CLA-2 CO:R:C:M 956284 DWS
Mr. Dennis Heck
Tower Group International, Inc.
Castelazo & Associates
5420 W. 104th Street
Los Angeles, CA 90045-6069
RE: Mini Compact Disc Stereo Systems; Stereo Integrated
Amplifiers/Tuners; Dual Stereo Cassette Decks/Compact Disc
Players; Remote Controls; Flat Cables; Sets; GRI 3(b);
Explanatory Note 3(b)(X); Functional Units; Section XVI,
Note 4; HQ 950882; Universal Electronics, Inc. v. U.S.;
19 CFR 177.7(b); 8519.99.00
Dear Mr. Heck:
This is in response to your letter of April 14, 1994, on
behalf of Aiwa America, Inc., concerning the classification of mini
compact disc stereo systems under the Harmonized Tariff Schedule
of the United States (HTSUS).
FACTS:
The merchandise, which will be made in Singapore, consists of
three types of mini compact disc stereo systems, all with a remote
control. After importation into the U.S., the systems will be
repackaged with U.S.-sourced speakers and then sold to the public.
System NSX-D603 consists of a stereo integrated amplifier/tuner
(model no. RX-N603), with a clock, and a dual stereo cassette
(player/recorder) deck/compact disc player (model no. FD-N603).
System NSX-D606 consists of a stereo integrated amplifier/tuner
(model no. RX-N606), with a clock, and a dual stereo cassette
(player/recorder) deck/compact disc player (FD-N606). System NSX-
D707 consists of a stereo integrated amplifier/tuner (model no. RX-
N707), with a clock, and a dual stereo cassette (player/recorder)
deck/compact disc player (model no. FD-N707). The systems'
components are designed for either horizontal or vertical
placement. In each system, connection of the amplifier/tuner to
the cassette deck player is effected by a specially designed flat
cable included with each system.
The subheadings under consideration are as follows:
8519.99.00: [t]urntables, record players, cassette players
and other sound reproducing apparatus, not
incorporating a sound recording device: [o]ther
sound reproducing apparatus: [o]ther.
The general, column one rate of duty for goods classifiable
under this provision is 3.9 percent ad valorem.
8520.31.00: [o]ther magnetic tape recorders incorporating
sound reproducing apparatus: [c]assette type.
The general, column one rate of duty for goods classifiable
under this provision is 3.9 percent ad valorem.
8527.32.00: [r]eception apparatus for radiotelephony,
radiotelegraphy or radiobroadcasting, whether or
not combined, in the same housing, with sound
recording or reproducing apparatus or a clock:
[o]ther radiobroadcast receivers, including
apparatus capable of receiving also
radiotelephony or radiotelegraphy: [n]ot
combined with sound recording or reproducing
apparatus but combined with a clock.
The general, column one rate of duty for goods classifiable
under this provision is 6 percent ad valorem.
8544.51.80: [i]nsulated (including enameled or anodized)
wire, cable (including coaxial cable) and other
insulated electric conductors, whether or not
fitted with connectors . . . : [o]ther electric
conductors, for a voltage exceeding 80 V but not
exceeding 1,000 V: [f]itted with connectors:
[o]ther.
The general, column one rate of duty for goods classifiable
under this provision is 5.3 percent ad valorem.
ISSUES:
Whether, for classification purposes, the three mini compact
disc stereo systems are sets.
If not, whether the three mini compact disc stereo systems
are classifiable as functional units.
If not, whether the components of the three mini compact disc
stereo systems are classifiable under the HTSUS provisions which
individually describe them.
LAW AND ANALYSIS:
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 is determined according to the
terms of the headings and any relative section or chapter notes.
Because it is claimed that the systems are sets, we must
consult GRI 3(b) which states that:
[m]ixtures, 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.
In understanding the language of the HTSUS, the Harmonized
Commodity Description and Coding System Explanatory Notes may be
utilized. The Explanatory Notes, although not dispositive, are to
be used to determine the proper interpretation of the HTSUS. See
T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
Explanatory Note 3(b)(X) (p. 4) states that:
[f]or the purpose 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).
Inasmuch as after importation into the U.S., the systems are
repackaged with U.S.-sourced speakers before they are put up for
sale to the public, the systems cannot be classifiable as sets
because they are not "put up in a manner suitable for sale directly
to users without repacking."
Section XVI, note 4, HTSUS, states that:
[w]here a machine (including a combination of machines)
consists of individual components (whether separate or
interconnected by piping, by transmission devices, by
electric cables or by other devices) 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 systems cannot be classifiable as functional units because
they are not "intended to contribute together to a clearly defined
function covered by one of the headings in chapter 84 or chapter
85." The amplifiers/tuners and the cassette decks/compact discs
are classifiable under separate headings. Therefore, the systems
fail the test as set forth under section XVI, note 4, HTSUS.
Because the systems are neither sets nor functional units,
their components must be classifiable under the HTSUS provisions
which individually describe them.
It is clear that the combination amplifiers/tuners are
classifiable under subheading 8527.32.00, HTSUS.
However, it is claimed that the cassette decks/compact discs
are classifiable under subheading 8519.99.00, HTSUS. HQ 950882,
dated August 7, 1992, is cited as support for this classification.
HQ 950882 dealt with the classification of combination stereos
incorporating a radio, dual cassette deck, record player, and
graphic equalizer. The issue in that case was whether dual
cassette tape players incorporate tape players which are incapable
of recording for the purposes of heading 8527, HTSUS. Because the
subject cassette decks/compact discs do not contain reception
apparatus, heading 8527, HTSUS, is not applicable. Because the
issue in HQ 950882 was specific to the provisions under heading
8527, HTSUS, we do not consider it relevant to the instant case.
Heading 8519, HTSUS, excludes goods which incorporate a sound
recording device. Because the cassette decks/compact discs
incorporate a sound recording device, they are precluded from
classification under heading 8519, HTSUS.
It is, however, our position that the cassette decks/compact
discs meet the terms of heading 8520, HTSUS, and are classifiable
under subheading 8520.31.00, HTSUS.
The flat cable included with the systems is classifiable under
subheading 8544.51.80, HTSUS.
With regard to the remote controls, it has come to our
attention that similar merchandise is the subject of an action
before the U.S. Court of International Trade in Universal
Electronics Inc. v. U.S. (Court No. 93-11-00740).
Section 177.7(b), Customs Regulations [19 CFR 177.7(b)],
states:
[n]o ruling letter will be issued with respect to any
issue which is pending before the [U.S.] Court of
International Trade, the [U.S.] Court of Appeals for the
Federal Circuit, or any court of appeal therefrom.
Litigation before any other court will not preclude the
issuance of a ruling letter, provided neither the Customs
Service nor any of its officers or agents is named as a
defendant.
Because the issues in Universal Electronics appear to be
similar to those in this case concerning the remote controls, it
would be imprudent to rule on the subject merchandise.
Consequently, under 19 CFR 177.7(b), we cannot issue a ruling on
the remote controls at this time.
HOLDING:
Because the systems are neither sets nor functional units,
their components must be classifiable under the HTSUS provisions
which individually describe them.
The stereo integrated amplifiers/tuners are classifiable under
subheading 8527.32.00, HTSUS, as other radiobroadcast receivers.
The dual stereo cassette decks/compact disc players are
classifiable under subheading 8520.31.00, HTSUS, as other magnetic
tape recorders incorporating sound reproducing apparatus.
The flat cables included with the systems is classifiable
under subheading 8544.51.80, HTSUS, as other electric conductors
fitted with connectors.
Sincerely,
John Durant, Director