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HQ 085577

January 10, 1990

CLA-2 CO:R:CV:G: 085577 JLV


TARIFF NO.: 8527.39.00

Robert F. Seely, Esq.
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60606-3693

RE: Amplifier, tuner, and cassette deck imported together for audio rack system

Dear Mr. Seely:

In a letter of September 12, 1989, as supplemented by a letter of November 9, 1989, on behalf of your client, TEAC America, Inc., you request a ruling on the tariff classification of audio components which, after importation, will be combined with other audio components for sale as a stereo component rack system. This ruling is our decision on the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).


The merchandise consists of a model SA-200 stereo amplifier, a model ST-200 stereo tuner, and a model SW-200 double cassette deck. These components are individually packed in cartons which are then packed in a single, large shipping carton so that each large shipping carton contains one amplifier, one tuner, and one cassette deck. Although you state that these components will be imported from Hong Kong, you do not state or demonstrate that Hong Kong is the country of origin of the three stereo components.

You state that these components will not be repacked after importation into the United States, but they will be marketed and sold with four other components as a stereo component rack system, Teac Model S-200CD. The additional four components are: compact disc player, turntable, speakers, and rack (cabinet).

It is your position that the merchandise is separately classified in subheadings 8518.40.20 (the amplifier), 8527.39.00 (the tuner), and 8520.31.00 (the cassette deck), HTSUSA, because the three components, although packed together, do not constitute a complete set under General Rule of Interpretation (GRI) 3(b), and because GRI 2(a) does not apply to incomplete sets.

In your supplemental letter of November 9, 1989, you stated that the decision in Sears, Roebuck & Co. v. United States, __ CIT __ (Slip Opinion 89-136, September 28, 1989), in which the court held that certain stereo components (an incomplete stereo rack system) were separately classified, is applicable even though the decision concerned the doctrine of entireties for purposes of classification under the Tariff Schedules of the United States (TSUS).


Are the three components, if packed together, classified separately when imported, or are they classified as a set under the HTSUSA?


The individual components fall under headings 8518 (amplifier), 8520 (cassette deck with recording apparatus), and 8527 (reception apparatus for radiobroadcasting), HTSUSA. Although imported together, these components do not constitute a composite machine for purposes of legal note 3, section XVI, because they are not "fitted together to form a whole." The Explanatory Notes (EN) to section XVI clearly indicate that "fitted together to form a whole" requires that the machines be permanently attached either to each other or by mounting on a common base or in the same housing. Furthermore, the imported components are not a functional unit for purposes of legal note 4, section XVI, because they do not contribute to a single function that is clearly defined in chapter 84 or 85.

The individual components, at the time of importation, are complete and finished articles. However, the goods are prima facie classifiable under three headings and, therefore, we look to GRI 3. If the three components are composite goods or items in a set put up for retail sale, then classification will be determined by the component which gives them their essential character, insofar as this criterion is applicable. GRI 3(a) and (b).

The EN to GRI 3(b) provide guidance on what constitutes a composite good and a set. EN (IX) states as follows:

(IX) For the purposes of this Rule [3(b)], composite goods made up of different components shall be taken to mean not only those in which the components are attached to each other to form a practically inseparable whole but also those with separable components, provided these components are adapted one to the other and are mutually complementary and that together they form a whole which would not normally be offered for sale in separate parts. * * * As a general rule the components of these composite goods are put up in a common packing.

Other than the fact that these components can be connected by cables or wires, they are not "adapted" one to the other. This term requires that they be suited by a particular design for use together. There is no evidence that these components have special design features which make them mutually complementary in a manner more so than any collection of various similar stereo components are considered to be "complementary." These components are the type that are normally offered for sale as separate articles.

EN (X) defines "goods put up in sets for retail sale" as meaning goods which satisfy three criteria. Two of the criteria are readily satisfied: the goods consist of at least two different articles which are, prima facie, classifiable in different headings, and the goods are packaged in a manner suitable for sale directly to users without repacking. The third criterion, that the goods consist of "products or articles put up together to meet a particular need or carry out a specific activity," presents a more difficult issue. Under the doctrine of entireties, as is evident from the decision in Sears, Roebuck & Co., supra, separate components, designed and intended to be used together, had to comprise a complete commercial entity. GRI 3(b), however, does not state that a set need be "complete." The components need only satisfy the requirement that they meet a particular need or carry out a specific activity. In this case, the three components, although they cannot be used without the addition of speakers, are said to be put up in a manner suitable for sale directly to users in order to satisfy a user's need for a balanced component stereo system.

The amplifier is the main power source and must be turned on in order for the cassette deck and tuner (or compact disc player, turntable, or speakers) to be turned on. The output signal from the cassette deck or tuner must be sent through the amplifier in order to properly amplify the signal for reproduction through the speakers. The three units provide the basic stereo components for an audio entertainment system. We conclude, therefore, that these components are put up together to carry out a specific activity, i.e., audio entertainment.

Articles which constitute a set are classified as if they consisted of the component which gives them their essential character. Although the amplifier is the component through which the power is supplied to all the other components and through which the signals must be sent for proper amplification, we conclude no one component of the set imparts the essential character. Among the examples of criteria set forth in EN (VIII) to GRI 3(b), only the value criterion has any relevance. The invoice value of the amplifier, according to the submission by counsel for the importer, is "nearly twice" that of the cassette tape player and "over twice" that of the tuner. However, as an audio entertainment system, the audio signals are generated from the tuner or the cassette deck. These components are as essential to the specific activity as is the amplifier. Therefore, GRI 3(c) applies, and the set is classified in heading 8527 because that is the heading which occurs last in numerical order among the headings which equally merit consideration.


The amplifier, tuner, and cassette deck are goods put up in a set for retain sale; no one component gives the set its essential character; therefore, under GRI 3(c), the set is classified in subheading 8527.39.00, HTSUSA.


John Durant, Director

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