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HQ W967655




September 15, 2006

CLA-2 RR: CTF:TCM W967655 KSH

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.30.0000

Mr. Joel Winnick, Esq.
Ms. Terry Polino, Esq.
Hogan & Hartson, LLP
Columbia Square
555 13th Street, N.W.
Washington, D.C. 20004-1109

RE: Revocation of New York Ruling Letter (NY) K88339, dated August 17, 2004; Classification of an Audio/Video Laptop.

Dear Mr. Winnick and Ms. Polino:

This is in response to your letter of April 1, 2005, on behalf of your client Toshiba America Information Systems, Inc. (TAIS), in which you request reconsideration of New York Ruling Letter (NY) K88339, issued on August 17, 2004, concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of the Qosmio AV Notebook PC E15 (Qosmio). The Qosmio was classified in heading 8528, HTSUS, which provides for: “Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors.’’ We regret the delay in responding.

In your request for reconsideration, you have advised us that the Qosmio’s audio visual function requires the user to turn on the computer and is fully dependent upon the PC’s operating systems. You have also stated that the Qosmio has the general characteristics of an automatic data processing (ADP) machine, the purchaser of the Qosmio expects to principally be buying an ADP machine, the Qosmio is designed, manufactured, marketed and sold in a channel of trade and an environment of sale devoted to ADP machines and it is used principally by consumers as an ADP machine. Accordingly, you argue that the principal function of the Qosmio is as an ADP machine that should be classified in heading 8471, HTSUS, which provides for: ‘‘Automatic data processing machines and units thereof...’’. In accordance with your request for reconsideration of NY K88339 and in light of this newly submitted information, including information submitted in conjunction with the meeting held with members of my staff on January 27, 2006, the Bureau of Customs and Border Protection (CBP) has reviewed the classification of this item and has determined that the cited ruling is in error.

Pursuant to section 625(c), Tariff Act of 1930, (19 U.S.C. 1625(c)), 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, 2186 (1993), notice of the proposed revocation of NY K88339 was published in the Customs Bulletin, Vol. 40, No. 29, on July 12, 2006. No comments were received in response to the notice.

FACTS:

The Qosmio is a clamshell-configured notebook computer which measures 13.31” by 11.22” by 1.70” and weighs approximately 8.2 lbs. The Qosmio contains the following core hardware and software components:

80GB Hard Disk Drive
512 MB RAM
Intel Pentium M Processor 735
Intel 855PM System Chipset
Microsoft XP Media Center Edition Operating System 15” XGA TruBrite Display
CD/DVD
NVIDIA GeForce FX Go5200 Graphics
Harmon/Kardon premium stereo speakers
Four USB 2.0 Ports
Integrated V.92 Modem, 10/100 Ethernet
Keyboard and touchpad
Parallel Linux Operating System
Wireless LAN B and G
Bluetooth Enabled
Surround Sound
Bridge Media Adapter
DVD
S-video input and output for DVR, DVD and other video applications i.Link for high speed communications
Analog TV tuner

The audio visual features of the Qosmio may be employed through either of the Qosmio’s two operating systems (Windows XP Media Center Edition and Linux). However, users who do not need to simultaneously run the audio visual features and perform data processing functions controlled by the Windows XP Media Center may chose to exclusively run the Linux operating system. Two separate power buttons allow the user to choose either the TV or computer features. If the TV power button is used, the data stream is picked up by the ADP peripheral interconnect bus and is transferred through the ADP system bus to the ADP processor and memory. Stated another way, the TV cannot function without the ADP hardware. Its electrical and logical functions are directed through the ADP machine.

ISSUE:

Whether the Qosmio is classified in heading 8528, HTSUS, as reception apparatus for television or in heading 8471, HTSUS, as an automatic data processing machine.

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods 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 may then be applied.

