OT:RR:CTF:EMAIN H323185 SKK
Center Director
Automotive and Aerospace Center of Excellence and Expertise
U.S. Customs and Border Protection
477 Michigan Avenue, Rm. 281 Detroit, MI 48226
ATTN: Linda Horacek, Import Specialist; John D. Parkinson, Supervisory Import Specialist
Re: Request for Internal Advice; Classification of automotive telematics device with cellular modem, GPS, code reader, accelerometer/gyroscope
Dear Director:
This letter is in response to your request for Internal Advice (IA), dated January 27, 2022,
made pursuant to § 177.11 of Title 19 of the Code of Federal Regulations (19 CFR § 177.11). The IA request was initiated by U.S. Customs and Border Protection’s (CBP) Automotive and Aerospace Center of Excellence and Expertise (CEE) at the request of counsel on behalf of DanLaw Inc. (DanLaw). This IA concerns the tariff classification under the Harmonized Tariff System of the United States (HTSUS) of an automotive telematics device described as the “Datalogger model number DCM970 GEN 3” (DCM970).
FACTS:
The DCM970 is designed to be installed in a vehicle’s engine diagnostics (OBD-II) port. It is used to collect, analyze, and transmit data about the vehicle to a server via the global cellular network. The DCM970’s key components include an accelerometer/gyroscope, GPS, OBD-II code reader, and cellular modem/transceiver. The accelerometer/gyroscope detects gravitational force to collect data on braking, acceleration, and cornering. The GPS collects vehicle location data. The reader function is used to pull data from the car’s computer and sensors. The cellular modem/transceiver processes, converts, and transmits to servers the data collected by other components.
ISSUE:
What is the proper classification of the subject automotive telemetrics device?
LAW AND ANALYSIS:
Classification under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods will be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. If 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 2 through 6 will be applied in order.
GRI 3(a) provides that “the heading which provides the most specific description shall be preferred to headings providing a more general description.” GRI 3(b) states, in pertinent part, that composite goods that cannot be classified by reference to GRI 3(a), are to be classified as if they consisted of the component that gives them their essential character. GRI 3(c) provides that when goods cannot be classified by reference to GRI 3(a) or 3(b), they are to be classified in the heading that occurs last in numerical order among the competing headings that equally merit consideration.
The subject article’s cellular modem/transceiver is described by heading 8517, HTSUS, which provides for, inter alia, apparatus for the wireless transmission or reception of data. The GPS component is described by heading 8526, HTSUS. The device’s OBD-II code reader and accelerometer/gyroscope are measuring devices described by heading 9031, HTSUS. Accordingly, the following HTSUS headings are under consideration:
8517 Telephone sets, including telephones for cellular networks or for other wireless
networks; other apparatus for the transmission or reception of voice, images or
other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission apparatus of
heading 8443, 8525, 8527 or 8528; parts thereof:
8526 Radar apparatus, radio navigational aid apparatus and radio remote control
apparatus:
9031 Measuring or checking instruments, appliances and machines, not specified or
included elsewhere in this chapter; profile projectors; parts and accessories
thereof:
Note 3 to Section XVI, HTSUS, provides:
Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed 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.
Note 3 to Chapter 90 states that the provisions of Note 3 to section XVI also apply to this chapter.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs)
constitute the official interpretation of the Harmonized System. While not legally binding nor 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).
The ENs to Note 3 to Section XVI provide:
(VI) MULTI FUNCTION MACHINES
AND COMPOSITE MACHINES
(Section Note 3)
In general, multi-function machines are classified according to the principal function of the machine.
Multi-function machines are, for example, machine-tools for working metal using interchangeable tools, which enable them to carry out different machining operations (e.g., milling, boring, lapping).
Where it is not possible to determine the principal function, and where, as provided in Note 3 to the Section, the context does not otherwise require, it is necessary to apply General Interpretative Rule 3 (c); such is the case, for example, in respect of multi function machines potentially classifiable in several of the headings 84.25 to 84.30, in several of the headings 84.58 to 84.63 or in several of the headings 84.70 to 84.72.
The ENs to heading 85.26 state that this heading includes the following:
(1) Radio navigational aid equipment (e.g., radio beacons and radio buoys, with fixed or rotating aerials; receivers, including radio compasses equipped with multiple aerials or with directional frame aerial). It also includes global positioning system (GPS) receivers.
As noted above, the DCM970 is installed in a vehicle’s engine diagnostics (OBD-II) port to collect, analyze, and transmit data about the vehicle to a server via a cellular network. The DCM970 is a telematics device, typically used in fleet management applications to monitor a variety of vehicle information (i.e., location, driver behavior, vehicle activity, engine diagnostics) and transmit that data in real time to fleet operators. Automotive telematic devices are designed in various configurations. Simpler devices may feature only a cellular modem and GPS; other devices may include additional integrated components that function to obtain data that is specific to the needs of the end-user. The DCM970 features a cellular modem, GPS, code reader and accelerometer/gyroscope. Data relating to location (GPS), vehicle diagnostics (code reader) and changes in velocity, orientation and driving habits (accelerometer/gyroscope) all provide essential information that the cellular modem transmits to end-users in real-time. Each of these components (modem, GPS, code reader, accelerometer/gyroscope) contributes equally to the DCM970’s function. The utility of components that collect and read essential data elements is dependent upon that data being able to reach the end user in real time. Similarly, the importance of the modem is negated if there is no data to transmit. Accordingly, we conclude that no single key component of the DataLogger DCM970 GEN 3 performs its principal function.
As it is not possible to determine which component performs the device’s the principal function, GRI 3(c) applies to require the good to be classified in the heading that occurs last in numerical order among the competing headings that equally merit consideration. On this basis, the subject DataLogger DCM970 GEN 3 is classified under heading 9031, specifically subheading 9031.80.80, HTSUS. This classification is consistent with Headquarters Ruling Letter (HQ) H312223, dated November 9, 2021, in which CBP classified several models of telematics devices consisting of cellular modem, GPS, code reader and accelerometer under heading 9031.80.80, HTSUS, pursuant to GRI 3(c).
HOLDING:
By application of GRIs 1, 3(c) and 6, the DataLogger DCM970 GEN 3 is classified under heading 9031, HTSUS, specifically subheading 9031.80.80, HTSUS, which provides for “[M]easuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof: other instruments, appliances and machines: other.” The applicable rate of duty is free.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 9031.80.80, HTSUS, unless specifically excluded, are subject to an additional 25 percent ad valorem rate of duty. At the time of importation, importers of goods of China classified under subheading 9031.80.80, HTSUS, must also report the Chapter 99 subheading, i.e., 9903.88.01.
The HTSUS is subject to periodic amendment, so reasonable care should be exercised in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, including information on exclusions and their effective dates, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the U.S. International Trade Commission’s website at www.usitc.gov.
You are directed to mail this decision to the Internal Advice applicant no later than 60 days from the date of this letter. On that date the Office of Trade, Regulations and Rulings, will make the public version of the decision available to CBP personnel and to the public at www.cbp.gov by means of the Freedom of Information Act and by other methods of public distribution.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division