CLA-2 OT:RR:CTF:TCM HQ H216719 TNA
Ms. Aasha B. Desloge
Best Buy Corporate Campus
7601 Penn Avenue
South Richfield, MN 55423
RE: Revocation of NY R02550, NY R03835, NY M84663, NY N010738, NY N015651, NY N024500, NY N047842, NY N092825, NY N092831, NY N092834, NY N021097, NY M86676, NY R04615, and NY N007861; Classification of docking stations with built-in radios for MP3 players
Dear Ms. Desloge:
This letter is in reference to New York Ruling Letter (“NY”) R02550, issued to Best Buy on September 15, 2005, concerning the tariff classification of a docking station with an AM/FM digital radio designed for an MP3 player. There, U.S. Customs and Border Protection (“CBP”) classified the merchandise under subheading 8527.31.60, Harmonized Tariff Schedule of the United States (“HTSUS”), as “Reception apparatus for radiotelephony, radiotelegraphy or radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Other radiobroadcast receivers, including apparatus capable of receiving also radiotelephony or radiotelegraphy: Combined with sound recording or reproducing apparatus: Other: Other … Other.”
This letter also concerns NY R03835, dated May 4, 2006, NY M84663, dated July 12, 2006, NY N010738, dated May 18, 2007, NY N015651, dated August 31, 2007, NY N024500, dated March 19, 2008, NY N047842, dated January 9, 2009, NY N092825, dated February 17, 2010, NY N092831, dated February 17, 2010, NY N092834, dated February 17, 2010, NY N021097, dated January 16, 2008, NY M86676, dated September 20, 2006, NY R04615, dated August 17, 2006, and NY N007861, dated March 20, 2007. These rulings classified similar merchandise either in subheading 8527.31.60, HTSUS (the predecessor to current subheading 8527.91.60, HTSUS), the current subheading 8527.91.60, HTSUS, or in subheading 8527.13.60, HTSUS, which provides for “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Radiobroadcast receivers capable of operating without an external source of power: Other apparatus combined with sound recording or reproducing apparatus: Other: Other.”
We have reviewed these rulings and found them to be in error. For the reasons set forth below, we hereby revoke NY R02550, NY R03835, NY M84663, NY N010738, NY N015651, NY N024500, NY N047842, NY N092825, NY N092831, NY N092834, NY N021097, NY M86676, NY R04615, and NY N007861.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice proposing to revoke NY R02550, NY R03835, NY M84663, NY N010738, NY N015651, NY N024500, NY N047842, NY N092825, NY N092831, NY N092834, NY N021097, NY M86676, NY R04615, and NY N007861 was published in the Customs Bulletin, Vol. 47, No. 3, on January 9, 2013. Three comments were received in response to this notice. These comments are discussed below.
FACTS:
The subject merchandise consists of clock radios with either AM/FM capability or simply FM capability. They incorporate a digital clock with an alarm and a docking station for an iPod music player or other MP3 player, all in the same housing. Users can play music from an MP3 player, either through MP3 players specifically designed for the docking station, or through a patch cord for MP3 players not designed for the docking station. The radio receiver also acts as a battery charger for the iPod or other MP3 player. Some models of the subject merchandise incorporate speakers; others do not. As imported, the subject merchandise does not contain either an MP3 player or an iPod.
In addition, the radios of the docking stations of NY R03835, NY N010738, NY N024500, NY N047842, NY N092825, NY N092831, NY N092834, NY N021097, NY R02550, and NY N007861 are incapable of operating without an external source of power. We note that the facts of NY R02550 differ from those provided in that ruling and in the proposed ruling. Because of the subject iH5’s backup battery, the proposed revocation classified the iH5 as being capable of operating without an external source of power. The commenter acknowledges that the merchandise has a battery backup feature, but claims that this feature is only capable of being used to operate the clock and the clock’s alarm temporarily in the event of a power outage. The commenter also claims that the backup battery cannot operate the radio, and that it cannot charge or power a connected MP3 player in the event of a power outage. In support of this argument, the commenter submitted the product’s user manual, which contained the iH5’s specifications. Furthermore, CBP’s own research confirms this. See http://www.macworld.com/article/ 1046579/ihomeih5.html (“the iH5 runs off AC power via the included AC adapter, but two AA batteries (included) keep the clock and alarm working in the event of a power failure.”) As a result, we find that the iH5 AM/FM radio is incapable of operating without an external source of power. The docking stations of NY M84663, NY M86676, and NY R04615 are either battery-operated or contain back-up batteries.
