OT:RR:CTF:CPMMA H318180 AJK
TARIFF NO: 9031.49.9000
Mr. Thomas J. O’Donnell
Rodriguez O’Donnell Ross -
Fuerst Gonzalez & Williams, P.C.
20 North Wacker Drive - Suite 1416
Chicago IL 60606
RE: Revocation of NY I86148; Classification of Universal Bill Stacker Sub-Assembly
Dear Mr. O’Donnell:
This letter is in reference to New York Ruling Letter (NY) I86148, dated September 26, 2002, concerning the tariff classification of a universal bill stacker sub-assembly. In
NY I86148, U.S. Customs and Border Protection (CBP) classified the merchandise in heading 9504, Harmonized Tariff Schedule of the United States (HTSUS), as a part of casino gaming machines. We have reviewed NY I86148 and have determined that the classification of the merchandise in heading 9504, HTSUS, was incorrect.
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, Volume 56, No. 34, on August 31, 2022. No comment was received in response to this notice.
FACTS:
The subject merchandise was described in NY I86148 as follows:
The merchandise, also referred to as a cash box, is designed to receive and store paper currency in casino gaming machines. A separate validator unit mounted to the universal stacker accepts a paper bill into the stacker machine. You relate that “[a]s the bill enters the machine, the validator sensor reads the denomination to determine the value of the bill. The casino gaming machine then converts the cash into game credits.…the validator then pushes the bill into the cash box where the money stays until the cash box is removed from the gaming machine.” ….
You state that the universal stacker sub-assembly subject of this inquiry, although capable of use in vending machines, is used primarily as a storage mechanism in casino gaming machines such as slot machines and video poker. You assert that the substantial construction of the stacker cash box housing and the fact that all units to be imported by your client will be equipped with locks or will be designed to accommodate locks is indicative of the primary or most common end use of this type of stacker in gaming machines.
ISSUE:
Whether the universal bill stacker sub-assembly is classified in heading 9031, HTSUS, as a banknote measuring machine, or heading 9504, HTSUS, as a part of a gaming machine operated by banknotes.
LAW AND ANALYSIS:
Classification of goods under HTSUS is governed by 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 classification 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 ARI 1(a), which applies to principal use provisions, provides as follows:
In the absence of special language or context which otherwise requires--
a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use ….
* * * * * *
The HTSUS provisions at issue are as follows:
9031 Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof:
Other optical instruments and appliances:
9031.49 Other:
9031.49.90 Other
9504 Video game consoles and machines, table or parlor games, including pinball machines, billiards, special tables for casino games and automatic bowling equipment, amusement machines operated by coins, banknotes, bank cards, tokens or by any other means of payment:
9504.30.00 Other games, operated by coins, banknotes, bank cards, tokens or by any other means of payment, other than automatic bowling alley equipment; parts and accessories thereof
Other:
9504.30.0060 Parts and accessories
* * * * * *
Note 1 to chapter 90, HTSUS, provides, in pertinent part:
This chapter does not cover:
…
(k) Articles of chapter 95 ....
Note 3 to chapter 95, HTSUS, provides, as follows:
Subject to note 1 above, parts and accessories which are suitable for use solely or principally with articles of this chapter are to be classified with those articles.
Subheading note to chapter 95, HTSUS, provides, in pertinent part:
[Subheading 9504.50] does not cover video game consoles or machines operated by coins, banknotes, bank cards, tokens or by any other means of payment (subheading 9504.30).
* * * * * *
The Harmonized Commodity Description and Coding System (HS) Explanatory Notes (ENs) constitute the official interpretation of the HS. While not legally binding or dispositive, the ENs provide a commentary on the scope of each heading of the HS at the international level and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The General EN to chapter 95, HTSUS, provides, in pertinent part:
Each of the headings of this Chapter also covers identifiable parts and accessories of articles of this Chapter which are suitable for use solely or principally therewith, and provided they are not articles excluded by Note 1 to this Chapter.
EN 90.31, HTSUS, provides, in pertinent part:
[T]his heading covers measuring or checking instruments, appliances and machines, whether or not optical.
The Subheading EN for subheading 9031.49, HTSUS, provides as follows:
This subheading covers not only instruments and appliances which provide a direct aid or enhancement to human vision, but also other instruments and apparatus which function through the use of optical elements or processes.
EN 95.04, HTSUS, provides, in pertinent part:
This heading includes:
…
(6) Machines, operated by coins, banknotes, bank cards, tokens or by other means of payment, of the kind used in amusement arcades, cafés, funfairs, etc., for games
of skill or chance (e.g., machines for revolver practice, pintables of various types).…
The Subheading EN for subheading 9504.50, HTSUS, provides as follows:
This subheading does not cover video game consoles or machines operated by coins, banknotes, bank cards, tokens or by any other means of payment; these are to be classified in subheading 9504.30.
