OT:RR:CTF:EMAIN: H314277 PF
Michael K. Tomenga
Neville Peterson LLP
1400 16th Street, N.W.
Washington, D.C. 20036
Re: Revocation of HQ H304416; Tariff Classification of the ActivPanel Version 7
Dear Mr. Tomenga:
This is in response to your letter to U.S. Customs and Border Protection (“CBP”), submitted on behalf of Promethean, Inc. (“Promethean”) requesting reconsideration of Headquarters Ruling Letter (“HQ”) H304416, dated, August 10, 2020 (“reconsideration request”). We have reviewed HQ H304416 and found it to be in error based on the revised facts set forth in the request for reconsideration. In reaching our decision, we have also considered a video submitted with the reconsideration request. Accordingly, for the reasons set forth below, CBP is revoking HQ H304416.
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 (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice of the proposed action was published in the Customs Bulletin, Vol. 55, No. 10, on March 17, 2021. CBP received one comment in support of the proposed action.
FACTS:
In HQ H304416, the ActivPanel 7 was described as follows:
There are two models of the ActivPanel v7 subject to this request, which are the ActivPanel Nickel and ActivPanel Titanium. Both models contain a 4K ultra high-definition liquid crystal display (“LCD”) video monitor containing a touch overlay, a CPU, speakers and connectors for various signal inputs and outputs, including VGA, USD, and HDMI, and a remote control. The LCD screen size of the ActivPanel Nickel is available from 65 inches to 86 inches and the LCD screen size of the ActivPanel Titanium is available from 70 inches to 86 inches. Both ActivPanel v7 models are configured with a Quad Core processor, 2GB to 4GB of memory, 16GB to 64GB internal storage, a graphics processor, audio, Ethernet, Wi-Fi and Bluetooth connectivity.
The ActivPanel v7 is described as an interactive display and includes a menu bar that allows users access to applications, tools, files, and other attached computing machines. The ActivPanel v7 is sold with Promethean Classroom Essential Applications, which include Whiteboard, Annotate, Screen Share, Spinner and Timer. The Promethean Classroom Essential Apps are educational applications that provide a user with whiteboard, screen capture, annotating, and mirroring functions. The ActivPanel v7 also has an application or control feature entitled the “Locker” that displays and provides access to the applications that are installed onto the ActivPanel v7 as well as the applications that are stored on a separate computing device. The ActivPanel v7 includes a preinstalled Promethean Store, which includes curated educational applications. In order to install an application from the Promethean Store or from the Google Play Store onto the ActivPanel v7, a separate computing system is required.
Promethean sells different types of computing/Open Pluggable Specification (“OPS”) modules that are externally connected to the ActivPanel v7, including Chromebox, OPS-M, and ActivConnect OPS-G. These OPS modules are considered optional devices and are not imported with the ActivPanel v7. The Chromebox uses a Chrome operating system, contains 4GB of RAM, a 128GB solid-state drive, and has Wi-Fi and Bluetooth connectivity. The Chromebox is connected to the ActivPanel v7 via an HDMI cable, the OPS-M is connected to the ActivPanel v7 via an OPS connection port on the ActivPanel v7’s housing, and the ActiveConnect OPS-G is mounted directly onto the ActivPanel v7 via a mounting bracket. The Chromebox allows a user to download applications from the Google Play Store directly onto the ActivPanel v7, which appear on the ActivPanel v7’s screen. The OPS-M (Windows version) is pre-loaded with Windows 10 and allows a user to install applications and software packages such as Microsoft Office. The ActivConnect G uses an Android operating system and allows the downloading of applications from any Android Application Store to the ActivPanel v7. The ActiveConnect G is described as an external Android Module that gives the ActivPanel v7 “tablet-like capabilities, [and] puts the digital world at your fingertips with access to apps, content, mirroring, and more.”
Promethean’s website also provides a description of the OPS modules on its website and describes the objective of these devices:
The objective of the OPS is to provide the ability for a wide range of computing units to be integrated into display units such as the ActivPanel based on standardized dimensions and the use of a common 80-pin JEA socket and other connectors.
