CLA-2 CO:R:C:M 953480 RFA/MLR
District Director of Customs
111 W. Huron Street
Room 603
Buffalo, NY 14202
RE: Protest No. 0901-92-101337; Orpheus Underwater Camera System; television camera; light-vessel; ejusdem generis; Canadian Free Trade Agreement (CFTA); originating goods; 50 percent value-content rule; heading 8905; ENs 85.25(C), 89.05(A); Note 4 to Section XVI; 9808.00.30; NY 837108
Dear District Director:
The following is our decision regarding the request for further review of Protest No. 0901-92-101337, which concerns the classification of the Orpheus Underwater Camera System ("UCS") under the Harmonized Tariff Schedule of the United States (HTSUS). The subject merchandise was entered on November 14, 1991. The entry was liquidated on April 3, 1992. The protest was timely filed on July 2, 1992.
FACTS:
The UCS contains a high resolution color video camera with remote tilt and dual lighting mounted onto a submersible vehicle. The camera transmits a video picture through an attached cable to a viewing monitor located on a surface vessel. The submersible vehicle provides 60 lbs. of thrust at up to 500 foot depths. The UCS also has a video overlay computer which displays navigational information in both graphic and numeric format.
The merchandise was entered under subheading 8525.30.00, HTSUS, as a camera system, eligible for duty-free treatment under the Canadian Free Trade Agreement (CFTA). The entry was liquidated under subheading 8525.30.00, HTSUS, as ineligible for duty-free treatment. Classification of the merchandise under subheading 9808.00.30, HTSUS, as a military item eligible for duty-free treatment, is also under consideration.
The protestant contests the classification and also alleges that if the article is classified under subheading 8525.30.00, HTSUS, it is eligible for the duty preference under the CFTA because the value of the third country origin camera that is used in the article is well below values required in the CFTA. The value of the third country origin components, using the stated factor of material plus labor costs, is stated to range from 5 percent to 10 percent of the total system, which allegedly permits full compliance with "the 50 percent rule." Furthermore, the protestant claims that because the article is fully manufactured and tested in Canada, it qualifies under "Rule 5B3." The protestant also claims that because the camera is manufactured for use in air only and would be destroyed if it were submersed in water, it is only through the custom designed and manufactured housing at the plant in Canada, that the camera may be used in underwater operations. It is further stated that these articles incorporate other features and functions that operate independently from the filming operation. Therefore, the protestant maintains that a valid change in tariff classification has occurred.
In the alternative, it is alleged that the article qualifies for duty-free treatment as a military item under subheading 9808.00.30, HTSUS, because it is under Government Contract #N655-40-91-M-1839. The protestant states that the required certificate of duty-free entry is attached. The certificate in the record is from the Defense Logistics Agency, Defense Contract Management Area Operations, New York, New York. The certificate, which is dated June 10, 1992, makes reference to a letter dated December 9, 1991, pertaining to the denial of duty-free entry. Furthermore, the certificate states:
Subsequent to issuance of referenced letter, it has been determined that the shipment identified below by the DOD contract number and the U.S. Customs Service entry control number is certified for duty-free entry into the Customs territory of the U.S. pursuant to DFARS 225.6 and item 9808.00.30009 of the Harmonized Tariff Schedule of the United States.
DOD Prime Contract Number: F33657-81-C-0222 ...
Date of Importation: October 3, 1991.
Entry Control Number: 551-2462290-7 0000
The record also contains a commercial invoice dated October 29, 1991, from Hydrobotics Engineering Canada Inc. to Navsses, Bldg. 59, U.S. Naval Base, Philadelphia, PA, which states that the country of origin of the Orpheus Underwater Camera System is Canada.
The subheadings under consideration are as follows:
8525.30.00: Television Cameras. . . .
Goods classifiable under this provision have a general, column one rate of duty of 4.2 percent ad valorem.
9808.00.30 Articles for military departments: Materials certified to the Commissioner of Customs by the authorized procuring agencies to be emergency war material purchased abroad. . .
Goods classifiable under this provision have a general, column one free rate of duty.
ISSUE:
I. Whether the imported article qualifies for the duty exemption available under subheading 9808.00.30, HTSUS.
II. Whether the imported article is classifiable as a light-vessel or as a camera and, therefore, eligible for preferential treatment under the CFTA.
LAW AND ANALYSIS:
I. Applicability of subheading 9808.00.30, HTSUS
Subheading 9808.00.30, HTSUS, provides for the duty-free treatment of materials certified to the Commissioner of Customs by the authorized procuring agencies to be emergency war materials purchased abroad. This provision is applicable only when a certificate executed by a duly authorized officer or official of the applicable military department is presented in accordance with section 10.102, Customs Regulations (19 CFR 10.102).
Section 10.102(b), Customs Regulations [19 CFR 10.102(b)], provides that:
the certificates may be printed, stamped, or typewritten on the Custom entry or withdrawal form, Customs Form 7501 or 7506, or on a separate paper attached to the entry or withdrawal form filed by the Government agency or office, provided the certification is clearly and unmistakably identified with the articles covered by the entry or withdrawal.
Because the entry number and date of the merchandise, subject to this protest, and the entry number and date on the certificate do not match, and the correct certificate was not filed within the requisite amount of time, as provided in Customs Directive Number 3550-08 dated May 31, 1985, we find that the certificate is not clearly identified with the article covered by this protest. Consequently, the article does not qualify for subheading 9808.00.30, HTSUS, treatment. The fact that the item was ultimately sent to Navsses is insufficient to qualify it for free entry in the absence of the required certification.
