CLA-2 OT:RR:TCM:EMAIN H288838 ALS
Ms. Kelle M. Rich
Skyrocket
12910 Culver Boulevard
Los Angeles, California 90066
RE: Reconsideration of NY N286353 (June 12, 2017); Tariff classification of Virtual Reality Goggles and Controller (VRSE)
Dear Ms. Rich:
This letter is in response to your request for reconsideration, dated June 20, 2017, of the above-referenced ruling. NY N286353 in response to your request. The ruling and this reconsideration addresses the legal tariff classification of a video goggles and controller set that you refer to as “VRSE”.
FACTS:
The facts as stated in NY N286353 are as follows:
The merchandise under consideration is the VRSE, which consist of VR Headset (goggles) and a remote control with plastic housing. The VRSE requires a smartphone (not included) to operate and works with VRSE game content that is downloaded onto a smartphone via the app store. The headset/goggles, which contain no electronics, have a slide-out drawer where one puts a smart phone that is loaded with appropriate software to allow the user to become immersed in virtual reality. The VR Headset is directly in front of the user’s eyes and the user can watch the smartphone screen through two clear lenses. The controller is used to control the game play via Bluetooth. The essential character of the set is imparted by the VR Headset.
In NY N286353, CBP ruled that the VRSE is classified as a video game machine in subheading 9004.90.00, HTSUS.
ISSUE:
Is the VRSE, as described above, properly classified under heading 9004, HTSUS, which provides for “Spectacles, goggles and the like, corrective, protective or other”, or under heading 9504, HTSUS, which provides for “Video game consoles and machines, articles for arcade, table or parlor games, including pinball machines, bagatelle, billiards and special tables for casino games; automatic bowling alley equipment; parts and accessories thereof”?
LAW AND ANALYSIS:
Classification under the HTSUS is determined in accordance with the General Rules of Interpretation (“GRI”) and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation (“ARI”). GRI 1 provides that the classification of goods shall be “determined according to the terms of the headings 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, GRIs 2 through 6 may be applied in order.
The instant merchandise is a retail set classified pursuant to GRI 3(b), which provides the following:
3. When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
The following headings and subheadings of the HTSUS are under consideration in this case:
9004 Spectacles, goggles and the like, corrective, protective or other:
9004.90.00 Other...
* * *
9504 Video game consoles and machines, articles for arcade, table or parlor games, including pinball machines, bagatelle, billiards and special tables for casino games; automatic bowling alley equipment; parts and accessories thereof:
9504.50.00 Video game consoles and machines, other than those of
subheading 9504.30, and parts and accessories thereof...
You contend that the VRSE is classifiable under subheading 9504.50.00, HTSUS, because the “controller connects to a gaming system (iOS or Android device) that [will be] purchased separately”, citing NY N118298 (August 30, 2010) and NY N127627 (November 10, 2010), in support for the proposition that the controller is properly classified under heading 9504. NY N118298 ruled that video game components were to be classified under subheading 9504.50.00. NY N118298 has been revoked by the publication of HQ H235178 (April 19, 2018), which states the following:
Note 3 to Chapter 95, HTSUS, states that “Subject to Note 1 [to Chapter 95, HTSUS], parts and accessories which are suitable for use solely or principally with articles of this chapter are to be classified with those articles.” However, Note 1(m) to Chapter 95, HTSUS, states that the chapter does not cover, in relevant part, “radio remote control apparatus (heading 8526).” Bluetooth technology is based upon radio frequencies, and the subject controllers in each of the rulings at issue employ Bluetooth technology to control video game consoles. Applying Note 1(m) to Chapter 95, HTSUS, the controllers are excluded from classification in Chapter 95 because they fit squarely within the scope of eo nomine heading 8526, HTSUS, which provides for, in pertinent part, “radio remote control apparatus.” They are specifically provided for under subheading 8526.92.10, HTSUS, which covers “radio remote control apparatus for video game consoles.
NY N127627 ruled that a wired video game controller is to be classified under heading 9504.*
The controller in this case is not independently classifiable under heading 9504 as a part or accessory of a video game machine. Rather, like the controller discussed in HQ H235178, supra, it is excluded from classification under Chapter 95 by operation of Note 1(m) to that chapter, and is thus properly classified under heading 8526, HTSUS, as a radio remote control apparatus for video game consoles. The controller subject to NY N127627 is a wired controller. NY N127627 therefore is not germane to the instant matter. The goggles in this case are independently classified under heading 9004. See NY N255269 (August 12, 2014) and NY N274341 (April 28, 2016). Therefore, neither of the components that make up the instant retail set are independently classified under heading 9504.
Applying GRI 3(b), we concur with the conclusion in N286353 the VRSE is a set, and that the goggles impart the set with its essential character because it is the goggles that provide the video. The video is at the core of the virtual reality experience, while the controller supports the video by transmitting command data to the goggles via the software to be downloaded to a smartphone. Therefore, the VRSE is properly classified under heading 9004, HTSUS. Specifically, the VRSE is properly classified under subheading 9004.90.00, HTSUS, as goggles.
HOLDING:
By application of GRI 3(b), the VRSE is properly classified under heading 9004, HTSUS. Specifically, the VRSE is properly classified under subheading 9004.90.00, HTSUS, which provides for “Spectacles, goggles and the like, corrective, protective or other: Other...” The general column one rate of duty, for merchandise classified in this subheading is 2.5%.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
EFFECT ON OTHER RULINGS:
NY N286353 (June 12, 2017) is hereby AFFIRMED.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division