Internal Advice 26/98; Unfinished tape autoloaders

HQ 962326 April 15, 1999 CLA-2 RR:CR:GC 962326 AML CATEGORY: Classification TARIFF NO.: 8473.30.50 Port Director U.S. Customs Service 4735 Oakland P.O. Box 390355 Denver, Colorado 80239 RE: Internal Advice 26/98; Unfinished tape autoloaders Dear Port Director: This is in response to your memorandum of September 16, 1998 (CLA-1 FO:CM:NP:DEN:CO ES), regarding internal advice request 26/98, dated August 21, 1998, initiated by counsel on behalf of Quantum Corporation, which seeks classification of unfinished tape autoloaders, model #s DLT 2500XT and DLT 2700XT, pursuant to the Harmonized Tariff Schedule of the United States (HTSUS). Literature concerning the products was provided for our examination. FACTS: The unfinished tape autoloaders, DLT 2500XT and DLT 2700XT, are designed for high capacity data storage, back up and archiving applications in conjunction with automatic data processing machines (ADPs). When complete, the autoloaders will backup - save - information previously stored on the hard drive of an ADP. Both models store information on magnetic tape cartridges which are moved via an elevator mechanism to be stored within and retrieved from a magazine contained within the unit. The autoloaders have a single drive capable of saving and reading the stored information. All initial commands are issued by the user through the host ADP, and the models are capable of unattended function once the initial prompts have been made. Model DLT 2500XT can hold up to five data cartridges and is capable of storing 75 gigabytes of data. Model DLT 2700XT can hold up to seven data cartridges and is capable of storing up to 105 gigabytes of data. As stated, the autoloaders are unfinished upon entry. When entered, the models contain the following component parts: a sheet metal chassis, a power supply, motor control printed circuit board, power and logic harness, elevator subassembly, front door and bezel assemblies, operator control panel, door interlock assembly and magazines. Following importation, tape drives are installed to complete the articles. ISSUE: Whether the unfinished tape autoloaders should be classified under subheading 8428.90.80, HTSUS, as other lifting, handling, loading or unloading machinery; or subheading 8471.70.90, HTSUS, as other storage units for automatic data processing machines; or subheading 8473.30.50, HTSUS, as other parts and accessories of the machines of heading 8471, not incorporating a cathode ray tube. LAW and ANALYSIS: Classification of imported merchandise for rate of duty and statistical purposes is accomplished pursuant to the Harmonized Tariff Schedule of the United States (HTSUS). Classification under the HTSUS is guided by the General Rules of Interpretation of the Harmonized System (GRI’s). GRI 1, HTSUS, states in part that “for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes[.]” The applicable heading and subheadings under consideration are as follows: 8428 Other lifting, handling, loading or unloading machinery (for example, elevators, escalators, conveyors, teleferics): 8428.90 Other machinery: 8428.90.80 Other. * * * * * * * * * * * 8471 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: 8471.70 Storage units: 8471.70.90 Other. * * * * * * * * * * * 8473 Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8469 to 8472: 8473.30 Parts and accessories of the machines of heading 8471: Not incorporating a cathode ray tube: 8473.30.50 Other. When interpreting and implementing the HTSUS, the Explanatory Notes (EN’s) of the Harmonized Commodity Description and Coding System may be utilized. The EN’s, while neither legally binding nor dispositive, provide a guiding commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. Customs believes the ENs should always be consulted. See, T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989). Section XVI, Note 2 provides, in pertinent part, that: (a) Parts which are goods included in any of the headings of chapters 84 and 85 . . . are in all cases to be classified in their respective headings; (b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading . . . are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. ... Note 2 of Section XVI was interpreted and applied in the context of electronic computer motors by the Court of International Trade in Nidec Corporation v. United States, 861 F. Supp. 136, aff’d, 68 F. 3d 1333 (1995). The Court, after observing that “parts of the machines are to be classified according to [ Note 2(a) and 2(b) of Section 16]” stated that: [t]he Explanatory Notes hereon state (at page 1131) that “parts which are suitable for use solely