* * * * * *
The legal note 3 to chapter 95 provides that “parts and accessories which are suitable for use solely or principally with articles of [chapter 95] are to be classified with those articles.” The EN to subheading 9504.50 provides that “video game consoles or machines operated by … banknotes” are classified in subheading 9504.30. See also Subheading Note to Chapter 95. Accordingly, subheading 9504.30.00, HTSUS, which provides for parts of video game machines operated by banknotes, is a principal use provision subject to ARI 1(a). To classify an article under a principal use provision, ARI 1(a) requires that the classification is controlled by the principal use of “goods of that class or kind to which the imported goods belong”. In United States v. Carborundum Co., the U.S. Court of Customs and Patent Appeals held that to determine whether an article is included in a particular class or kind of merchandise, the court must consider a variety of factors, including: (1) the general physical characteristics of the merchandise; (2) the channels, class or kind of trade in which the merchandise moves (i.e., where the merchandise is sold); (3) the expectation of the ultimate purchasers; (4) the environment of the sale (i.e., accompanying accessories and marketing); (5) usage, if any, in the same manner as merchandise which defines the class; (6) the economic practicality of so using the import; and (7) the recognition in the trade of this use. United States v. Carborundum Co., 536 F.2d 373, 377 (C.C.P.A. 1976). While these factors were developed under the Tariff Schedule of the United States (predecessor to the HTSUS), the courts have also applied them under the HTSUS. See e.g., Minnetonka Brands v. United States, 24 C.I.T. 645, 651-2 (2000); Aromont USA, Inc. v. United States, 671 F.3d 1310 (Fed. Cir. 2012); Essex Manufacturing, Inc. v. United States, 30 C.I.T. 1 (2006).
In NY I86148, CBP held that the universal bill stacker sub-assembly was classified in subheading 9504.30.0060, HTSUSA (Annotated), as a part of gaming machines operated by banknotes, because you contended that the subject merchandise is principally used with casino gaming machines. CBP, however, neglected to fully analyze the meaning of “principal use” within heading 9504, HTSUS. In the instant case, the universal bill stacker sub-assembly cannot be classified under heading 9504, HTSUS, because it is not a class or kind of machine that is principally used with casino gaming machines. In NY I86148, CBP found that the substantial construction of the stacker cash box housing and the locks used with the stacker are indicative of the primary or most common end use of this type of stacker in casino gaming machines. This finding, however, is incorrect because those physical characteristics do not prevent the subject merchandise from being used in general vending machines; thus, the universal bill stack sub-assembly has uses beyond casino gaming machines. Accordingly, since the merchandise can be used with other machines, in addition to casino gaming machines, we find that the subject merchandise is not principally used with casino gaming machines. Although we recognize the universal bill stacker sub-assembly’s gaming-specific design and features, the evidence of a single importer’s design for or sale to the gaming industry does not demonstrate the actual principal use of the merchandise. See Carborundum Co., 536 F.2d at 377 (“Susceptibility, capability, adequacy, or adaptability of the import to the common use of the class is not controlling.”).
Moreover, the universal bill stacker sub-assembly is not an essential part of casino gaming machines as it does not enable the gaming function or facilitate the operation; instead, it performs a distinct function—to authenticate, accept and store banknotes. It is not limited in its ability to be used with other kinds of machines, including, but not limited to, banking, dispensing and vending, as long as they require a part—such as the universal stacker sub-assembly —to authenticate and store banknotes. In HQ 958781, dated April 30, 1996, CBP held that color picture tubes used exclusively in the video game industry were not classifiable in heading 9504, HTSUS, because they lacked the features which dedicated the tubes for sole or principal use with video game monitors. Similar to the subject universal bill stacker sub-assembly that can be used with non-casino gaming machines, the tubes were capable of being used with non-video game appliances and thus, CBP held that the tubes did not meet the requirements of the legal note 3 to chapter 95. Accordingly, the universal bill stacker sub-assembly, which is not exclusively used in the gaming industry, is not solely or principally used as a part of casino gaming machines. The primary function of the merchandise is to validate the legitimacy of the banknotes being input. Thus, the universal bill stacker sub-assembly is not classifiable under heading 9504, HTSUS, as a part of gaming machines operated by banknotes.
Accordingly, as a machine that authenticates banknotes by using validator sensors, the universal stacker sub-assembly is a distinct commercial entity that is covered in heading 9031, HTSUS, which provides for “measuring or checking instruments, appliances and machines, whether or not optical”. See EN 90.31. In HQ 964467, dated December 1, 2000, CBP classified bill acceptors under subheading 9031.49.9000, HTSUSA. Similar to the subject universal bill stacker sub-assembly, the bill acceptors, which were placed inside of vending machines, scanned, accepted and rejected banknotes by using optical and magnetic sensors to verify them. In determining the correct heading, CBP found that the bill acceptors constitute optical checking instruments within the scope of heading 9031, HTSUS, due to their optical and magnetic sensors to verify currency and their primary function to validate banknotes. Similarly, in NY N009267, dated April 10, 2007, CBP classified optical bill acceptors, which were used as internal components of various machines to validate banknotes, under subheading 9031.49.9000, HTSUSA. Although you stated in your ruling request that the universal stacker sub-assembly “is used primarily as a storage mechanism in casino gaming machines[,] such as slot machines and video poker”, we find that it is substantially similar to the products described in HQ 964467 and NY N009267 as they all share the primary function of verifying the legitimacy of, accepting or rejecting, and storing banknotes—a function that is universal to any machine that takes bills. The universal stacker sub-assembly, therefore, is classified in heading 9031, HTSUS, as a banknote measuring machine. This conclusion is consistent with prior CBP rulings classifying other banknote acceptors and similar articles under heading 9031, HTSUS.
HOLDING:
By application of GRI 1, the universal stacker sub-assembly is classified in heading 9031, HTSUS, specifically subheading 9031.49.9000, HTSUSA, which provides for “Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this chapter; profile projectors; parts and accessories thereof: Other optical instruments and appliances: Other: Other”. The 2022 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 https://hts.usitc.gov/current.
EFFECT ON OTHER RULINGS:
NY I86148, dated September 26, 2002, is hereby revoked.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days from the date of publication in the Customs Bulletin.
Sincerely,
Yuliya A. Gulis, Director Commercial and Trade Facilitation Division