The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and are thus useful in ascertaining the classification of merchandise under the Harmonized System. CBP believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUS provisions under consideration are as follows:

8471.30.00      Portable digital automatic data processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard and a display

Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors:

Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus:

Other:

8528.12.7201 Other."

Note 5(A) to chapter 84, HTSUS, defines the term "automatic data processing machines" for the purposes of heading 8471 as digital machines which must be 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.

Pursuant to Note 5(A)(a), the Qosmio prima facie meets the terms of Heading 8471, HTSUS, as an ADP machine. However, it is also capable of displaying a variety of tv signals and other audio visual information which is provided for, eo nomine, under heading 8528, HTSUS, as reception apparatus for television.

The Qosmio is therefore considered a composite machine that has the functions of both an ADP machine and a reception apparatus for television. Classification of composite machines is regulated by Note 3 to Section XVI, HTSUS, which provides that:

Unless the content otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.

It is the principal use of the class or kind of goods to which the imports belong at or immediately prior to the time of importation and not the principal use of the specific import that is controlling under the General Rules of Interpretation. See Group Italglass U.S.A., Inc. v. United States, 17 C.I.T. 1177, 1177, 839 F. Supp. 866, 867 (1993)

The courts have provided factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. They include: (1) general physical characteristics; (2) expectation of the ultimate purchaser; (3) channels of trade; (4) environment of sale (accompanying accessories, manner of advertisement and display); and (5) usage of the merchandise. See Lenox Collections v. U.S., 20 CIT 194, 196 (1996). See also U.S. v. Carborundum Co., 63 CCPA 98, 102, 536 F. 2d 373, 377 (1976), cert denied, 429 U.S. 979 (1976); Kraft, Inc. v. U.S., 16 CIT 483, 489 (1992); and G. Heileman Brewing Co. v. U.S., 14 CIT 614, 620 (1990).

In considering these factors, we note that the 15 inch screen size, screen resolution of 1024 by 768, standard 84 key keyboard and touch pad, USB and i.Link ports, hard drive and clamshell configuration are consistent with the general physical characteristics of an ADP machine. In this regard, we note that the Qosmio is not an ADP unit but is a complete, integrated ADP machine. (Cf. the classification opinion by World Customs Organization (WCO), Harmonized System Committee (HSC), at its 19th Session to classify a multimedia personal computer system consisting of three separately housed units: a 14 (35 cm) colour television receiver (display) with a digital processing unit, a keyboard (input unit), and an infra-red remote control device in subheading 8471.49, HTS, and NY K82971, dated February 26, 2004, in which a Gateway 610 Media Center PC desktop computer system with integrated TV tuner card was classified in subheading 8471.49.1095, HTSUS.

The TV tuner and ADP are not two separate machines. Rather, the TV function is dependent on the ADP hardware. Even when the TV is in use the Intel Pentium M Processor 735, Intel 855PM chipset and memory chips are ADP hardware that must be used.

Probative evidence included in your submission indicates that consumers are primarily purchasing the Qosmio for its ADP functions with ancillary interest in the audio visual functions. The Qosmio is marketed and sold in channels of trade for ADP machines. The Qosmio is sold in the ADP departments of consumer electronic retailers and are advertised as such. The Qosmio is also sold to retailers who primarily sell ADP equipment and software. Further, evidence has been submitted that the overwhelming majority of purchasers use the Qosmio for its data processing functions while few regularly use the Qosmio to watch television.

Based on the Carborundum factors and the information above, we find that the principal function of the Qosmio is an ADP machine of heading 8471, HTSUS.

HOLDING:

By application of GRI 1 and Note 3 to Section XVI, the Qosmio is classified in heading 8471, HTSUS. It is specifically provided for in subheading 8471.30.0000, 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: Portable digital automatic data processing machines, weighing not more than 10kg, consisting of at least a central processing unit, a keyboard and a display.” The column one, general rate of duty is free.

EFFECT ON OTHER RULINGS:

NY K88339, dated August 17, 2004, is hereby revoked. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.

Sincerely,

Myles B. Harmon, Director

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