CLA-2 OT:RR:CTF:EMAIN H310177 DSR
Mr. John M. Peterson
Neville Peterson LLP
Counsellors at Law
17 State Street, 19th Floor
New York, NY 10004
RE: Revocation of NY N194496, NY N083076 and NY N234397; tariff classification of various multifunction wireless speakers
Dear Mr. Peterson:
In New York Ruling Letters (NY) N194496 (December 28, 2011), NY N083076 (November 19, 2009) and NY N234397 (November 15, 2012), U.S. Customs and Border Protection (CBP) classified devices identified as the “Sonos Play:3,” the “Sonos ZonePlayer S5 Router” and the “SUB,” respectively, in subheading 8517.62.0050, Harmonized Tariff Schedule of the United States (HTSUS). That subheading provides for “Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network): Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Other.” Since the rulings were issued, CBP has reviewed the rulings and determined that the classifications provided for the subject devices are incorrect and, therefore, NY N194496, NY N083076 and NY N234397 must be revoked for the reasons set forth in this ruling.
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 of the proposed revocations of NY N194496, NY N083076 and NY N234397 was published on May 20, 2020, in the Customs Bulletin, Volume 54, No. 19. CBP received one comment in response to the notice.
FACTS:
The device that is the subject of NY N194496 is the Sonos Play:3. It allows the user to wirelessly stream data, including digital music files and related metadata in multiple locations. The Sonos Play:3 does not have any independent capability of recording, storing or playing back digital sound files. However, it allows files to be played from storage on a personal computer or network storage facilities, and allows the user to play songs from select music services without ripping, downloading or personal computer interaction required. Regarding sound output, the device contains three digital amplifiers and three drivers (one tweeter and two 3-inch midrange drivers), as well as one bass radiator.
The device that is the subject of NY N083076 is the ZonePlayer S5 Router (“ZonePlayer S5”). It is one of the components of the Sonos digital media network system. The ZonePlayer S5 is similar in construction and function to the ZP 100 ZonePlayer ruled on in New York Ruling N021357 and the ZP 80 ZonePlayer ruled on in New York Ruling N021358. With the use of a Sonos ZonePlayer installed in various rooms, a system user can play the same digital sound files in different rooms or play different digital sound files in different rooms. As many as thirty-two (32) ZonePlayers may be deployed across the network, which is a mesh wireless network. All the ZonePlayers may be operated and manipulated with the use of a single handheld controller, which is not imported with the ZonePlayer and not the subject of the ruling. The user can purchase the controller separately.
The principal components of the ZonePlayer S5 are a power source and wireless network card. In addition, it incorporates a digital to analog converter, which allows digital files to be converted to analog signals and played through the owner’s existing sound equipment radios, home theatres, and the like. The ZonePlayer S5 also incorporates 5 Class-D amplifiers and five driver speaker system; 2 tweeters, 2 3” mid-range drivers, and a 3.5” woofer.
A single ZonePlayer S5 establishes what is referred to as a Sonos system or network via initial connection to a broadband router, which is typically connected to a high-speed Internet service and controlled by a personal computer (neither of which are at issue in this ruling). Computer software must also be installed (after importation) for this connection to work. Connecting this initial ZonePlayer to a router as described above creates a network to which 32 additional ZonePlayers may be added. Each ZonePlayer may be connected by wire to additional loudspeakers or play audio through its own incorporated speakers. This enables the user to wirelessly stream data, namely digital music files and related metadata, to be played in multiple rooms. The source of the data played by the ZonePlayers can be a personal computer, network storage facilities, and select online music services.
Through the wireless controller, which is imported separately, a user can call up digital music files from a number of sources. The Sonos system also allows a user to source sound files from up to 16 PCs or Mac computers connected to the network. The controller also contains pre-set programming, which allows the user to access streaming audio files from approximately 25,000 radio stations Internet web streams. The stream audio files are not actual satellite radio transmission or radio broadcasting.
The device that is the subject of NY N234397 is described as the SUB, a subwoofer intended for use with the Sonos digital home music system. It contains two digital amplifiers and two force-canceling speakers positioned face-to-face. The SUB intercepts and decodes the low-end frequencies of the audio file that had previously come out of a ZonePlayer, a type of which is described above (the ZonePlayer S5). As data on the system streams, the controller processes the non-audio files (metadata), the ZonePlayers decode the audio files and converts them to sound, and the SUB subwoofer receives and decodes the base register notes of the audio file. The SUB has a power source and wireless network card that can be utilized after first wiring either a ZonePlayer or Bridge to the home network using the Ethernet cable.
The Sonos SUB subwoofer cannot operate without a connection to a network to which the Sonos software has been loaded. It cannot receive or convert files unless the SonosNet network is active. Once connected, digital audio files from a variety of sources can be accessed and played. The SUB receives specific parts of the digital music file and converts them into sound. As a device within the mesh network SonosNet, the SUB also participates in the transmission of related data and metadata.
ISSUE:
Whether the subject devices are classified under heading 8517, HTSUS, which provides for, in pertinent part, apparatus for the reception, conversion and transmission or regeneration of voice, images or other data, or under heading 8518, HTSUS, which provides for, in pertinent part, loudspeakers, whether or not mounted in their enclosures.
