CLA-2 RR:TC:MM 959651 RFA
Mr. Charles Spoto
Fritz Companies, Inc.
150-20 132nd Avenue
Jamaica, NY 11430
RE: Digital Color Printers; Printing Machinery; Automatic Data
Processing (ADP) Units; Functional Unit; Legal Note 5 to
Chapter 84; Legal Note 4 to Section XVI; EN 84.43; General
EN to Chapter 84; HQs 088024 and 957491
Dear Mr. Spoto:
This is in response to your letter dated January 18, 1996,
to the then Regional Commissioner of Customs, New York, on behalf
of Bayer Corporation-AGFA Division, concerning the tariff
classification of the AGFA Chromapress digital color printing
system ("Chromapress") under the Harmonized Tariff Schedule of
the United States (HTSUS). Your letter was referred to this
office for a response. We regret the delay in responding.
FACTS:
The merchandise, labeled as the Chromapress, is a 4-color
digital printing system used in the graphic arts field for
short-run, full color applications at high speeds. The
Chromapress is an example of a relatively new type of commercial
product known in the industry as short-run printing with digital
presses or "digital print-on-demand". Instead of requiring the
costly intermediate steps, such as mechanical art, film and
plate-making, commonly associated with color printing, the
Chromapress prints directly from digital data to paper. Images,
text and line art can be created on any standard desktop
publishing system that produces PostScript files. Completed jobs
are sent to the Chromapress where the Raster Image Processor
(RIP) converts the images into bitmaps which are stored
internally and sent to CMYK (cyan, magenta, yellow, and black)
image memory for printing on the web-fed printing engine
containing two sets of four printing units (CMYK). One set of
printing units is on each side of the paper, allowing for duplex
printing in a single pass.
The Chromapress consists of several subsystems: a Macintosh
design workstation/ server; a RIP multiprocessor; an engine
controller; Chromapress print engine; a paper handling system; a
cooling system; and software (ChromaPost, ChromaWatch, and
ChromaWrite). The work station/server allows the user through
the ChromaPost software to create a job description file
containing OPI links, color management, and printing parameters,
binding method and other job information. The work
station/server also allows the user through the ChromaWatch, and
ChromaWrite software to access all press controls, and track and
manage jobs.
The paper handling system holds the paper rolls (the print
web) used during the operation of the Chromapress. The paper
handling system is designed so that paper rolls may be changed
when a different paper size or grade is needed for a new job.
The handling system also conditions the paper by monitoring the
moisture content. The web drive motors in the print engine tower
feed the paper from the paper handling system. The print engine
tower contains eight print units (four on each side of the paper
web) which utilize an array of light emitting diodes (LEDs) to
place an electrostatic charge to distribute fine particles of
pigment onto the paper. The paper is then cooled and cut before
leaving the print tower. The paper is then cut into paper
sheets, separating test prints from the finished product as it
leaves the printing tower.
ISSUE:
Is the Chromapress digital color printer classifiable as an
automatic data processing (ADP) printer, or as printing machinery
under the HTSUS?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's). GRI
1 provides that classification shall be determined according to
the terms of the headings and any relative section or chapter
notes.
Legal Note 4 to Section XVI, 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 Chromapress consists of
several subsystems (a Macintosh design workstation/ server; a RIP
multiprocessor; an engine controller; Chromapress print engine; a
paper handling system; and a cooling system) intended to
contribute together to the clearly defined function of printing.
It has been suggested that the Chromapress is an ADP printer
classifiable under heading 8471, HTSUS. Heading 8471, HTSUS, is
governed by the terms of Legal Note 5 to Chapter 84, HTSUS, which
provides, in relevant part:
(B) Automatic data processing machines may be in
the form of systems consisting of a variable number of
separate units. Subject to paragraph (E) below, a unit
is to be regarded as being a part of a complete system
if it meets all the following conditions:
(a) It is of a kind solely or principally used in an
automatic data processing system;
(b) It is connectable to the central processing unit
either directly or through one or more other units; and
(c) It is able to accept or deliver data in a form
(codes or signals) which can be used by the system.
* * * * * * *
(D) Printers, keyboards, X-Y coordinate input devices
and disk storage units which satisfy the conditions of
paragraphs (B)(b) and (B)(c) above, are in all cases to be
classified as units of heading 8471.
(E) Machines performing a specific function other
than data processing and incorporating or working in
conjunction with an automatic data processing machine
are to be classified in the headings appropriate to
their respective functions or, failing that, in
residual headings.
It has been suggested that based upon Legal Note 5(B) and
5(D), the Chromapress is an ADP printer. However, the
Chromapress is more than just an ADP printer, it is an entire
printing system which acts as a functional unit designed to
replace off-set printing presses. Legal Note 5(E) to chapter 84
clearly states that machines performing a specific function are
to be classified in the heading appropriate to their respective
functions.
The issue remains which of the above legal notes determines
the classification of the subject merchandise. In HQ 957491,
dated July 31, 1996, Customs stated that Legal Note 5(D) must be
read in light of Legal Note 5(E) to chapter 84, HTSUS. Customs
concluded that "while note 5(D) negates the sole or principal use
requirement when considering the classification of printers,
keyboards, X-Y coordinate input devices and disk storage units,
note 5(E) provides a separate prerequisite to the classification
of any ADP machine and, therefore, ADP unit."
