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HQ 954935



May 18, 1994

CLA-2 CO:R:C:M 954935 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 9013.80.60

Mr. Myles J. Ambrose
Ms. Evelyn M. Suarez
Ross & Hardies
888 Sixteenth Street
Washington, DC 20006-4103

RE: Dense Code Reader System; Explanatory Note 84.71(II)(A); Chapter 84, Note 5(A)(a); ADP Machine; Chapter 90, Additional U.S. Note 3; Optical Appliance or Instrument; HQ's 952992, 952298, and 952297; Section XVI, Note 1(m); 8471.99.90; 8471.20.00

Dear Mr. Ambrose and Ms. Suarez:

This is in response to your letters of August 31, 1993, and February 17, 1994, on behalf of United Parcel Service (UPS), concerning the classification of a dense code reader system under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The merchandise consists of a dense code reader system. The purpose of the system is to provide package origin and destination information for the user's operations. To accommodate various customer systems, the merchandise will decode both dense codes and one-dimensional codes. It will retrieve and collect data encoded on a label placed on a parcel or document pack, and decode and process the data.

The system is comprised of a system box, a height sensor system or light curtain (consisting of an array of light imaging diodes), and a rotary encoder (belt speed sensor). The system box includes a power supply box, lighting, a cooling system, a camera system, and electronic hardware including software.

The electronic hardware includes a number of printed circuit boards. One board is a system processor whose main task is controlling the reader operation and communications to the hub controller. The central processing unit synchronizes overall label processing and decodes a reconstructed label. A signal board sends digital values to the analogue/digital (A/D) board and controls attenuation gains. The A/D board takes raw analog camera data, adjusts the gain and digitizes it for decoding. Other boards run the bull's-eye code; perform image processing; hold system codes; and receive, buffer, translate, and transmit data.

The camera system includes: lenses; a charged couple device (CCD) board which provides drive signals to the CCD chip which enables the board to produce video output (electrical signal) proportional to the optical image; a signal processor which is used to strip out reset noise from a video image; and a focus board which drives the speaker connected to the CCD board and focuses it according to the package height.

The system is mounted over the conveyor belt of an existing package sorting system. Packages with applied labels move on conveyor belts under the system. As a package passes by the height sensors near the belt, the height sensors transmit a message to the camera to focus according to the height of the package. When the package passes beneath the camera, a signal from the camera is sent to the system to detect the presence of the bull's eye. After the bull's-eye is detected from the signal, the image is filtered to leave only address label information, which is decoded by the software that runs on the system processor. After the data is processed, it is transmitted and used to control diverters which route the packages to their proper destinations.

The subheadings under consideration are as follows:

8471.99.90: [a]utomatic 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: [o]ther: [o]ther: [o]ther: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 3.7 percent ad valorem.

8471.20.00: [d]igital automatic data processing machines, containing in the same housing at least a central processing unit and an input and output unit, whether or not combined.

The general, column one rate of duty for goods classifiable under this provision is 3.9 percent ad valorem.

9013.80.60: . . . other optical appliances and instruments, not specified or included elsewhere in this chapter . . . : [o]ther devices, appliances and instruments: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 9 percent ad valorem.

ISSUE:

Whether the dense code reader system is classifiable under subheading 8471.99.90, HTSUS, as an optical reader, under subheading 8471.20.00, HTSUS, as a digital automatic data processing (ADP) machine, or under subheading 9013.80.60, HTSUS, as an other optical appliance or instrument.

LAW AND ANALYSIS:

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive, are to be used to determine the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). In part, Explanatory Note 84.71(II)(A) (p. 1300) states that:

[m]agnetic or optical readers read characters, generally in a special form, and convert them into electric signals (impulses) which can be directly used by machines for transcribing or processing coded information.

(1) Magnetic readers. . .

(2) Optical readers. These do not require the use of special ink. The characters are read directly by a series of photoelectric cells and translated on the binary code principle.

The readers described above are classified in this heading only if presented separately. When combined with other machines (e.g., machines for transcribing data onto data media in coded form and machines for processing such data in coded form) they are classified with those machines provided they are presented with them.

It is our position that, based upon the above Explanatory Note, the dense code reader system is precluded from classification as an optical reader. The system does possess an optical reader; however, the reader is not presented separately but is combined with other components. Because the optical reader is presented and combined with other machines, it is to be classified with those machines. Therefore, the system is not classifiable under subheading 8471.99.90, HTSUS.

In an alternative claim, you contend that, in meeting the requirements of chapter 84, note 5(A)(a), HTSUS, the system is classifiable as a digital ADP machine. Chapter 84, note 5(A)(a), HTSUS, states:

(A) For purposes of heading 8471, the expression "automatic data processing machines" means:

(a) Digital machines, capable of (1) storing the processing program or programs and at least the data immediately necessary for execution of the program; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and, (4) executing, without human intervention, a processing program which requires them to modify their execution, by logical decision during the processing run . . .

It is true that part of the dense code reader system does perform the functions of an ADP machine, and those functions meet the above definition of an ADP machine. However, the system is comprised of many other components performing different functions. The system taken as a whole cannot be classifiable as and ADP machine. Such a classification would ignore the equally essential functions which the other components perform. Consequently, the dense code reader system is not classifiable under subheading 8471.20.00, HTSUS.

Chapter 90, additional U.S. note 3, HTSUS, states that:

[f]or the purposes of this chapter, the terms "optical appliances" and "optical instruments" refer only to those appliances and instruments which incorporate one or more optical elements, but do not include any appliances or instruments in which the incorporated optical element or elements are solely for viewing a scale or for some other subsidiary purpose.

It is our position that the dense code reader system meets the above definition as an optical appliance. The system incorporates an optical element and that element (camera system) is not used for a subsidiary purpose. In fact, without the optical element, the system would be useless for the purpose for which it was created.

Therefore, because the system is not described elsewhere in the HTSUS, it is classifiable under subheading 9013.80.60, HTSUS. See HQ 952992, dated December 11, 1992, and HQ 952298 and HQ 952297, dated July 30, 1993, for similar rulings.

We note chapter 84, note 1(m), HTSUS, which states that:

[t]his section does not cover:

(m) Articles of chapter 90.

Because the system is classifiable under chapter 90, HTSUS, it is precluded from classification under chapter 84, HTSUS.

HOLDING:

The dense code reader system is classifiable under subheading 9013.80.60, HTSUS, as an other optical appliance or instrument.

Sincerely,

John Durant, Director
Commercial Rulings Division

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