LAW AND ANALYSIS:
Classification under the HTSUS is determined 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 based on 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. In addition, in interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989). The HTSUS provisions under consideration in this ruling are as follows:
8517 Telephone sets, including telephones for cellular networks or for other wireless
networks; other apparatus for the transmission or reception of voice, images or
other data, including apparatus for communication in a wired or wireless network
(such as a local or wide area network), other than transmission or reception
apparatus of heading 8443, 8525, 8527 or 8528; parts thereof:
. . .
Other apparatus for transmission or reception of voice, images or other data,
including apparatus for communication in a wired or wireless network (such
as a local or wide area network):
. . .
8517.62.00 Machines for the reception, conversion and transmission or regeneration
of voice, images or other data, including switching and routing apparatus
* * *
8518 Microphones and stands therefor; loudspeakers, whether or not mounted in their
enclosures; headphones and earphones, whether or not combined with a
microphone, and sets consisting of a microphone and one or more
loudspeakers; audio-frequency electric amplifiers; electric sound amplifier sets;
parts thereof:
. . .
Loudspeakers, whether or not mounted in their enclosures:
. . .
8518.21.00 Single loudspeakers, mounted in their enclosures
8518.22.00 Multiple loudspeakers, mounted in the same enclosure
* * *
The EN to heading 85.17 provides, in pertinent part, the following:
This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electromagnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks.
…
(II) OTHER APPARATUS FOR TRANSMISSION OR RECEPTION OF VOICE, IMAGES OR OTHER DATA, INCLUDING APPARATUS FOR COMMUNICATION IN A WIRED OR WIRELESS NETWORK (SUCH AS A LOCAL OR WIDE AREA NETWORK)
…
(F) Transmitting and receiving apparatus for radio-telephony and radio-telegraphy.
This group includes:
(1) Fixed apparatus for radio-telephony and radio-telegraphy (transmitters, receivers and transmitter-receivers). . . .
. . .
The EN to heading 85.18 provides, in pertinent part, the following:
This heading covers microphones, loudspeakers, headphones, earphones and audio-frequency electric amplifiers of all kinds presented separately, regardless of the particular purpose for which such apparatus may be designed (e.g., telephone microphones, headphones and earphones, and radio receiver loudspeakers).
The heading also covers electric sound amplifier sets.
. . .
(B) LOUDSPEAKERS, WHETHER OR NOT MOUNTED IN THEIR
ENCLOSURES
The function of loudspeakers is the converse of that of microphones: they reproduce sound by converting electrical variations or oscillations from an amplifier into mechanical vibrations which are communicated to the air. . . .
Matching transformers and amplifiers are sometimes mounted together with loudspeakers. Generally the electrical input signal received by loudspeakers is in analogue form, however in some cases the input signal is in digital format. Such loudspeakers incorporate digital to analogue converters and amplifiers from which the mechanical vibrations are communicated to the air.
Loudspeakers may be mounted on frames, chassis or in cabinets of different types (often acoustically designed), or even in articles of furniture. They remain classified in this heading provided the main function of the whole is to act as a loudspeaker. Separately presented frames, chassis, cabinets, etc., also fall in this heading provided they are identifiable as being mainly designed for mounting loudspeakers; articles of furniture of Chapter 94 designed to receive loudspeakers in addition to their normal function remain classified in Chapter 94.
The heading includes loudspeakers designed for connection to an automatic data processing machine, when presented separately.
. . .
The commenter argues that the Sonos speakers primarily function as a connected system using significantly more complex protocols that cannot be reasonably compared to devices that employ stereo wire and that would be classified in heading 8518, HTSUS, as loudspeakers. The commenter bases that assertion on the ability of the Sonos devices to transmit non-audio data (such as information about the music being played) along with audio data, and concludes that it is not equivalent to a stereo wire, in which only audio signals are transmitted or to Bluetooth speakers in which the transmission, reception and conversion was done to facilitate the connectivity. Further, the commenter argues that the Sonos devices are analogous to the Bluetooth phone earpiece device considered in NY N233055 (September 24, 2012) and classified in subheading 8517.62.00, HTSUS, as a machine for the reception, conversion and transmission or regeneration of voice, images or other data. Finally, the commentator stresses that because the Sonos speakers create a separate peer-to-peer wireless network in order to transmit data, that functionality must determine the devices’ principle function.
However, we continue to hold that the critical point of analysis is that the transmission and reception functions employed by the subject Sonos devices are undertaken to accomplish the principal, and ultimate, function of playing sound through the loudspeaker components of the devices. Furthermore, the scope of the relevant portion of heading 8518, HTSUS, is not limited only to loudspeakers that use stereo wire to function as loudspeakers. As explained in detail below, the wireless connections created by the subject devices essentially act as a stereo wire, except they permit those connections to be wireless.
With regard to NY N234397, the SUB is a composite machine. To clarify, the SUB consists of reception, conversion and transmission apparatus of heading 8517 and an amplifier and loudspeaker of heading 8518. Note 3 to Section XVI, states the following:
Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed 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.
