CLA-2 R:C:M 958449 LTO
Mr. John Hanson
Epson America, Inc.
20770 Madrona Avenue
Mail Stop B1-02
Torrance, California 90503-3777
RE: Color Upgrade Kit for computer printer; HQs 950925, 952154, 952775, 955882; NY 805826 modified; heading 9612; GRI 3 (sets); EN to GRI 3(b); Chapter 85, Note 6
Dear Mr. Hanson:
This is in response to your letter of August 31, 1995, to Customs in New York, requesting reconsideration of NY 805826, dated February 2, 1995, which concerned the classification of a color upgrade kit for a computer printer under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter was referred to this office for a response.
FACTS:
The article in question is a color upgrade kit for an automatic data processing (ADP) color printer (item C832081). The kit contains a motor with an output of two Watts, a software driver disk and a color ribbon. The product is designed to enable a particular model of Epson, single color dot matrix printer, to print in color. The motor is installed to lift the ribbon to the appropriate color, the software driver disk interprets the computer's instructions for the printer and the ribbon transfers the appropriate color to the medium. The motor, disk and ribbon are imported and sold as a pre-packaged kit. The value of the entire kit is $29.40 (motor, $17.64; ribbon, $10.29; and software, $1.47).
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ISSUE:
Whether the color upgrade kit is a GRI 3(b) set.
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states, in pertinent part, that "for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes . . . ."
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding, and therefore not 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).
In NY 805826, the components for the color upgrade kit were classified separately as follows: the motor was classified under subheading 8501.10.40, HTSUS, which provides for electric motors "of an output not exceeding 37.5 W: [o]f under 18.65 W: [o]ther;" the software was classified under subheading 8524.90.40, HTSUS, which provides for other recorded media for sound or other similarly recorded phenomena; and the ribbon was classified under subheading 9612.10.10, HTSUS, which provides for typewriter or similar ribbons, inked or otherwise prepared for giving impressions, measuring less than 30 mm in width, permanently put up in plastic or metal cartridges of a kind used in ADP or other machines. The components for the kit were classified separately because it was determined that the kit was "a collection of items rather than a set for classification purposes."
The color upgrade kit consists of a collection of goods that is not described by the terms of a single heading. Because the kit consists of goods that are prima facie classifiable under two or more headings, it is necessary to resort to GRI 3. See GRI 2(b). GRI 3(a) provides, in pertinent part, that "when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods." GRI 3(b), which governs the classification of "sets," provides that "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."
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The Explanatory Notes to GRI 3(b), pg. 4, state 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) [emphasis in
original].
The components of the kit, as stated above, are prima facie classifiable in different headings. The kit consists of components that are put up together to meet a particular need--converting a single color dot matrix printer into a color dot matrix printer. See HQ 955882, dated May 17, 1994 (concerning a bicycle upgrade kit, which includes disparate bicycle components that may or may not be used together to meet a particular need or carry out a specific activity). Finally, the kit is imported and sold as a pre-packaged unit. The color upgrade kit is therefore considered a "set" for tariff purposes, and it is classifiable as if it consisted of the component which gives the kit its "essential character."
The Explanatory Notes to GRI 3(b), pg. 4, states that "[t]he 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." All of the components play a significant role in the conversion of a single color dot matrix printer into a color dot matrix printer--the motor is installed to lift the ribbon to the appropriate color, the software interprets the computer's instructions for the printer and the ribbon transfers the appropriate color to the medium. However, the motor and software, which will replace the printer's present driver, are permanently installed into the machine. The ribbon, on the other hand, is a disposable article that will be replaced by a separately purchased ribbon. The items that upgrade the printer are the motor and software. With regard to the motor and software, there is a significant difference in value between the two. The motor is valued at $17.64 (60% of the entire kit's value), while the software is valued at only $1.47 (5%). Accordingly, based on its role in relation to the use of the goods and its significant value, the motor provides the kit with its "essential character." The kit, with the exception of the software, is therefore classifiable under subheading 8501.10.40, HTSUS. Note 6 to chapter 85, HTSUS, requires that the software be classified separately under heading 8524, HTSUS, specifically under subheading 8524.90.40, HTSUS. See HQ 950925, dated May 12, 1992; HQ 952154, dated November 17, 1992; HQ 952775, dated - 4 -
February 16, 1993 (rulings relating to the application of note 6 to chapter 85 and GRI 3(b)). NY 805826 is modified accordingly.
HOLDING:
The Color Upgrade Kit, with the exception of the software, is classifiable under subheading 8501.10.40, HTSUS, which provides for electric motors "of an output not exceeding 37.5 W: [o]f under 18.65 W: [o]ther." The corresponding rate of duty for articles of this subheading is 6.2% ad valorem. The software is classifiable under subheading 8524.90.40, HTSUS, which provides for other recorded media for sound or other similarly recorded phenomena. The corresponding rate of duty for articles of this subheading is 7.8 cents per square meter of recording surface.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division