or principally with particular machines or apparatus . . . are classified in the same heading as those machines or apparatus”. This statement, however, does “not apply to parts which in themselves constitute an article covered by a heading of this section . . .; these are in all cases classified in their own appropriate heading even if specifically designed to work as part of a specific machine.” (861 F. Supp. at 141-142; footnote omitted; emphasis in original). We first address classification in heading 8428. EN 84.28 states, in pertinent part:  The heading covers lifting or handling machines usually based on pulley, winch or jacking systems, and often including large proportions of static structural steelwork, etc. These static structural elements (e.g., pylons specialized for teleferics, etc.) are classified in this heading when they are presented as parts of a more or less complete handling machine. When presented separately, they are classified in heading 8431 provided they are fitted or designed to be fitted with the mechanical features essential for the operation of the moving parts of the complete installation (wheels, rollers, pulleys, running or guide rails, etc.). EN 84.28 gives a number of examples of kinds of lifting, loading or unloading machines covered by the heading. All of the examples, as well as those of heading 8426, to which EN 84.28 refers, are of machines the primary function of which is lifting, loading or unloading materials or people. While the “elevator” mechanism which moves magnetic tape cartridges may be of the kind contemplated by heading 8428, HTSUS, the “elevator” mechanism within the completed autoloaders performs a subservient function to the unit as a whole: it moves the magnetic tape cartridges from the storage magazine to the tape drive in order to perform the function of storing and reading information of the “host” ADP. (See discussion of the role of the “elevator” mechanism in NY 886052, dated June 1, 1993: “The Cartridge Scratch Loader [elevator mechanism] has no role in the actual storage of information on the magnetic tape cartridges.”). Therefore, classification may not be made within heading 8428, regardless of whether the tape autoloaders are finished or unfinished. Chapter 84, Note 5(B) provides, in part, that: Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. ... [A] unit is to be regarded as being a part of a complete system if it meets all the following conditions: (a) it is of a kind solely or principally used in an automatic data processing system; (b) it is connectable to the central processing unit either directly or through one or more other units; and (c) it is able to accept or deliver data in a form (in codes or signals) which can be used by the system. Under Chapter 84, Note 5(C), separately presented units of an ADP machine are to be classified in heading 8471. The unfinished tape autoloaders, imported without their tape drives, are not, in their condition as imported, able to accept or deliver data in a form which can be used by the system. They fail to meet the definition of ADP units in Chapter 84, Note 5(B), and may not be classified in heading 8471. Accordingly, the unfinished tape autoloaders do not themselves constitute an article covered by a heading of Section XVI (see Nidec, cited above), and must be classified in accordance with Section XVI, Note 2(b). They meet the requirements of that note, in that they are parts “suitable for use solely with a particular kind of machine” (i.e., ADP machine). Therefore, they are classifiable in heading 8473. They are classifiable in subheading 8473.30.50, HTSUS, which provides for: parts and accessories . . . suitable for use solely or principally with machines of headings 8469 to 8472: parts and accessories of the machines of heading 8471: not incorporating a cathode ray tube: other: other. This is consistent with other Customs rulings. New York Ruling (NY) D82242, dated September 25, 1998, classified, among other things, unfinished disk storage units in subheading 8473.30.50, HTSUS. See also, HQ 958225, dated December 19, 1995, and rulings cited therein. HOLDING: The unfinished tape autoloaders, DLT 2500XT and DLT 2700XT, are classified in subheading 8473.30.50, HTSUS, which provides for: “[p]arts and accessories . . . suitable for use solely or principally with machines of headings 8469 to 8472: [p]arts and accessories of the machines of heading 8471: [n]ot incorporating a cathode ray tube: [o]ther: [o]ther. ...” You are to mail this decision to the internal advice applicant, no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, John Durant, Director Commercial Rulings Division