However, we no longer hold that that the principal function of the SUB is to transmit and receive sounds or data. Specifically, we now note that in NY N234397, CBP incorrectly concluded that the principal function of the SUB is to receive convert and transmit voice, audio files or other data in a wireless network because “[t]he SUB can only function when the SonosNet network, which is a wireless network, is active. As a result, the SUB functions within a wireless network.” That conclusion did not take into consideration the loudspeaker capabilities of the SUB.
As we observed in H281100 (June 27, 2018), where the principal function of a device such as a loudspeaker is not to connect to the source of a signal, but rather to convert such signal into sound, such a device functions as a loudspeaker of heading 8518, HTSUS. Here, the SUB is a wireless digital data receptor, converter and transmitter, which operates using a mesh network for wireless transmission of digital sound files and file streams. It receives digital data, specifically the data that forms the lower register of the audio file, and converts it into sound. Because it is connected to SonosNet’s peer-to-peer network, it also transmits said data. Once connected, digital audio files from a variety of sources can be accessed and played. The transmission and reception functions are undertaken to accomplish the task of playing sound. Notwithstanding the commenter’s argument, the wireless network does essentially act as a stereo wire as it relates to the function of the subject wireless speakers, i.e. it permits the connection to the speakers to be wireless. In other words, regardless of whether loudspeakers such as the SUB are connected to the source of the audio signals by way of a stereo wire, or wirelessly via proprietary or other transmission/reception functions, the principal function of such loudspeakers is not to connect to the source of the signal, but rather to convert such signal into sound – that is, to function as a loudspeaker. See also HQ H167270 (July 11, 2011) (Bluetooth-compliant wireless speakers that connected to laptops, smart phones, tablets, and mp3 players through a 3.5mm stereo wire or wireless Bluetooth technology classified as a loudspeaker of heading 8518). Therefore, we find that the SUB of NY N234397 is classified as a loudspeaker of heading 8518, HTSUS.
The Sonos Play:3 (NY N194496) allows the user to wirelessly stream data, including digital music files and related metadata in multiple locations. It allows such files to be played from storage on a personal computer or network storage facilities, and allows the user to play songs from select music services without ripping, downloading or personal computer interaction required. Regarding sound output, the Sonos Play:3 contains three digital amplifiers and three drivers (one tweeter and two 3-inch midrange drivers), as well as one bass radiator. As with the SUB discussed supra, what is key is that the transmission and reception functions of the Sonos Play:3 are undertaken to accomplish the task of playing sound. The wireless network that is utilizes essentially acts as a stereo wire, except it permits the connection to be wireless. Because of this, the principal function of the Sonos Play:3 is not to connect to the source of the data that it receives, but rather to convert such data into sound – that is, to function as a loudspeaker. Therefore, we find that the Sonos Play:3 is classified as a loudspeaker of heading 8518, HTSUS.
Finally, regarding NY N083076, and the subject device the ZonePlayer S5 Router, the principal components of the ZonePlayer are a power source; wireless network card; a digital to analog converter (which allows digital files to be converted to analog signals and played through the owner’s existing sound equipment radios, home theatres, and the like); 5 amplifiers and five driver speaker system; 2 tweeters; 2 3” mid-range drivers; and a 3.5” woofer.
The ZonePlayer S5 must be directly connected to a broadband router (as the initial node in a subsequently created proprietary mesh wireless Internet network), or as subsequent node within such a wireless network that has already been established. The ZonePlayer S5 may play audio directly through its internal speakers from digital music files that it receives, or connect by wire to external loudspeakers that then produce sound. As with the SUB and Sonos Player:3 analyzed above, the principal function of the ZonePlayer S5 is not to connect to the source of the data that it receives, but rather to convert such data into sound – that is, to function as a loudspeaker. Therefore, we find that the ZonePlayer S5 is also classified as a loudspeaker of heading 8518, HTSUS.
HOLDING:
By application of GRI 1 (Note 3 to Section XVI), the SUB, the Sonos Play:3 and the ZonePlayer S5 Router are classified in heading 8518, HTSUS, specifically in subheading 8518.22.00, HTSUS, which provides in pertinent part for: “… loudspeakers, whether or not mounted in their enclosures; …: …Loudspeakers, whether or not mounted in their enclosures: … Single loudspeakers, mounted in their enclosures.” The column one, general rate of duty is free.
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 at www.usitc.gov.
Pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, products of China classified under subheading 8518.22.00, HTSUS, unless specifically excluded, are subject to an additional 7.5 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.15, in addition to subheading 8518.22.00, HTSUS, listed above.
The HTSUS is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Note cited above and the applicable Chapter 99 subheading. For background information regarding the trade remedy initiated pursuant to Section 301 of the Trade Act of 1974, you may refer to the relevant parts of the USTR and CBP websites, which are available at https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions and https://www.cbp.gov/trade/remedies/301-certain-products-china respectively.
EFFECT ON OTHER RULINGS:
NY N194496 (December 28, 2011), NY N083076 (November 19, 2009) and NY N234397 (November 15, 2012), are revoked in accordance with this decision.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division