II. Classification of the UCS and Eligibility of the CFTA
Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes.
The protestant asserts that the UCS is more correctly classified under subheading 8905.90.50, HTSUS, as an underwater light vessel. It is our opinion that the UCS is not an underwater light vessel for the following reasons:
1. A light-vessel or lightship is
[A] sea-going vessel which may or may not be
self-propelled and [is] fitted with a powerful
lighting apparatus. It is permanently anchored,
either to mark an outstanding danger to navigation
where it is impractical to build a lighthouse, or
to indicate the approach of a port and mark a point
from which passing vessels can take bearings.
DEKERCHOVE'S INTERNATIONAL MARITIME DICTIONARY 455 (2nd ed. 1961).
Clearly, the submersible vehicle upon which the camera is mounted is not a light vessel pursuant to the definition cited above. In further support of this conclusion, the Harmonized Commodity Description and Coding System Explanatory Notes (EN) 89.05(A), page 1452, states that light-vessels "normally perform their main function in a stationary position." The ENs constitute the Customs Cooperation Council's official interpretation of the HTSUS. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings.
2. Furthermore, the ejusdem generis rule, which holds
that where general words follow an enumeration
of persons or things, by words of a particular
and specific meaning, such general words are to be
held as applying only to persons or things of the
same general kind or class as those specifically
mentioned.
BLACK'S LAW DICTIONARY 270 (5th ed. 1983).
Applying this rule of statutory construction to the applicable tariff section and corresponding explanatory notes, it is our position that the UCS is not within the same general kind or class of items enumerated in heading 8905, HTSUS. The tariff section refers to floating cranes, dredgers, floating docks, and submersible drilling or production platforms. It is apparent that the UCS, which uses self-propulsion to navigate a video camera underwater, does not belong to the same general kind or class as those items specifically enumerated in heading 8905, HTSUS. Accordingly, the protestant's argument that the UCS is properly classified as a light vessel is without merit.
The UCS consists of an underwater television camera and light mounted on a submersible vehicle. The camera transmits a video picture through an attached cable to a viewing monitor located on a surface vessel. Note 4 to Section XVI states:
Where a machine (including a combination of machines) consists of individual components. . . intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.
The UCS is a machine consisting of individual components intending to contribute together to the defined function of transmitting underwater pictures to the surface. Therefore, the UCS will be classified according to the heading appropriate to its camera function.
EN 85.25(C), page 1375, states:
This heading covers television cameras, whether or not with an incorporated device for remote control of lens and diaphragm as well as for remote control of the horizontal and vertical movement of the camera. . . . Cameras for underwater work and portable cameras with or without a built-in video recorder are also classified here.
Based upon Note 4 to Section XVI and EN 85.25(C), we find that the UCS is provided for under subheading 8525.30.00, HTSUS, as a television camera. See NY 837108, dated February 28, 1989.
The importer argues that the merchandise is eligible for CFTA treatment. To be eligible for tariff preferences under the CFTA, goods must be "originating goods" under the rules of origin in General Note 3(c)(vii)(B), HTSUS. Because the article in this case contains some third country origin material, it is not considered a good "wholly obtained or produced in the territory of Canada and/or the United States" as provided for in General Note 3(c)(vii)(B)(1), HTSUS. Therefore, it must be "transformed in the territory of Canada and/or the United States" as provided in General Note 3(c)(vii)(B)(2), HTSUS.
A transformation is evident when a change in tariff classification occurs that is prescribed by General Note 3(c)(vii)(R), HTSUS, or to such other requirements subdivision (c)(vii)(R) may provide when no change in tariff classification occurs and the other conditions set out in subdivisions (c)(vii)(F), (G), (H), (I), (J), and (R) of this note are met. General Note 3(c)(vii)(R)(16)(bb), HTSUS, provides that a transformation into "originating goods" occurs if the operations performed in Canada result in a change in tariff classification of the components to a heading in Chapter 85 from any other heading of the tariff schedule. In the instant case, the incorporation of the camera into the article does not result in a change in tariff classification as required by General Note 3(c)(vii)(R), HTSUS.
The protestant also mentions that the CFTA includes a provision that further clarifies and defines the rules of origin by requiring a 50 percent value-content test for all goods. However, Annex 301.2, paragraph 4, is not a general value-content rule. It is a specific rule that applies to the two situations described in paragraph 3 of Annex 301.2. The provisions in Annex 301.2, paragraphs 3 and 4, are codified in General Note 3(c)(vii)(G) and (H) of the HTSUS. These provisions do not apply to the situation here because the camera was already assembled when it was imported into Canada, and subheading 8525.30.00, HTSUS, does not provide for both the UCS and its parts. Consequently, because the camera was assembled when it was imported into Canada, and is not transformed in the territory of Canada and/or the U.S. so as to be subject to a change in tariff classification, the article is not eligible for duty-free treatment under the CFTA.
HOLDING:
Subheading 9808.00.30, HTSUS, is not applicable because the proper certificate is not clearly and unmistakably identified with the UCS and was not presented in the requisite amount of time. The Orpheus UCS is classifiable under subheading 8525.30.00, HTSUS, as a television camera. Furthermore, the article is not eligible to receive duty-free treatment under the CFTA because the requisite changes in tariff classification were not met, and the camera was not subjected to assembly operations in Canada. Accordingly, the protest should be denied in full.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065 dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Freedom of Information Act and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division