Magnum Encryption Software; 3.5 Inch Diskette; Recorded Media

HQ 960327 July 18, 1997 CLA-2 RR:TC:MM 960327 RFA CATEGORY: Classification TARIFF NO.: 8524.99.60 Ms. Anthea Bradford Leprechaun Software Pty Ltd. A.C.N. 010 989 670 P.O. Box 826 Capalaba, QLD 4157 Australia RE: Magnum Encryption Software; 3.5 Inch Diskette; Recorded Media Dear Ms. Bradford: This is in response to your letter dated February 5, 1997, concerning the tariff classification of the Magnum encryption software under the Harmonized Tariff Schedule of the United States (HTSUS). FACTS: The packaging containing a 3.5 inch diskette and instructions for use is labeled as the "Magnum High Security Diskette & File Encryption for Windows". It is a software system that protects information stored on diskettes and while being transferred between computers. The software can only be run on an IBM-compatible 386 or higher computer with DOS 3.1 or above, Windows 3.0, 3.1, or Windows NT and Windows 95. The Magnum can encrypt files and disks so that they cannot be read on another computer unless the other computer also has Magnum installed with a matching combination. Magnum allows millions of different encryption schemes to be selected, so the possibility of unauthorized access to encrypted information is very small. Magnum provides four combinations which can be used concurrently. This allows computer users to use diskettes from a number of sources. Diskettes can also be decrypted for use on non-Magnum computers. The Magnum software consists of a configuration program and an encryption device driver. The configuration program is used to: set combinations for file and disk encryption; and to encrypt and decrypt files and diskettes. The encryption device driver translates encrypted diskettes so that Windows applications are able to access them normally. Without Magnum loaded, or with the combination set to incorrect values, the diskettes is unrecognizable to Windows and DOS. ISSUE: What is the classification of encryption software on a 3.5 inch diskette under the HTSUS? LAW AND ANALYSIS: 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 according to the terms of the headings and any relative section or chapter notes. The software on a 3.5 inch magnetic diskette is classifiable under subheading 8524.99.60, HTSUS, which provides for: "Records, tapes and other recorded media for sound or other similarly recorded phenomena. . . : [o]ther: [o]ther: [f]or reproducing representations of instructions, data, sound, and image, recorded in a machine readable binary form, and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine; proprietary format recorded media. . . ." There are no restrictions or prohibitions on importing encryption software into the United States. HOLDING: The Magnum encryption software on a 3.5 inch diskette is classifiable under subheading 8524.99.60, HTSUS, which provides for: "Records, tapes and other recorded media for sound or other similarly recorded phenomena. . . : [o]ther: [o]ther: [f]or reproducing representations of instructions, data, sound, and image, recorded in a machine readable binary form, and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine; proprietary format recorded media. . . ." The general, column one rate of duty is 2.6 cents per square meter of recording surface. Sincerely, John Durant, Director Tariff Classification Appeals Division