified by application of GRI 1, that is, 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 interpreting the headings and subheadings, Customs looks to the Harmonized Commodity Description and Coding System Explanatory Notes (EN). Although not legally binding, they provide a commentary on the scope of each heading of the HTSUS. It is Customs practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS provisions under consideration are as follows:
8518 Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures; headphones, earphones and combined microphone/speaker sets; audio-frequency electric amplifiers; electric sound amplifier sets; parts thereof:
Loudspeakers, whether or not mounted in their
enclosures:
8518.21 Single loudspeakers, mounted in the same enclosure
8518.22.00 Multiple loudspeakers, mounted in the same enclosure
8518.40 Audio-frequency electric amplifiers:
8518.40.20 Other
8518.50.00 Electric sound amplifier sets
The AV-S7 CinemaStation System is comprised of three components, the control center/speaker unit, the subwoofer speaker/200 watt amplifier with signal processor, and the satellite speakers. EN 85.18(E) describes the term “electronic sound amplifier set” as consisting of three articles: a microphone, an audio-frequency amplifier, and loudspeakers. The home theater sound system does not contain a microphone. Therefore, we believe that classification of the instant goods in subheading 8518.50.00, HTSUS, is incorrect.
There is no disagreement that the home theater system under consideration, Yamaha AV-S7, is classified in heading 8518. The question is whether these goods form a set put up for retail sale. For the instant case, applying GRI 6 at the subheading level, two provisions at the same level of subdivision within heading 8518 describe the home theater sound system in part, amplifiers and loudspeakers. We turn to GRI 3(b) which states that when goods are prima facie classifiable under two or more (sub)headings, classification shall be effected as follows:
(b) 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) [by reference to the (sub)heading which provides the most specific description], shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
EN (X) for GRI 3(b), states that "[f]or the purposes of this Rule, the term 'goods put up in sets for retail sale' shall be taken to mean goods which:
(a) consist of at least two different articles which are, prima facie, classifiable in different headings . . .; (b) consist of products or articles put up together to meet a particular need or carry out a specific activity; and (c) are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards)."
Here, the AV-S7 CinemaStation System has multiple components of different subheadings; is packaged for the specific activity of providing a sound system for a television, and is packaged in one box for retail sale directly to the consumer without repacking. Therefore, it qualifies as a set pursuant to GRI 3(b). See HQ 085577 (January 10, 1990).
GRI 3(b) states that sets are to be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. Under EN (VIII) to GRI 3(b), 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.
Customs has taken the position that, in an essential character analysis for purposes of GRI 3(b), the role of the constituent materials or components in relation to the use of the goods is generally of primary importance, but the other factors listed in EN (VIII) for GRI 3(b) should also be considered, as applicable (see, e.g., HQ 961095 dated July 20, 1998; HQ 962047 dated May 17, 1999).
The question is which component of the system provides the essential character to the set. The amplifier/sound processor is considered the “heart” of a home theater system. See Howstuffworks.com, “How Home Theater Works”, by Tom Harris. The amplifier and signal processor provide the power to drive the speakers and subwoofer. The signal processor receives a signal from an input device such as a television, interprets, decodes and amplifies the signal and sends it to the speakers, and is equipped to decode Cinema DSP, HiFi DSP and Dolby Pro-Logic inputs.
However, the purpose of a home theater system is to provide the listener with a “movie theater” quality “surround sound”. The listener uses five speakers to receive sound as if that sound is occurring all around the room. The listener desires the vibrations provided by the subwoofer to get the “feel” of the action.
We find that the AV-S7 CinemaStation System does not have one essential character. Both the amplifier and control center, and the speakers merit equal consideration. Therefore, pursuant to GRI 3(c), the AV-S7 CinemaStation System is classifiable under the subheading which occurs last in numerical order, subheading 8518.40.20, HTSUS, as an audio-frequency electric amplifier, other.
HOLDING:
Pursuant to GRI 3(c), the AV-S7 CinemaStation System is classified in subheading 8518.40.20, HTSUS, an audio-frequency electric amplifier, other.
EFFECT ON OTHER RULINGS:
PD C87740 dated May 29, 1998, is REVOKED. In accordance with 19 U.S.C. § 1625(c), this ruling will become effective sixty (60) days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Acting Director,
Commercial Rulings Division