Furthermore, the YSP-4000, a speaker bar with a built-in FM tuner that was described in NY N015651, is incapable of operating without an external source of power and does not contain a clock. In addition, whereas NY N01561 and the proposed version of this ruling originally described the YSP-4000 as housing a docking station for an MP3 player, the importer has submitted specifications during the comment period showing that this product does not contain the docking station in the same housing as the speaker. To the contrary, the YSP-4000 can be plugged to a docking station that consumers can order separately; because the YSP-4000 is compatible with an MP3 player docking station, it is capable of projecting the music played by the MP3 player through its speakers.
Lastly, NY N021097 classified item number A017JA00162, which requires an external source of power and contains a telephone featuring a 16 digit caller ID/number Liquid Crystal Display (LCD) Screen, a 50 incoming call memory, 3 one-touch dialing memory, 10 two-touch dialing memory, a dual-caller ID system, a ringer and volume control, and a mute, flash, and redial function. Thus, in addition to a radio and iPod charging function, this item also allows a user to make and receive telephone calls.
ISSUE:
Whether the subject docking stations with built-in radios for MP3 players contain sound recording or reproducing apparatus?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRI). 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 GRI may then be applied. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs 1 through 5.
The HTSUS provisions under consideration are as follows:
8527 Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock:
Radiobroadcast receivers capable of operating without an external source of power:
8527.13 Other apparatus combined with sound recording or reproducing apparatus:
Other:
8527.13.60 Other:
* * *
8527.19 Other:
8527.19.10 Valued not over $40 each, incorporating a clock or clock-timer, not in combination with any other article, and not designed for motor vehicle installation
8527.19.50 Other
* * *
Other:
8527.91 Combined with sound recording or reproducing apparatus:
Other:
8527.91.60 Other:
* * *
8527.92 Not combined with sound recording or reproducing apparatus but combined with a clock:
8527.92.10 Valued not over $40 each
8527.92.50 Other
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding nor 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 (Aug. 23, 1989).
The EN to heading 85.27 provides, in pertinent part:
The sound radio broadcasting apparatus falling in this heading must be for the reception of signals by means of electro magnetic waves transmitted through the ether without any line connection.
This group includes:
(1) Domestic radio receivers of all kinds (table models, consoles,
receivers for mounting in furniture, walls, etc., portable models, receivers, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock)….
(5) Stereo systems (hi-fi systems) containing a radio receiver, put up
in sets for retail sale, consisting of modular units in their own separate housing, e.g., in combination with a CD player, a cassette recorder, an amplifier with equaliser, loudspeakers, etc. The radio receiver gives the system its essential character.
In beginning our analysis, we note that that it is not in dispute that the subject merchandise is described by the terms of heading 8527, HTSUS. Thus, the issue is at the 6-digit heading level, and focuses on the question of whether the subject docking stations with radios contain sound recording or reproducing devices.
We note that although the term “sound recording or reproducing device” is not defined in EN 85.27, it is described in EN 85.19. In light of the fact that sound recording or reproducing apparatus of heading 8519, HTSUS, may be incorporated into products of heading 8527, HTSUS, we find EN 85.19 to be instructive in this particular matter. EN 85.19 provides, in pertinent part, that:
Generally, sound is recorded onto or reproduced from an internal storage device or media (e.g., magnetic tape, optical media, semiconductor media or other media of heading 85.23).
Sound recording apparatus modify a recording medium so that sound reproducing apparatus can subsequently reproduce the original sound-wave (speech, music, etc.). This includes recording based on the receipt of a sound-wave or by other methods, e.g., by recording data sound files, downloaded from an Internet page or a compact disc by an automatic data processing machine, onto the internal memory (e.g., flash memory) of a digital audio device (e.g., MP3 player). Devices which record sound as digital code generally are not capable of reproducing sound unless they incorporate a means for converting the recording from digital code to an analogue signal….
(IV) OTHER APPARATUS USING MAGNETIC, OPTICAL OR SEMICONDUCTOR MEDIA
The apparatus of this group may be portable. They may also be equipped with, or designed to be attached to acoustic devices (loudspeakers, earphones, headphones) and an amplifier…
(C) Apparatus using semiconductor media
This group includes apparatus which use semiconductor (e.g., solid-state non- volatile) media. Sound is recorded as digital code converted from amplified currents of variable intensity (analogue signal) on the recording medium. Sound is reproduced by reading such medium. The semiconductor media may be permanently installed in the apparatus or may be in the form of removable solid-state non-volatile storage media. Examples include flash memory audio players (e.g., certain MP3 players) which are portable battery operated apparatus consisting essentially of a housing incorporating a flash memory (internal or removable), a microprocessor, an electronic system including an audio-frequency amplifier, an LCD screen and control buttons. The microprocessor is programmed to use MP3 or similar file formats. The apparatus can be connected to an automatic data processing machine for downloading MP3 or similar files.
