CLA-2 CO:R:C:M 951926 AJS
Mr. Bruce H. Leeds
Manager
Export/Import Operations
CO/C1/B112
Hughes Identification Devices Inc.
P.O. Box 80028
Los Angeles, CA 90080-0028
RE: Reconsideration NY 872659; Injectable transponder; card
transponder; Heading 8542; Heading 8529; Chapter 85, note
5(b)(ii); GRI 1; EN 85.42 (I)(2); H. Conf. Rep. No. 576; Chapter
85, note 5(b)(iii); EN 85.42 (II).
Dear Mr. Leeds:
This is in reply to your letter of May 26, 1992, requesting
the reconsideration of New York (NY) 872659 (April 21, 1992),
concerning the tariff classification of certain microcircuit
devices assembled in Thailand.
FACTS:
The devices at issue are the model TX14XX series injectable
transponder (IT) and model TX1309 series card transponder (CT).
The IT is described as a passive radio-frequency identification
(ID) tag designed to work in conjunction with a compatible radio-
frequency ID reading system. It consists of an electromagnetic
coil, tuning capacitor, and EEPROM microchip sealed in a
cylindrical glass enclosure. The chip is pre-programmed with an
unique ID code which cannot be altered. Although specifically
designed for inserting under the hides of livestock, the IT can
be used for other animal or non-animal applications. The IT need
only be programmed with an unique ID code, no physical change is
required.
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The CT is composed of a card insert, laminated card and coil
insert. It appears that only the coil insert will be imported.
Your submission states that the coil insert is an unfinished
microcircuit based device used in many potential applications.
The finishing operations performed after importation depend on
the nature of the finished product.
Each device contains an EEPROM chip which can be programmed
with any one of tens of billions of ID codes. When a person or
object having one of the Hughes ID devices passes near a
specially designed radio frequency scanner, it activates the code
on the chip. The code is then reflected back to the scanner to
identify the person or object.
ISSUE:
Whether the subject devices are properly classifiable within
heading 8542, Harmonized Tariff Schedule of the United States
(HTSUS), which provides for electronic integrated circuits and
microassemblies; or within heading 8529, HTSUS, which provides
for parts suitable for use solely or principally with the
apparatus of headings 8525 to 8528; or heading 8543, HTSUS, which
provides for electrical machines and apparatus, having individual
functions, not specified or included elsewhere in this chapter.
LAW AND ANALYSIS:
Heading 8542, HTSUS, provides for electronic integrated
circuits. These devices consist of hybrid integrated circuits
(HICs) in which passive elements (resistors, capacitors,
interconnections, etc.) obtained by thin- or thick-film
technology and active elements (diodes, transistors, monolithic
integrated circuits, etc.) obtained by semiconductor technology
are combined to all intents and purposes indivisibly, on a single
insulating substrate (glass, ceramic, etc.). Chapter 85, note
5(b)(ii). The subject devices do not satisfy the terms of this
legal note. They are not combined indivisibly on a substrate,
but are individually wire bonded to a substrate. In the HTSUS,
classification is determined according to the terms of the
headings and any relative section or chapter notes. General Rule
of Interpretation (GRI) 1. Accordingly, the subject devices do
not satisfy the terms of the relative chapter note for HICs, and
thus cannot be classified as such within heading 8542, HTSUS.
The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs) state that HICs are microcircuits built
up on an insulating substrate on which a thin or thick film
circuit has been formed. EN 85.42 (I)(2), p. 1400 (1992).
Furthermore, this process allows certain passive elements
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(resistors, capacitors, interconnections, etc.) to be produced at
the same time. EN 85.42 (I)(2). The subject devices do not
satisfy this description. A thin or thick film circuit is not
formed, nor are passive elements produced at the same time. As
discussed previously, the subject devices consist of chips which
are individually wire bonded to an epoxy resin substrate. While
the ENs are not dispositive, they provide a commentary on the
scope of each heading and offer guidance for interpretation of
the HTSUS. H. Conf. Rep. No. 576, 100th Cong., 2d Sess., p. 550,
reprinted in 1988 U.S. CODE CONG. ADMIN. NEWS p. 1582. Therefore,
we find the above ENs instructive for determining that the
subject devices do not satisfy the description of a HICs.
Heading 8542, HTSUS, additionally provides for electronic
microassemblies. These devices consist of a molded module,
micromodule or similar type, consisting of discrete, active or
both active and passive components which are combined and
interconnected. Chapter 85, note 5(b)(iii), See also EN 85.42
(II), p. 1401. The subject devices do not satisfy this chapter
note. They do not consist of discrete components. Discrete
components are indivisible and are the basic electronic
construction components in a system. EN 85.42 (II). They may
have a single active electrical function (semiconductor devices
defined by Note 5(A) to Chapter 85) or a single passive
electrical function (resistors, capacitors, interconnections,
etc.). EN 85.42 (II). However, components consisting of several
electric circuit elements and having multiple electrical
functions, such as integrated circuits, are not considered
discrete components. EN 85.42 (II). The subject devices do not
consist of discrete components. They contain an EEPROM chip,
which is a type of integrated circuit. Thus, we find the above
ENs instructive for determining that the subject devices also do
not satisfy the description of an electronic microassembly.
Heading 8529, HTSUS, provides for parts suitable for use
solely or principally with the apparatus of headings 8525 to 8528
(e.g., radio reception and transmission apparatus). In NY
872659, Customs classified the subject devices within this
heading based on the view that the devices received a radio
signal. Upon further review, however, they do not appear to
receive or transmit a signal. Rather, they merely reflect a
signal which is altered by the EEPROM chip so that the signal ID
code is recognized by a radio frequency scanner. Therefore, the
subject devices do not satisfy the terms of heading 8529, HTSUS.
Heading 8543, HTSUS, provides for electrical machines and
apparatus, having individual functions, not specified or included
elsewhere in this chapter. The subject devices satisfy this
description. They are electrical apparatus with the individual
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function of altering and reflecting a signal, which are not
specified elsewhere. More specifically, they are described
within subheading 8543.80.90, HTSUS, which provides for "other"
electrical apparatus of heading 8543, HTSUS.
HOLDING:
The subject IT and CT coil insert are classifiable within
subheading 8543.80.90, HTSUS, which provides for "other"
electrical apparatus, having individual functions, not specified
or included elsewhere in chapter 85. NY 872659 is modified
accordingly. Merchandise classified within subheading
8543.80.90, HTSUS, which is assembled in Thailand may be eligible
for special tariff treatment under the Generalized System of
Preferences (GSP).
Sincerely,
John Durant, Director
Commercial Rulings Division