The Harmonized Commodity Description and Coding System
Explanatory Notes (ENs) constitute the official interpretation of
the HTSUS. While not legally binding nor dispositive, 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. See T.D. 89-80, 54 FR 35127, 35128 (August 23,
1989). General EN for Chapter 84, states that:
(E) MACHINES INCORPORATING OR WORKING IN CONJUNCTION
WITH AN AUTOMATIC DATA PROCESSING MACHINE AND
PERFORMING A SPECIFIC FUNCTION
In accordance with the provisions of the last
paragraph of Note 5 to Chapter 84, the following
classification principles should be applied in the case
of a machine incorporating or working in conjunction
with an automatic data processing machine, and
performing a specific function:
(i) A machine incorporating an automatic data
processing machine and performing a specific function
other than data processing is classifiable in the
heading corresponding to the function of that machine
or, in the absence of a specific heading, in a residual
heading, and not in heading 84.71.
(ii) Machines presented with an automatic data
processing machine and intended to work in
conjunction therewith to perform a specific
function other than data processing, are to be
classified as follows: the automatic data
processing machine must be classified separately
in heading 84.71 and the other machines in the
heading corresponding to the function which they
perform unless, by application of Note 4 to
Section XVI or Note 3 to Chapter 90, the whole is
classified in another heading of Chapter 84,
Chapter 85 or of Chapter 90 [emphasis added].
According to the sales literature, the Chromapress allows
the user "to run a wide range of printed materials. Almost any
industry can use Chromapress to create short-run color documents--from real estate brochures to software documentation to full-color magazines. . . . Chromapress breaks down the traditional
cost and time barriers to efficient short-run color printing."
On December 5, 1993, The New York Times published an article
titled "Gutenberg Goes Digital", which states, in part, that:
"[a] new generation of presses is emerging that eliminates the
metal plates, creating flexibility that should allow shorter
press runs and even let the publisher make on-the-fly changes. A
full-color advertising circular, for example, could carry a
message tailored to each individual customer. . . . Two of the
entrants in the plateless-press market are the E-Print 1000 by
Indigo, Inc., of Rehovot, Israel , and the Chromapress by
AGFA...." In an Print on Demand Business, September 1995
article, "Opportunities Abound in Digital Book Production", an
AGFA line manager for Chromapress stated that the Chromapress and
other products based on the Xeikon DCP-1 [a competitor's product]
print engine are ideally suited for book publishing because of
its web-fed perfecting (duplexing) printer.
Based upon the information in the above-cited articles, we
find that the Chromapress is a functional unit by application of
Legal Note 4 to Section XVI and Legal Note 5(E) to chapter 84,
and is performing the specific function of short-run four color
printing. Heading 8443, provides for printing machinery.
Therefore, we find that the Chromapress is classifiable under
heading 8443, HTSUS, as printing machinery.
We note that it has been suggested that the EN 84.43 for
this heading limits printing machinery to those types of machines
that print by means of the type, printing blocks, plates or
cylinders of heading 8442, HTSUS. However, nothing in the legal
text of heading 8443 provides for such limitations. Furthermore,
"[i]t must also be remembered that the tariff statutes were
enacted 'not only for the present but also for the future,
thereby embracing articles produced by technologies which may not
have been employed or known to commerce at the time of the
enactment * * *.'" Nec America, Inc. v. United States, 8 CIT 184,
186(1984), citing Corporacion Sublistatica, S.A. v. United
States, 1 CIT 120, 126, 511 F.Supp. 805, 809 (1981); See also
Davis Turner & Co. v. United States, 45 CCPA 39, 41, C.A.D. 669
(1957). See also Simmon Omega, Inc. v. United States, 83
Cust.Ct. 14, C.D. 4815 (1979), and Trans-Atlantic Co. v. United
States, 471 F.2d 1397, 60 CCPA 100, C.A.D. 1088 (1973), in which
the courts have held that technological advancements and
"improvement in the design of an article does not militate
against its continuing to be a form of the named articles." See
HQ 088024 (January 3, 1991), in which Customs held that the 3M
Digital Matchprint Color Proofing System which uses digital data
to produce proofs on paper stock for the printing industry was a
technologically advanced, special purpose, printing proofing
system and was classifiable under subheading 8443.50.50 [now
8443.59.50], HTSUS, as other printing machinery.
We further note that the merchandise includes software.
Legal Note 6 to chapter 85, HTSUS, provides that "[r]ecords,
tapes and other media of heading 8523 or 8524 remain classified
in those headings, whether or not they are entered with the
apparatus for which they are intended." In HQ 950675, dated
January 7, 1992, Customs held that software, whether imported in
floppy disk form or downloaded onto the system's hard disk drive,
was classifiable under heading 8524, HTSUS, whether or not
entered with the rest of the system. Therefore, the subject
software should be classified separately under heading 8524,
HTSUS. At the time of entry, the proper subheading shall be
determined based upon what type of media the software is recorded
on and whether or not it contains sounds and images.
HOLDING:
Based upon the application of Legal Note 4 to Section XVI,
the AGFA Chromapress digital color printer is classifiable under
subheading 8443.59.50, HTSUS, which provides for: "[p]rinting
machinery, including ink-jet printing machines, other than those
of heading 8471. . . : [o]ther printing machinery: [o]ther:
[o]ther. . . ." The column one, general rate of duty is 1.3
percent ad valorem.
The software is classified within heading 8524, HTSUS, as
recorded media. At the time of entry, the proper subheading
shall be determined based upon what type of media the software is
recorded on and whether or not it contains sounds and images.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division