CLA-2 OT:RR:CTF:TCM H014776 HkP
Port Director
Port of Charleston
U.S. Customs and Border Protection
200 East Bay Street
Charleston, SC 29401
RE: Application for Further Review of Protest no. 1601-07-100210; Unshielded Twisted Pair Cables; Information Technology Agreement
Dear Port Director:
This is our decision regarding the Application for Further Review (“AFR”) of Protest Number 1601-07-100210, timely filed on behalf of CommScope, Inc. (“CommScope”), concerning the classification of unshielded twisted pair cables under the Harmonized Tariff Schedule of the United States (“HTSUS”).
In reaching our decision we have taken into consideration arguments made by counsel during a meeting in this office on April 30, 2008, as well as in a supplemental submission, received on May 8, 2008.
FACTS:
According to the submitted information, the cables at issue are SYSTIMAX 71E Series GigaSPEED XL Cables (“GigaSPEED XL”) specifically designed to transmit voice, data, and video signals. They can support network line speeds in excess of 1G (gigabit) per second. The cables have a four-pair construction, meaning that each cable includes four pairs of twisted wires, with a patent-pending bi-sector separator tape designed to support high-bandwidth applications, including for video communication applications of up to 550 MHz. The twisting of the wires reduces electromagnetic interference and crosstalk from nearby wires. Each pair of wires is balanced because the two wires in the pair carry equal and opposite signals.
The jacket (or sheath) of the cable is constructed either of low smoke PVC or a low smoke zero halogen compound, and the insulation is constructed either of high-density polyethylene, non-halogen high-density polyethylene, or fluorinated-ethylene-propylene. The outside diameters of the cables range from 5.6 mm to 5.8 mm. The cables at issue have a maximum direct current resistance of 9.83 Ohms/100 m and can operate at temperatures from -20 °C to 60 °C. The cables are not imported with connectors.
According to the submitted information, CommScope’s twisted pair cables are Category 6 telecommunication cables that meet the TIA/EIA-568-B.2-1 standard and meet or exceed IEEE Standard 802.3 for local area networks. Generally, “Category 6” is the cable standard for the latest generation of network cable. It was developed to ensure gigabit Ethernet (1000 Mbits/sec.) (also, “1000Base-T”) performance as well as accommodate other network protocols. There are two gigabit Ethernet protocols currently in use, 1000Base-T and 1000Base-TX. 1000Base-T transmits and receives data at 250 Mbits/sec on each of the four pairs, for a total transfer rate of 1000 Mbits/sec. The transfer of data is bi-directional on each of the four pairs. 1000Base-TX transmits data at 500 Mbits/sec on two pairs and receives data on the remaining two pairs at the same data rate.
Some of the merchandise at issue was entered during December 2005, under subheading 8544.20.0000, HTSUSA, which provides for, in relevant part: “Insulated (including enameled or anodized wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors … : coaxial cable and other coaxial electric conductors.” CBP liquidated these entries under the claimed classification in October and November 2006.
In February 2006, the importer’s broker made a request for a refund of duty paid for at least one of the entries made in December 2005, because of a classification error. The broker claimed that the correct classification was in subheading 8544.79.4000, HTSUSA, because the cable was designed to transmit voice, data and video signals. We note that no such subheading exists in the HTSUS. CBP rejected the request for a duty refund and, based on information provided by the importer as well by a third party laboratory that the cables were rated at 300 volts, informed the broker that the correct classification was under subheading 8544.59, HTSUS, because the cables were copper, had a 300 V capacity, and did not have connectors. Subheading 8544.59.2080, HTSUSA (2006), provides for, in relevant part: “Insulated (including enameled or anodized wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors … : Other electric conductors, for a voltage exceeding 80 V but not exceeding 1,000 V: Other: Of copper: Other.”
On August 30, 2006, CBP issued to the broker a classification ruling on the GigaSPEED XL cables at issue. See New York Ruling Letter (“NY”) M85658. In that ruling, CBP found that the correct classification of the cables was subheading 8544.59.2080, HTSUSA.