Thus, the ENs describe a “sound-recording or reproducing device” as including one that functions by way of semiconductor media. Sound that is recorded onto such a medium is done so as digital code converted from analogue signal on the recording medium, and sound that is reproduced is done so by reading such medium. The fact that the ENs allow for semiconductor media to be either permanently installed in the apparatus or in the form of removable solid-state non-volatile storage media means that sound can be recorded onto an internal file or a removable solid state non-volatile media, such as a USB flash memory apparatus. In order for a device to be a sound-reproducing device, it must be able to read the recorded file, either from an internal memory or from a removable solid state non-volatile media, such as a USB flash memory apparatus. See EN 85.19.
This description is in accordance with definitions of dictionaries and other lexicographic sources. For example, the Oxford English Dictionary defines “record” as “of a machine, instrument or device: to set down (a message, reading, etc.) in some permanent form.” See www.oed.com. The Oxford English Dictionary defines “reproduce” as “To relay (sound originating elsewhere) or replay (sound recorded on another occasion) by electrical or mechanical means…. To produce again in the form of a copy.” See www.oed.com. In addition, the McGraw-Hill Encyclopedia of Science and Technology defines “sound recording” as “the technique of entering sound, especially music, on a storage medium for playback at a subsequent time.” See McGraw-Hill Concise Encyclopedia of Science and Technology, 6th Ed., 2009 at 2197. This encyclopedia defines “sound-reproducing systems,” in pertinent part, as:
Systems that attempt to reconstruct some or all of the audible dimensions of an acoustic event that occurred elsewhere. A sound-reproducing system includes the functions of capturing sounds with microphones, manipulating those sounds using elaborate electronic mixing consoles and signal processors, and then storing the sounds for reproduction at later times and different places.
Id. at 2197.
In the present case, each model of the subject merchandise consists of a radio and docking station in the same housing. The docking stations allow the user to play music from an iPod or other MP3 player. The music, which is recorded on the MP3 player, is directed to the speakers for broadcasting. In the models of the subject merchandise which do not contain speakers, the docking station can be plugged into a set of speakers, thereby also acting as a conduit between the music player and the speakers. In neither instance does the docking station actually record or reproduce the music passing through it because it does not convert the code form of the music from digital to analogue; nor does it read the music from a media device. To the contrary, it is the iPod or other MP3 player that acts as a sound recording or reproducing device, because it converts the music from digital to analogue format and can read the music from the internal media on which the music is recorded. The docking station would not be able to play the music again at a later time if the MP3 player were removed. As a result, the subject docking stations with built-in radios cannot be said to be sound recording or reproducing apparatus. As such, they cannot be classified in subheading 8527.91, HTSUS.
In its submission stating its disagreement with the scope of the term “sound-recording or reproducing” as set forth in the proposed ruling, a commenter notes that heading 8527, HTSUS, provides for “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock.” Citing the McGraw-Hill Encyclopedia of Science and Technology’s definition of “sound-reproducing system,” which CBP noted above as part of a list of numerous lexicographic sources, the commenter argues that CBP failed to distinguish between a “sound-reproducing system,” which the McGraw-Hill Encyclopedia defines, and a “sound-reproducing apparatus,” which is what is required by heading 8527, HTSUS. The commenter argues that a “system” is made up of an interacting or interdependent group of items, whereas an “apparatus” is a single instrument or appliance. However, in noting that the instant docking stations cannot play music without an MP3 player, we are merely illustrating the docks’ role as a conduit for the music signal as opposed to a device that would be independently considered a product of heading 8527, HTSUS. This does not stand for the proposition that devices of heading 8527, HTSUS, must both record and reproduce sound, which was the concern of the commenter. The question of whether specific merchandise fits CBP’s definition of a “sound-recording or reproducing apparatus” will be made on a case-by-case basis, based on the characteristics of the specific merchandise.
In the present case, certain models of the subject merchandise are either battery-operated or contain a back-up battery. As such, they are capable of operating without an external power source. Thus, these models are described by the terms of subheading 8527.19, HTSUS, which provides for “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Radiobroadcast receivers capable of operating without an external source of power: Other.” At the 8-digit level, this subheading contains breakouts for merchandise based on its value on entry. As a result, if the subject merchandise is valued at less than $40, incorporates a clock or clock timer, is not in combination with any other article, and is not designed for motor vehicle installation, it is classified in subheading 8527.19.10, HTSUS; otherwise, it is classified in subheading 8527.19.50, HTSUS.
