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NY J85398

June 26, 2003

CLA-2-85: RR: NC: 1:108 J85398


TARIFF NO.: 8518.21.0000, 8520.90.0040, 8543.89.9695

Mr. Dennis Heck
6600 Orangethorpe Avenue
P.O. Box 6600
Buena Park, CA 90622-6600

RE: The tariff classification of the MusicCast System from Japan.

Dear Mr. Heck:

In your letter dated June 3, 2002 you requested a tariff classification ruling.

The item in question is denoted as the Yamaha MusicCast System. Based upon the information provided this system maybe composed of any of three components that are denoted as the MCX-1000 Server, the MCX-10 Client and the MCX-SP10 Speakers.

The individual devices are designed as an audio entertainment system for use in the home. It is uniquely designed to enable the user to channel recorded music to various locations in the home while also enabling the user to choose various music selections to be played simultaneously in the various locations.

The MCX-1000 Server is basically Yamaha’s CDR-HD1300 CD player/recorder with wireless transmission/reception capability when used in tandem with the MCX-10 client. The device is a CD burner/recorder that enables the user to record, play and store, audio CDs on and from its 80GB hard drive. The unit can store up to 1000 audio CDs. It can operate as a stand alone CD player/recorder and also can transmit digital signals that represent the stored music, through the ether without a line connection to the Client when prompted by the Client. The device does not contain a radiobroadcast receiver.

The MCX-10 Client is a device, with a LCD screen and various command buttons, that allow the user to send a wireless signal to the Server requesting any number of audio CDs. Once selected the audio CDs that are stored on the Server are played and sent digitally to the Client. The Client is then used to send, via a required line connection to all connected speakers. The Client can transmit a wireless digital signal to the Server, receive the selected choice in return and then transmit the selected audio CD, via a direct line connection to the speakers for listening.

The perspective importation of this system is based upon three actual configurations. First as individual articles of commerce. Secondly with just the Server and Client and finally as a complete system comprised of all three components and packaged for retail sale.

You have suggested a classification for both the Sever and Client as transceivers under HTS Heading 8525. This is due to the wireless feature of both the Server and Client. Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI’s). GRI 1 provides that classification shall be determined in according to the terms of the headings and any relative section or chapter notes. It is the opinion of this office that neither item conforms to this particular heading. The heading calls for transmission apparatus for radiotelephony, radiotelegraphy, radiobroadcasting or television. The operation of the both the Server and Client do not represent any of these functions. There isn’t a radio receiver involved in the system and neither the Server nor the Client is a radiotelephonic or radiotelegraphic device. Also EN 85.25 calls for, in part, for apparatus used for the transmission of signals (representing speech, messages or still pictures) by means of electro-magnetic waves which are transmitted through the ether without any line connection. It is important to note that the Client device does and must use a line connection for final transmission of the music to the speakers for audible definition. Therefore classification of these items, when imported individually will be in the heading most appropriate to their function.

The applicable subheading for the MCX-1000 Server will be 8520.90.0040, Harmonized Tariff Schedule of the United States (HTS), which provides for Magnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other Optical disc recorders. The rate of duty will be free.

The applicable subheading for the MCX-10 Client will be 8543.89.9695, Harmonized Tariff Schedule of the United States (HTS), which provides for Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other Other. The rate of duty will be 2.6 percent ad valorem.

The applicable subheading for the MCX-SP10 Speakers will be 8518.21.0000 Harmonized Tariff Schedule of the United States (HTS), which provides for Loudspeakers, whether or not mounted in their enclosures; Single loudspeakers, mounted in their enclosures. The rate of duty will be 4.9 percent ad valorem.

In classifying both the Server and Client imported together it is the opinion of this office that based upon HQ ruling 958914 this configuration does not comprise a set, a functional unit or a composite good. Without the speakers these devices form an incomplete set and an incomplete functional unit. There cannot be a classification of either an incomplete set or an incomplete functional unit. The fact that the Server can function as an independent CD player/recorder does not conform to the rule that composite goods form an inseparable whole. Therefore the classification of these items, configured together without the speakers, will be in accordance with the aforementioned classifications as thought they were independent articles of commerce.

To address the importation of all three items packaged together for retail sale one must look to the following:

Explanatory Note X to GRI 3b provides for the purpose of this rule, the term “goods put up in sets for retail sale” shall be taken to mean goods which:

A. Consist of at least two different articles which are, prima facie, classifiable in different headings.

B. Consist of products put up together to meet a particular need or carry out a specific activity; and

C. Are put up in a manner suitable for sale to users without repackaging (e.g. in boxes or cases or on boards).

All the aforementioned articles are prima facie classifiable in different headings. Together each affords the user audio entertainment. Based upon the information provided to this office the imported configuration of the Server, Client and Speakers will not be repackaged after importation. Therefore it is the opinion of this office that this particular configuration constitutes a set in accordance with Explanatory Note X.

In accordance, in part, with GRI 3b goods put up in sets for retail sale, which cannot be classified by reference to GRI 3a, shall be classified as if they consisted of the material or component which gives them their essential character.

EN VIII to GRI 3b states that the factor, which determines essential character, will vary as between different kinds of goods. It may for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of the constituent material in relation to the goods.

It is the opinion of this office that the item which imparts the essential character to this particular set is that of the MCX-1000 Server. This CD player/recorder is the basis of the entire system. It is the device that records stores and plays the pre-recorded music at the request of the user. It is the source of the audio entertainment.

The applicable subheading for the MusicCast System, imported as a complete set, will be 8520.90.0040, Harmonized Tariff Schedule of the United States (HTS), which provided for Magnetic tape recorders and other sound recording apparatus, whether or not incorporating a sound reproducing device: Other Optical disc recorders. The duty rate will be free.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Michael Contino at 646-733-3014.


Robert B. Swierupski

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