While these events were ongoing, the importer made additional entries of the merchandise during April and May of 2006, under subheading 8544.59.2080, HTSUSA. CBP liquidated these entries under the claimed classification. The last of the entries was liquidated on March 16, 2007. A protest with AFR was timely filed on April 16, 2007, in which Protestant asserted that the appropriate classification for the subject merchandise was in subheading 8544.49.4000, HTSUSA, which provides for: “Insulated (including enameled or anodized wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors … : Other electric conductors, for a voltage not exceeding 80V: Other: Of a kind used for telecommunications.”
ISSUE:
What is the correct classification of the SYSTIMAX 71E Series GigaSPEED XL cables under the HTSUS?
LAW AND ANALYSIS:
Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification. The protest was timely filed, within 90 days of liquidation of the first entry for entries made before December 18, 2004, and within 180 days of liquidation of the first entry for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).
Further Review of Protest No. 1601-07-100210 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24 because the decision against which the protest was filed involves matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The 2006 HTSUS provisions under consideration are as follows:
8544 Insulated (including enameled or anodized) wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fiber cables, made up of individually sheathed fibers, whether or not assembled with electric conductors or fitted with connectors:
* * *
8544.20.0000 Coaxial cable and other coaxial electric conductors …..
* * *
Other electric conductors, for a voltage not exceeding 80 V:
* * *
8544.49 Other:
8544.49.4000 Of a kind used for telecommunications …..
* * *
Other electric conductors, for a voltage exceeding 80 V but not exceeding 1,000 V:
* * *
8544.59 Other:
8544.59.20 Of copper …..
* * *
8544.59.2080 Other …..
It is not in dispute that the GigaSPEED XL cables cannot be classified in subheading 8544.20.0000, HTSUSA, because they are not coaxial cables. We next examine the remaining claims raised by the Protestant.
Protestant states that the cables at issue are principally used for voice, data and video transmission, and that such applications principally use currents of significantly less than 80 V. As a result, they should be classified under subheading 8544.49, HTSUS, because they are described by terms of this subheading. The Port classified these cables under subheading 8544.59, HTSUS.
Protestant believes that subheading 8544.49, HTSUS, which provides for “other electric conductors, for a voltage not exceeding 80 V”, is a classification controlled by use because the word “for” is included in the text of the subheading. The main arguments advanced in support of classification in subheading 8544.49, HTSUS, are that: (1) the GigaSPEED XL cables are solely or principally used for transmitting voice, data and video signals, which is generally accomplished utilizing current that is significantly less than 80 volts. Therefore, although the cables are rated at up to 300 V, this fact is irrelevant to the performance of the cables in their transmission functions. (2) Given that subheading 8544.49 is a principal use provision, actual voltage does not determine whether a conductor can be classified in subheading 8544.49. (3) “The provision ‘for a voltage not exceeding 80 V’ has no meaning if the word ‘use’ is not implied. The cables are ‘for a voltage’ because they are used for carrying a voltage. Accordingly, the tariff provision must be one controlled by use.” However, consideration of the “maximum capacity” or “rated capacity” of an electric conductor is not implied by the terms of the subheading. (This argument was made in Protestant’s supplemental submission, on the basis of the Court of International Trade’s opinion in BASF Corporation v. United States (“BASF”), 427 F. Supp. 2d 1200 (citations omitted) (2006).)
Addressing Protestant’s third argument first, we note that:
It has long been a settled rule of interpretation of the statutes imposing duty on imports, that if words used therein to designate particular kinds or classes of goods have a well known signification in our trade and commerce, different from their ordinary meaning among the people, the commercial meaning is to prevail, unless Congress has clearly manifested a contrary intention; and that it is only when no commercial meaning is called for or proved, that the common meaning of the words is to be adopted.
Cadwalader v. Zeh, 151 U.S. 171, 176; 14 S. Ct. 288 (citations omitted) (1894), citing United States v. Chests of Tea, 9 Wheat. 430, 438, among other cases. Further, the United States Court of Customs and Patent Appeals (“C.C.P.A.”) in United States v. Fung Chong Co., 34 C.C.P.A. 40 (1946), stated, in reference to the lower court’s decision (Quong Lee & Co. et al. v. United States, 10 Cust. Ct. 23, C. D. 716):
The trial court properly ruled that in customs cases the common and commercial meaning of a word used in the tariff act “are presumed to be the same unless it is otherwise shown; that the burden of proving commercial designation is upon the party who alleges it, and that commercial designation must be shown to be definite, uniform, and general throughout the United States at the time of the enactment of the tariff act.”