The Chromebox is described as follows:
The Promethean Chromebox is the perfect solution for extending an existing Chrome OS ecosystem to the ActivPanel Elements Series, providing certified and seamless access to your preferred apps from the Google Play Store. View and launch downloaded apps directly from the Unified Menu with one-click access and no need for source switching.
The ActivPanel v7 has a CPU on a scaler board. The CPU that runs the Android operating system functions as an image processor that takes a signal from an automatic data processing (“ADP”) machine input and translates it onto the LCD in the form of an image. Aside from the control and interface applications that are installed directly onto the internal scaler CPU, users are limited as to what they can directly install on the scaler board CPU. Applications that provide general purpose computing functions reside on the computing/OPS modules, such as the ActiveConnect OPS-G, Chromebox, and OPS-M and not on the ActivPanel v7. A support video from Promethean describes how a user can “integrate the ActivConnect OPS-G with the ActivPanel Elements Series so the apps will exist in the Locker alongside the apps from the ActivPanel.” In addition, a separate support video states that the OPS-M and Active Connect G are required to install applications. Moreover, in order to manually install applications, users must download the specific application from their personal computer, save it to a USB drive, and insert it into the mounted OPS/ActiveConnect OPS-G/Chromebox.
Promethean also creates and supports lesson delivery software, entitled ActivInspire and ClassFlow for use on its ActivPanels v7. These applications are not physically installed on the ActivPanel v7, but instead are installed on a separate ADP machine. The ClassFlow application is installed on the ActiveConnect OPS and is marketed is for its ability to “deliver lessons, write, draw, annotate and poll students.” In addition, the ActivInspire specifications require a Windows, Mac or Linux operating system to function and the ActivPanel v7 runs on an Android operating system. Based on the ActivInspire specifications, this software has to be installed on a separate ADP machine and not on the ActivPanel v7. Neither the ActivInspire nor Classflow programs allow users to perform general purpose computing functions.
The request for reconsideration includes a video presentation by a software product manager showing the installation and execution of third-party software on the ActivPanel v7. The video demonstration shows three ways that a user can download and run applications directly to the ActivPanel v7 using the Promethean Store, a web browser, and a DOS Box DOS emulator.
The first method allows a user to download and install applications directly on the ActivPanel v7 via the Promethean Store, which is a software application on the ActivPanel v7, that links to the Promethean Store website. The applications available on the Promethean Store include Microsoft Word, a word processing program that allows users to create and edit documents; Microsoft Excel, a spreadsheet program that allows users to create and edit spreadsheets; Microsoft Outlook, a personal information program that allows users to use webmail, calendars, and tasks services; Microsoft Teams, which allow users to video conference, call, chat, and collaborate on Microsoft 365 applications; and Zoho Books, which is an accounting software. Using an Internet connection, a user can download and run these third-party software applications directly on the ActivePanel v7. The ActivPanel’s v7 USB drive allows programs to be loaded onto the device. As a result, a user can also load, read, and write files on the ActivPanel using a USB device.
The second method allows a user to download web based third-party applications directly from the Internet. A user can download and run applications from the Google Play Store onto the ActivPanel v7. In addition, the ActivPanel v7 can run ClassFlow, the lesson software, directly from the Internet. According to Promethean, ClassFlow is a cloud-based application that runs on external servers and can be accessed via a browser which can be accessed from the ActivPanel v7.
The third method allows a user to install and run applications written in DOS. The ActivPanel v7 includes a DOS emulator, which is a software application that comes with and runs on the ActivPanel v7. The DOS emulator allows users the ability to load custom programs written in DOS to run on the ActivPanel v7.
As shown in the demonstration video, the third-party applications that were installed and executed on the ActivPanel v7 as described above were installed without the use of the Chromebox, OPS-M and/or ActivConnect computing modules.
ISSUE:
Whether the ActivPanel v7 is classified as an automatic data processing (“ADP”) machine of heading 8471, HTSUS or a combined input/output unit of an ADP machine of heading 8471, HTSUS.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (“GRIs”) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation (“AUSR”). The GRIs and the AUSR are part of the HTSUS, and are considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
GRI 6 provides as follows:
For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative section and chapter notes also apply, unless the context otherwise requires.
