CLA-2 RR:CR:GC 961929 DWS
Mr. Chris Garcia
Kuehne & Nagel, Inc.
8870 Boggy Creek Road, Suite 100
Orlando, FL 32824
RE: Scancoder; Chapter 84, note 5(B); Explanatory Note 85.17;
Section XVI, Note 4;
Chapter 90, Notes 2 and 3; General Explanatory Note IV to
Chapter 90;
HQs 087077, 961387, and 952942; NYs 857097, B84956, and
A83385;
8471.80.90; 8517.50; 9028.20.00
Dear Mr. Garcia:
This is in response to your letter of May 15, 1998, on
behalf of ABB Water Meters Inc., to the Customs National
Commodity Specialist Division, New York, concerning the
classification of a Scancoder under the Harmonized Tariff
Schedule of the United States (HTSUS). Your letter was referred
to this office for a response.
FACTS:
The merchandise consists of a Scancoder, which, based upon
the provided literature, is an encoder device principally used as
an attachment to an existing water meter for transcoding the
meter reading into an electronic signal. The signal is then
retrieved by the utility or municipality and downloaded for
billing and/or statistical purposes. The Scancoder consists of a
body comprised of a brass case bottom and a translucent plastic
top. It operates by way of a magnet on the inside bottom of the
base. The device is fitted into the reader portion of a meter,
and, as the meter gears turn (measuring the volume or quantity of
the medium), a magnet on top of the meter turns causing the
magnet in the Scancoder to turn in sync. This turning causes
gears inside the Scancoder to register a reading of its own based
upon its calibration. This reading is then encoded digitally by
way of an electronic system comprised of a battery, computer
chip, and transmission apparatus. The computer chip compiles and
translates the meter reading into electronic signals which may be
stored in a black circular plastic dish on the outside of the
Scancoder, otherwise known as the "pad." A utility employee can
then retrieve the information by downloading it onto a hand-held
device (sold separately from the Scancoder). The signal may also
be transmitted directly through telephone lines; instead of
utilizing the "pad", a telephone line may be connected to the
Scancoder.
ISSUE:
Whether the Scancoder is classifiable under subheading
8471.80.90, as an other automatic data processing (ADP) unit;
under subheading 8517.50, HTSUS, as other telegraphic apparatus,
for carrier-current line systems or for digital line systems;
under subheading 9028.20.00, HTSUS, as a liquid meter; or under
subheading 9028.90.00, HTSUS, as an accessory for liquid meters.
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRIs). GRI
1 provides that classification is determined according to the
terms of the headings and any relative section or chapter notes.
The HTSUS provisions under consideration are as follows:
8471 Automatic data processing machines and units thereof; *****:
8471.80 Other units of automatic data processing machines:
Other:
8471.80.90 Other.
* * * * * * * * *
8517 Electrical apparatus for line telephony or line telegraphy,
including line telephone
sets with cordless handsets and telecommunication apparatus
for carrier-current
line systems or for digital line systems; videophones; parts
thereof:
8517.50 Other apparatus, for carrier-current line systems or
for digital line systems.
* * * * * * * * *
9028 Gas, liquid or electricity supply or production meters,
including calibrating meters
thereof; parts and accessories thereof:
9028.20.00 Liquid meters.
9028.90.00 Parts and accessories.
* * * * * * * * *
You suggest possible classification of the Scancoder in
heading 8471, HTSUS, which covers ADP machines and units thereof.
As you do not claim that the Scancoder is an ADP machine, for it
to be classifiable in heading 8471, HTSUS, it would have to be as
an ADP unit. Chapter 84, note 5(B), HTSUS, states:
[a]utomatic 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.
Based upon the information provided, as the Scancoder is
used to transmit signals so that the information contained
therein may be downloaded onto a remote ADP machine, it is our
understanding that the Scancoder is not itself principally used
within an ADP system. Therefore, the Scancoder is precluded from
classification in heading 8471, HTSUS.
You cite NY 857097, dated October 30, 1990, as precedent for
classification of the Scancoder in heading 8517, HTSUS. In that
ruling, Customs held that a digital encoder which processes and
transmits NTSC signals between two points using a line connection
is classifiable in heading 8517, HTSUS. Inasmuch as that ruling
does not explain how the article is used and operated, we cannot
agree that it is precedent to be followed in this case.
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 or
legally binding, 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 Fed. Reg.
35127, 35128 (August 23, 1989). In part, Explanatory Note 85.17
(p. 1475) states that:
[t]he heading also excludes:
(a) - (ij) *****
(k) Carrier-current receivers and transmitters which form a single
unit with analogue or digital
telemetering instruments or apparatus, or which, together with the
latter, constitute a
functional unit within the meaning of Note 3 to Chapter 90
(Chapter 90).
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.
Chapter 90, note 3, HTSUS, states that:
[t]he provisions of note 4 to section XVI apply also to this chapter.
General Explanatory Note IV to chapter 90, HTSUS, states:
(IV) FUNCTIONAL UNITS
(Chapter Note 3)
Note 3 specifies that the provisions of Note 4 to Section XVI apply also
to this Chapter (see Part (VII) of the General Explanatory Notes to
Section XVI).
Thus, this Chapter covers, as functional units, for example, the
electrical (including electronic) instruments or apparatus which make up an
analogue or digital telemetering system. These are essentially the following:
(I) Apparatus at the transmitting end:
(i) A primary detector (transducer, transmitter,
analogue-digital converter, etc.) which transforms the quantity
to be measured, whatever its nature, into a proportional
current, voltage or digital signal.
(ii) A measurement amplifier, transmitter and receiver basic unit
which (if necessary) boosts this current, voltage or digital
signal to the level required by the pulse or
frequency-modulated transmitter.