The rule as it has been established “was intended to apply to cases where the trade designation is so universal and well understood that the Congress, and all the trade, are supposed to have been fully acquainted with the practice at the time the law was enacted.” Jas. Akeroyd & Co. et al v. United States, 15 Ct. Cust. App. 440, T.D. 42641.
A volt (symbol: V) is a trade designation that is definite, uniform and general throughout the United States and the world. The term refers to a unit of measurement of force, or pressure, in an electrical circuit. Modern Science: The New Dictionary of Cultural Literacy, 3rd ed., Houghton Mifflin Company (2002). According to A Dictionary of Weights, Measures, and Units, Oxford University Press, (2004), “The volt as used today was originally defined in 1881 at the first International Electrical Conference, among the practical units derived from the absolute units of the e.m.u. [electromagnetic unit] system.”
Based on these well-established facts, CBP concludes that the term “80V” is a commercial designation for insulated wire and other electric conductors with which Congress and the trade is fully acquainted. Based on our research, electric conductors of the kind at issue here are never sold in the United States without a voltage rating for safety reasons. “Maximum rating” or “rated capacity” is, therefore, a significant characteristic for the category of products commercially recognized as “electric conductors” and, as such, contrary to Protestant’s assertions, is implicit in any discussion of electric conductors, whether in subheading 8544.49, HTSUS, or otherwise. In this case, the term “80V” indicates that an electric conductor must have an actual rating of 80 volts.
We next consider the phrase, “for a voltage not exceeding”. We note that, “It is well established that in the construction of a statute the intention of the legislature is to be deduced from the whole statute and every material part of the same.” United States v. Invicta Seeland, Inc., 25 C.C.P.A. 300, 305 (1938). Further, “the provisions of the Tariff Schedules [now, the HTSUS] must be considered in pari materia.” Venetianaire Corp. of America v. United States, 60 C.C.P.A. 75, 78 (citations omitted) (1973).
Subheadings 8544.41 and 8544.49 may be read in pari materia with the rest of heading 8544, specifically subheadings 8544.51 through 8544.60, HTSUS, because the products which they cover are used in the same way (to conduct electricity), and because the identical words (“for a voltage not exceeding”) are used in subheadings of the same heading. Libbey Glass v. United States, 921 F.2d 1263 (Fed. Cir. 1990). On this basis, we find that the language of these subheadings is comparable or, have the same meaning. Subheadings 8544.51 through 8544.59, HTSUS, cover electric conductors that can safely conduct voltages ranging from over 80 to 1,000 volts. Subheading 8544.60, HTSUS, covers electric conductors that can safely conduct voltage in excess of 1,000 volts. When the subheadings are considered all together and in the context of electric conductors, which are commercially recognized as voltage rated products, it is clear that the phrase “for a voltage not exceeding” is used to create categories of conductors of commercially recognized voltages and is not used to indicate the voltage at which a wire or cable may be principally used. In sum, we find that the phrase “for a voltage not exceeding 80V” requires that electric conductors classified under the provisions of subheading 8544.49, HTSUS, must be rated at a maximum current load of 80 volts.
Furthermore, our research and Protestant’s own submission indicate that the electrical conductor industry (more specifically, the wire and cable industry) does not rely on a mere voltage rating to determine the principal use of a class or kind of wire or cable. Instead, industry adheres to other standards, such as the TIA/EIA-568-B.2-1 Standard and IEEE Standard 802.3 mentioned in the FACTS section above which include, but are not limited to, voltage. Were CBP to find subheading 8544.49, HTSUS, to be a principal use provision on the basis of voltage alone, we would be acting in contravention of commercially recognized standards. Accordingly, we find that the term “electrical conductors, for a voltage not exceeding 80 V” is a commercial designation which cannot be construed in the same way as the common meaning of this phrase.
Protestant’s other two arguments are based on the fact that CBP has, in the past, found that the use of the word “for” in a tariff provision may be indicative that the provision is one controlled by use. In the cited example, HQ 966199, dated April 18, 2003, CBP found that the expression “tools for milling” indicated that the subheading under consideration was a use provision.
