CLA-2 RR:CR:GC 961441 JAS
Port Director of Customs
610 S. Canal Street
Chicago, Il 60607
RE: PRD 3901-97-102457; Multiliner, Optical Disc Manufacturing Machine; Injection Molding Machine, Machinery for Manufacturing Video Laser Discs
Dear Port Director:
This is our decision on Protest 3901-97-102457, filed against your classification under the Harmonized Tariff Schedule of the United States (HTSUS), of machinery for manufacturing optical discs. The entries under protest were liquidated on October 3, 1997, and this protest timely filed on December 31, 1997. Counsel for the protestant summarized factual and legal arguments in support of his proposed classification at a meeting in our office on May 12, 1999. The contents of that meeting were confirmed in a letter dated May 19, 1999.
FACTS:
The merchandise under protest, referred to as an optical media production system, consists of two injection molding machines and one dual station machine called the Multiliner, which replicates or reproduces single discs. The latter incorporates two lacquering units, two curing units, and two metalizing units, together with dual scanning and handling units. The Multiliner is thus able to work together with both injection molding machines to simultaneously produce two separate optical discs. The injection molding machines are separate, stand-alone units. Except for its controller which is attached by cables, the components of the Multiliner replicating machine are enclosed in the same housing.
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A master disc of glass electrolytically coated with nickel, called a stamper, is produced in a separate process not in issue here. Utilizing the stamper as a mold, the injection molding machines compress plastic resin under high pressure and velocity
into disc-shaped replicas of the stamper. An optical inspection
machine or laser scanner then checks each disc for scratches,
dust, irregular coating thickness, and other defects. Sound discs are then sputter coated (metalized) with a reflective surface of aluminum using vacuum deposition technology, coated with a protective layer of clear acrylic plastic, and cured. Labels are then applied and the discs packaged for shipment.
The merchandise was entered under a provision in HTSUS heading 8479 as other machines for the manufacturing of video laser discs. In liquidation, Customs reclassified the two injection molding machines with molds under a provision in HTSUS heading 8477 as machines for working rubber or plastics or for the manufacture of articles from these materials, and the replicating machine under another provision in heading 8479 as other machines and mechanical appliances.
Counsel maintains that the injection molding machines and the replicating machine were designed as a single integrated unit to produce optical disc media, and that under Section XVI, Note 4, HTSUS, they operate together to perform a clearly defined function described by heading 8479. He cites HQ 959655, dated April 3, 1997, for the proposition that the components in this protest must be classified together in this heading. Counsel argues that digital video disc (DVD) replicating equipment represents a technological advancement over an earlier generation of equipment for replicating 12-inch diameter video laser discs for the digital recording of motion pictures. The claim is that the instant equipment bears an essential resemblance to the latter and should be similarly classified. For this reason, counsel concludes that subheading 8479.89.85, HTSUS, machines for the manufacture of video laser discs, represents the proper classification. Alternatively, counsel claims that the merchandise is classifiable in subheading 8479.89.97, HTSUS, as other machinery and mechanical appliances.
The provisions under consideration are as follows:
8477 Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in [chapter 84]; parts thereof:
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8477.10 Injection molding machines:
8477.10.40 For use in the manufacture of video laser discs
8477.10.80 Other
* * * *
8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in [chapter 84]; parts thereof:
8479.89 Other:
8479.89.85 [m]achines for the manufacturing of video laser discs
8479.89.95 (now 97) Other
ISSUE:
Whether the injection molding machines and the replicating machine, as described, are classifiable together either in heading 8477 or in heading 8479; whether the components are separately classifiable.
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6.
Section XVI, Note 3, HTSUS, states, in part, that unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. Section XVI, Note 4, HTSUS,
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states, in part, that 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 is to be classified in the heading appropriate to that function.
The injection molding machines and the replicating machine do not qualify as a functional unit classifiable under Section XVI, Note 4 in heading 8477, because that heading does not describe machines that produce articles in part of plastic and in part of base metal. Likewise, these machines are not a functional unit of heading 8479 because we have previously ruled that heading 8479 does not describe a machine or machines by specific function. See HQ 958629, dated February 21, 1996. For this reason, the injection molding machines and the disc replicating machine cannot be classified together. By way of contrast, in HQ 959655, the case counsel cites, we classified the Monoliner, an earlier generation of the merchandise under protest, in subheading 8479.89.95 (now 97), HTSUS. Unlike the instant merchandise, the available information in that case led us to conclude that the Monoliner was a single machine.
For purposes of Section XVI, Note 3, composite machines are taken to be fitted together to form a whole when incorporated one in the other or mounted one on the other, or mounted on a common base or in a common housing. Submitted literature describes the Multiliner disc replication machine as modular in design, for “high volume mass CD replication.” As previously stated, the injection molding machines are depicted as stand-alone machines while the components of the Multiliner disc replicating machine are clearly within a common housing. The latter are fitted together to form a whole and, therefore, qualify as a composite machine for purposes of Section XVI, Note 3. In our opinion, the metalizing component or sputter coater, which applies the aluminum layer to each disc, performs the replicating machine’s principal function. During playback, it is the aluminum that reflects the low-power laser that “reads” the signals encoded on the disc’s surface and allows the disc to play. No 4-digit heading in the HTSUS specifically describes the function the sputter coater performs. However, the sputter coater or metalizer performs a mechanical function independent of the function of any other machine among the replicating equipment, and is not covered more specifically by any other heading in the HTSUS. As such, it is described by the terms of heading 8479. As to the appropriate subheading, the available evidence
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indicates the Multiliner replication machine is used in making
5-inch diameter pre-recorded compact discs like CD-Audio, CD-ROM, CD-ROM-XA (a combination of audio and video), CD-i (interactive), and Video-CD. The literature states the Multiliner is “ready” for DVD. The evidence of record supports the conclusion that the replication machine belongs to a class or kind of machine principally used in the manufacture of compact discs (CDs) not video laser discs (VLDs). The literature depicts the Multiliner’s controller as a stand-along device, connected by cables. It is not within the same housing as the other components. Because there is no authority to classify the Multiliner and its controller as a functional unit under heading 8479, in its condition as imported the controller must be separately classified.
HOLDING:
Under the authority of GRI 1, the injection molding machines are provided for in heading 8477. As there is no evidence they belong to a class or kind of injection molding machine principally used in the manufacture of VLDs, they are classifiable in subheading 8477.10.90, HTSUS. The Multiliner disc replication machine is provided for in heading 8479. It is classifiable in subheading 8479.89.95 (now 97). The controller is provided for in heading 8537, as a board, panel, or base for electric control or the distribution of electricity. It is classifiable in subheading 8537.10.90, HTSUS, as boards, panels or bases for a voltage not exceeding 1,000 V.
Since reclassification of the merchandise, as indicated, would result in no net duty reduction, the protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the
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decision the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www .customs.ustreas. gov, by means the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division