Other models of the subject merchandise are incapable of operating without an external power source. As such, they are precluded from classification in subheading 8527.19, HTSUS. Subheading 8527.92, HTSUS, provides for “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Other: Not combined with sound recording or reproducing apparatus but combined with a clock.” The subject merchandise is described by the terms of this subheading. At the 8-digit level, this subheading contains breakouts for merchandise based on its value on entry. As a result, if the subject merchandise is valued at less than $40, it is classified in subheading 8527.92.10, HTSUS; if it is valued at over $40, it is classified in subheading 8527.90.50, HTSUS.
Lastly, NY N021097 classified item number A017JA00162, a docking station that is distinguishable from the rest of the models at issue because it contains a telephone and multiple functions unique to the telephone. In that sense, it is similar to the merchandise at issue in HQ 086939, dated August 9, 1990, where CBP classified a combination telephone/clock/radio. There, CBP considered this device to be a composite machine of Note 3 to Section XVI, HTSUS. Unable to determine the principal function, CBP used GRI 3(c) to classify the combination telephone, clock, and radio in heading 8527, HTSUS. Similarly, in the present case, a consumer is likely to purchase this type of docking station as much for the telephone as for its charging function and speakers. Otherwise, a consumer could easily buy any one of the myriad docking stations without a telephone. As a result, we use GRI 3(c) to classify item number A017JA00162 in subheading 8527.92, HTSUS. If it is valued at less than $40, it is classified in subheading 8527.92.10, HTSUS; if it is valued at over $40, it is classified in subheading 8527.90.50, HTSUS.
HOLDING:
Under the authority of GRI 1 via Note 3 to Section XVI, HTSUS, and GRI 6, the subject iPod docking stations are classified in heading 8527. Models of the subject merchandise that are capable of operating without an external source of power (i.e., the merchandise of NY M84663, NY M86676, and NY R04615), are classified in one of two subheadings based on whether they are valued not over $40, incorporate a clock or auto-timer, are not in combination with any other articles, and are not designed for motor vehicle installation. If they meet all of the elements, they are classified in subheading 8527.19.10, HTSUS, which provides for “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Radiobroadcast receivers capable of operating without an external source of power: Other: Valued not over $40 each, incorporating a clock or clock-timer, not in combination with any other article, and not designed for motor vehicle installation.” The 2012 column one general rate of duty is free.
Models of the subject merchandise that are valued over $40 or do not meet any one of the other criteria are classified in subheading 8527.19.50, HTSUS, which provides for “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Radiobroadcast receivers capable of operating without an external source of power: Other: Other.” The 2012 column one general rate of duty is 3% ad valorem.
Models of the subject merchandise that are incapable of operating without an external source of power and include a clock (i.e., the merchandise of NY R03835, NY N010738, NY N015651, NY N024500, NY N047842, NY N092825, NY N092831, NY N092834, and NY N007861) are classified in subheading 8527.92, HTSUS. At the eight-digit level, they are classified in two different subheadings, depending on the value of the merchandise at the time of entry. If they are valued at less than $40, they are classified in subheading 8527.92.10, HTSUS, which provides for “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Other: Not combined with sound recording or reproducing apparatus but combined with a clock: Valued not over $40 each.” The 2012 column one general rate of duty is free. If they are valued at over $40, they are classified in subheading 8527.92.50, HTSUS, which provides for “Reception apparatus for radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Other: Not combined with sound recording or reproducing apparatus but combined with a clock: Other.” The 2012 column one general rate of duty is 3% ad valorem.
At GRI 3(c), item number A017JA00162 (the subject of NY N021097) is classified in subheading 8527.92, HTSUS. If it is valued at less than $40, it is classified in subheading 8527.92.10, HTSUS. The 2012 column one general rate of duty is free. If it is valued at over $40, it is classified in subheading 8527.90.50, HTSUS. The 2012 column one general rate of duty is 3% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the internet at www.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
NY R02550, dated September 15, 2005, NY R03835, dated May 4, 2006, NY M84663, dated July 12, 2006, NY N010738, dated May 18, 2007, NY N015651, dated August 31, 2007, NY N024500, dated March 19, 2008, NY N047842, dated January 9, 2009, NY N092825, dated February 17, 2010, NY N092831, dated February 17, 2010, NY N092834, dated February 17, 2010, NY N021097, dated January 16, 2008, NY M86676, dated September 20, 2006, NY R04615, dated August 17, 2006, and NY N007861, dated March 20, 2007 are REVOKED.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division