The HTSUS headings under consideration are as follows:
8471 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included:
* * *
Other automatic data processing machines:
8471.41.01 Compromising in the same housing at least a central processing unit and an input and output unit, whether or not combined..
* * *
8471.60 Input or output units, whether or not containing storage units in the same housing:
8471.60.10 Combined input/output units…
ADP machines are defined in Legal Note 5(A) to Chapter 84, HTSUS, which
provide as follows:
For the purposes of heading 8471, the expression "automatic data processing machines" means machines capable of:
Storing the processing program or programs and at least the data immediately necessary for the execution of the program;
Being freely programmed in accordance with the requirements of the user;
Performing arithmetical computations specified by the user; and
Executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run.
To be classified as an ADP unit under heading 8471, HTSUS, an article must meet the terms of Legal Note 5(C) to Chapter 84, HTSUS, which provides that:
Subject to paragraphs (D) and (E) below, a unit is to be regarded as being a part of an automatic data processing system if it meets all the following conditions:
It is of a kind solely or principally used in an automatic data processing system;
It is connectable to the central processing unit [CPU] either directly or through one or more other units; and
It is able to accept or deliver data in a form (codes or signals) which can be used by the system.
Separately presented units of an automatic data processing machine are to be classified in heading 8471….
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, 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 ENs to heading 8471 provide, in pertinent part:
AUTOMATIC DATA PROCESSING MACHINES
AND UNITS THEREOF
Data processing is the handling of information of all kinds, in pre-established logical sequences and for a specific purpose or purposes.
Automatic data processing machines are machines which, by logically interrelated operations performed in accordance with pre-established instructions (program), furnish data which can be used as such, or, in some cases, serve in turn as data for other data processing operations.
This heading covers data processing machines in which the logical sequences of the operations can be changed from one job to another, and in which the operation can be automatic, that is to say with no manual intervention for the duration of the task….
However, the heading excludes machines, instruments or apparatus incorporating or working in conjunction with an automatic data processing machine and performing a specific function. Such machines, instruments or apparatus are classified in the headings appropriate to their respective functions or, failing that, in residual headings (See Part (E) of the General Explanatory Note to this Chapter).
AUTOMATIC DATA PROCESSING MACHINES
The automatic data processing machines of this heading must be capable of fulfilling simultaneously the conditions laid down in Note 5(A) to this Chapter. […]
Thus, machines which operate only on fixed programs, i.e., programs which cannot be modified by the user, are excluded even though the user may be able to choose from a number of such fixed programs.
These machines have storage capability and also stored programs which can be changed from job to job….
Prior to issuing HQ H304416, CBP had considered and rejected classification under subheading 8471.41.01, HTSUS. In HQ H304416, CBP explained that the ActivPanel v7 was not freely programmable. CBP noted that the ActivPanel v7 ran on fixed programs and that a user could not install, modify, or remove program applications on the ActivPanel v7 itself. As a result, we concluded that the ActivPanel v7 did not meet all of the requirements of Note 5(A) to Chapter 84, HTSUS. This conclusion would be correct if the ActivPanel v7 required the OPS modules, such as the Chromebox, OPS-M and ActivConnect, to download, install, and execute third-party applications. However, the information provided in your reconsideration request confirms that the ActivPanel v7 can download, install, and execute third-party applications without these OPS modules.