The use of the word “for” is not determinative that a tariff provision is controlled by use; it is merely an indicator. Tariff provisions must be read in their entirety and in context. According to the Oxford English Dictionary, the noun “use” means “the act of employing a thing for any (esp. a profitable) purpose; the fact, state, or condition of being so employed; utilization or employment for or with some aim or purpose, application or conversion to some (esp. good or useful) end.” Based on this definition, a principal use provision must have an apparent aim or purpose. In instances in which CBP has found that the word “for” is indicative of a provision controlled by principal use, there has always been a particular aim or purpose evident in the provision. See, for example, HQ 966199, dated April 18, 2003, construing the term “tools for milling”, and HQ W968315, dated October 13, 2006, construing the expression “articles for the conveyance or packing of goods, of plastics”. In instances in which the word “for” is not a part of the text, CBP has found that, when a particular aim or purpose is apparent in a provision, classification under that provision must be in accordance with principal use of the class or kind of good specified. See, for example, HQ W968416, August 28, 2007, interpreting the expression “other household articles of plastics” based on the precedent set by the Court of International Trade in The Hartz Mountain Corporation v. United States, 19 CIT 1149, 903 F. Supp. 57 (citations omitted) (1995).
Protestant rightly points out that the Court of International Trade found in BASF that the expression, “for gasoline”, designated tariff heading 3811 as a principal use provision. The CIT explained that, “’use’ may be implied from the phrase ‘for gasoline’ for without the implied term the statutory phrase has no meaning.” BASF at 44. As we have earlier found, the phrase “for a voltage not exceeding 80 V” has meaning; what is more, it has a commercial meaning which exceeds its common meaning.
For all of the foregoing reasons, we find that subheading 8544.49.4000, HTSUS, is not a principal use provision and that classification therein must be according to the actual rated voltage of the relevant good and not its principal use.
Finally, Protestant asserts that subheading 8544.49, HTSUS, is not susceptible to an eo nomine reading. We agree. Subheading 8544.49 (as well as subheadings 8544.41 and 8544.51 through 8544.60), HTSUS, are provisions of general description, similar to that of “wearing apparel”. See Jack Bryan, Inc. v. United States, 72 Cust. Ct. 197, C.D. 4541 (1974).
According to Protestant and a third party laboratory, the cables at issue are rated at 300 V and are not fitted with connectors. As such, we find that they are provided for under subheading 8544.59, HTSUS, and that the classification decision reached in NY M85658 is correct.
Protestant also argues that the cables are entitled to duty free treatment under the terms of Annex B to the Information Technology Agreement (ITA) because it is network equipment. Annex B lists specific products that are entitled to duty free treatment wherever they are classified in the HS. Annex B provides, in relevant part:
Network equipment: Local Area Network (LAN) and Wide Area Network (WAN) apparatus, including those products dedicated for use solely or principally to permit the interconnection of automatic data processing machines and units thereof for a network that is primarily used for the sharing of resources such as central processor units, data storage devices and input or output units – including adapters, hubs, in-line repeaters, converters, concentrators, bridges and routers, and printed circuit assemblies for physical incorporation into automatic data processing machines and units thereof.
Under the provisions of the ITA, each participant in the Agreement is required to provide all other participants with a document containing, among other things, “a list of the detailed HS headings involved for products specified in Attachment B.” Annex: Modalities and Product Coverage, para. 2. Neither cables nor subheading 8544.59, HTSUS, is included in the list submitted by the United States. Consequently, the cables at issue are outside the purview of the ITA and are not entitled to duty-free treatment when entered into the United States.
HOLDING:
By application of GRI 1, the SYSTIMAX 71E Series GigaSPEED XL cables are classified in heading 8544, HTSUS. They are specifically provided for in subheading 8544.59.2080, HTSUSA, which provides for: “Insulated (including enameled or anodized wire, cable (including coaxial cable) and other insulated electric conductors, whether or not fitted with connectors … : Other electric conductors, for a voltage exceeding 80 V but not exceeding 1,000 V: Other: Of copper: Other.” The 2006 column one, general rate of duty is 5.3% ad valorem.
Since the rate of duty under the classification indicated above is the same as the liquidated rate, you are instructed to deny the protest in full. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter.
No later than 60 days from the date of this letter, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP homepage on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division