(iii) A pulse or frequency-modulated transmitter which transmits
an analogue or digital signal to another station.
(II) Devices at the receiving end:
(i) A pulse, frequency-modulated or digital signal receiver
which converts the transmitted information into an analogue
or digital signal.
(ii) A measurement amplifier or converter which, if necessary,
amplifies the analogue or digital signal.
(iii) Indicating or recording instruments calibrated in terms of
the primary quantity and equipped with a mechanical pointer or
opto-electronic display.
Telemetering systems are mainly used in oil, gas and production
pipelines, water, gas and sewage disposal installations and environmental
monitoring systems.
Line or radio transmitters and receivers for telemetering pulses remain
in their respective headings (heading 85.17, 85.25 or 85.27, as the
case may be) unless they are combined as a single unit with the
instruments and apparatus referred to in (I) and (II) above or the whole forms
a functional unit within the meaning of Note 3 to Chapter 90; the complete
unit then falls in this Chapter.
We find that the Scancoder does not constitute a functional
as described in General Explanatory Note IV to chapter 90, HTSUS.
Although the Scancoder incorporates apparatus at the transmitting
end, based upon the information provided, it does not incorporate
apparatus at the receiving end of the signal transmitted by the
Scancoder. Both apparatus are required for the Scancoder to be a
telemetering system and a functional unit. Unfinished functional
units are not recognized by any Legal or Explanatory Notes to the
HTSUS. See HQ 087077, dated March 27, 1991.
We find that the Scancoder is precluded from classification
in heading 8517, HTSUS. Based upon the descriptions you
supplied, it appears that Scancoder is telemetering apparatus,
unlike the merchandise in NY 857097. Also, we note that only one
version of the Scancoder utilizes a line connection to transmit
signals. Furthermore, the exclusionary language in Explanatory
Note 85.17 makes it clear that telemetering apparatus, such as
the Scancoder, is precluded from classification heading 8517,
HTSUS.
We will now ascertain whether the Scancoder is classifiable
in any of the provisions of heading 9028, HTSUS.
In HQ 961387, dated March 20, 1998, we held a similar
electric meter module, which attaches to existing electricity
meters and transmits signals using a short-range radio frequency
to a remote site for the downloading of the meter information, to
be classifiable in heading 9028, HTSUS, specifically under
subheading 9028.90.00, HTSUS. See also NY B84956, dated May 30,
1997.
It continues to be our position that the class of
merchandise to which the Scancoder belongs, which is principally
used for attachment to existing meters, is not classifiable as
meters in heading 9028, HTSUS. Although the Scancoder is capable
of registering a reading from an existing meter, such capability
is principally for the purpose of transmitting the information to
a remote site where it is downloaded, not for visual inspection.
Based upon the literature provided, it is our understanding that
Scancoder is not purchased merely for use as a water meter; it is
used for the transmission of meter information to a remote site.
NY A83385, dated June 6, 1996, has been cited as precedent
for classification of the Scancoder in heading 9028, HTSUS, as a
meter. In that ruling, Customs held an integrated metering
transponder (IMT), which is composed of an electric supply meter
providing a user the ability to remotely read total electric
consumption, to be classifiable under subheading 9028.30.00, as
an electricity meter. Based upon a review of the literature
describing the IMT, it is our understanding that, although
capable of being retrofitted to existing meters, the IMT is
principally used as an electricity meter in and of itself to be
installed in a new line. Consequently, as explained above,
because the Scancoder is used as an attachment to existing
meters, it is our position that the holding in NY A83385 is
inapplicable to the classification of the Scancoder, which is
precluded from classification under subheading 9028.20.00, HTSUS.
In HQ 952942, dated April 27, 1993, we stated that:
[a] part of an article, for tariff purposes, is a thing necessary to the
completion of that article. It is an integral, constituent or component
part, without which the article to which it is joined could not function as
such article. An accessory, on the other hand, is something that is not
essential in itself but adds to the effectiveness of something else. In
each case, the nature, function, and purpose of an article must be
examined in relation to the article to which it is attached or which it is designed to serve.
Again, based upon the literature provided, it is our
understanding that the Scancoder is not essential to the
operation of an existing water meter; however, it adds to the
effectiveness of the meter by allowing its readings to be
transmitted to a remote location and downloaded by a user. As
with the merchandise in HQ 961387, it is our position that the
Scancoder is an accessory for liquid meters and is described
under subheading 9028.90.00, HTSUS.
As the Scancoder meets the term "parts and accessories",
chapter 90, note 2, HTSUS, is applicable. It states that:
[s]ubject to note 1 above, parts and accessories for machines,
apparatus, instruments or articles of this chapter are to be classified
according to the following rules:
(a) Parts and accessories which are goods included in any of the
headings of this chapter or of chapter 84, 85 or 91 (other than
heading 8485, 8548 or 9033) are in all cases to be classified in
their respective headings;
(b) Other parts and accessories, if suitable for use solely or
principally with a particular kind of machine, instrument or
apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or
apparatus of heading 9010, 9013 or 9031) are to be
classified with the machines, instruments or apparatus of that
kind;
(c) All other parts and accessories are to be classified in heading
9033.
As it is our position that the Scancoder is not a good of
chapters 84, 85, 90, or 91, HTSUS, chapter 90, note 2(a), HTSUS,
is inapplicable. However, because the
Scancoder is an accessory for liquid meters of heading 9028,
HTSUS, in accordance with chapter 90, note 2(b), HTSUS, it is
classifiable with those meters in heading 9028, HTSUS,
specifically under subheading 9028.90.00, HTSUS.
HOLDING:
The Scancoder is classifiable under subheading 9028.90.00,
HTSUS, as an accessory for liquid meters.
Sincerely,
John Durant, Director
Commercial Rulings Division