The applications described above must also comport with the second requirement set forth in Note 5(A) to Chapter 84, which is that an automatic data processing machine of heading 8471 must be capable of “[b]eing freely programmed in accordance with the requirements of the user.” Note 5(A)(ii) to Chapter 84, HTSUS. In HQ H075336, dated May 16, 2011, CBP analyzed the meaning of “freely programmable” in this context and explained as follows:
In Optrex America Inc. v. United States, 4[27] F. Supp. 2d. 1177 (Ct. Int’l Trade 2006), aff’d, [47]5 F.3d 1367 (Fed. Cir. 2007) (“Optrex”), the U.S. Court of Appeals for the Federal Circuit (“CAFC”) upheld CBP’s longstanding interpretation that a “freely programmable” ADP machine is one that: (i) applications can be written for, (ii) does not impose artificial limitations upon such applications, and (iii) will accept new applications that allow the user to manipulate the data as deemed necessary by the user. [47]5 F.3d at 1368. See also Headquarters Ruling Letter (“HQ”) 964880, dated December 21, 2001. The Optrex court noted that “[CBP’s] interpretation is supported by the World Customs Organization’s Explanatory Notes […] which provide that ‘machines which operate only on fixed programs, that is, programs which cannot be modified by the user, are excluded [from heading 8471] even though the user may be able to choose from a number of such fixed programs.’ Explanatory Note 84.71(I)(A).” Id. The court added that “[a]pplication programs are not ‘fixed’ because they can be installed or deleted from a machine.” 427 F. Supp. 2d at 1197.
Moreover, in HQ 952862, dated November 1, 1994, CBP determined that Teklogix data collection devices were not freely programmable, in part, because they were not “general purpose” machines and were designed for certain specific applications and could not by themselves perform the typical applications of computers or personal computers. HQ 952862 discussed the concept of freely programmable by examining the definitions of computer and personal computer and stated as follows:
In determining whether a particular machine is "freely programmable," it is helpful to examine the definitions of the terms "computer" and "personal computer." A computer, which is freely programmable, is a "[g]eneral-purpose machine that processes data according to a set of instructions that are stored internally either temporarily or permanently." A. Freedman, The Computer Glossary, Sixth Edition, pg. 95 (1993). A personal computer "is functionally similar to larger computers, but serves only one user. It is used at home and in the office for almost all applications traditionally performed on larger computers." Computer Glossary (1993), pg. 400. Personal Computers "are typically used for applications, such as word processing, spreadsheets, database management and various graphics-based programs, such as computer-aided design (CAD) and desktop publishing. They are also used to handle traditional business applications, such as invoicing, payroll and general ledger. At home, personal computers are primarily used for games, education and word processing." A. Freedman, The Computer Glossary, Fourth Edition, pg. 524 (1989). Because they can perform any of the above-listed applications, personal computers are considered to be "freely programmable.
The ActivPanel v7 is freely programmable under the criteria set forth above because it is not limited to fixed programs and there are no hardware or software blocks preventing the end user from downloading off-the-shelf, third party applications. Moreover, the Promethean Store is not the exclusive source of applications that can be downloaded for use by the end user for installation on the ActivPanel v7; other sources are available online and programs can be manually created by the end users. As such, the user of the ActivPanel v7 can perform the functions of word processing, web surfing, email, spreadsheet manipulation, etc., which provide general purpose computing while the devices also serve as a display and interactive medium for specific classroom programs.
Except for what is discussed above, none of the other requirements for automatic data processing machines of heading 8471, HTSUS, is in controversy in this case; and, in light of the discussion, the ActivPanel v7 is properly classified under subheading 8471.41.01, HTSUS. Our decision is consistent with New York Ruling (“NY”) N296923, dated June 7, 2018, where CBP determined that a tablet that was installed onto a treadmill, having the capability of downloading and running various applications via the Android OS, satisfied Note 5(A) to Chapter 84 even though the performing of such functions on the machine was very limited. The Android tablet in NY N296923 was also responsible for the power (on/off), the speed control, and the elevation control of the treadmill. CBP classified the Life Cycle Android Tablet under 8471.41.01, HTSUS.
HOLDING:
By application of GRIs 1 and 6, the ActivPanel Version 7 is classified under heading 8471, HTSUS, and specifically under subheading 8471.41.01, HTSUS, which provides for “Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included: Other automatic data processing machines: Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined.” The column one, general rate of duty is free.
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 at www.usitc.gov.
EFFECT ON OTHER RULINGS:
HQ H304416, dated August 10, 2020, is hereby REVOKED.
In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division