The tariff classification and status under the North American Free Trade Agreement (NAFTA) of desk-top computers from Canada.

NY C87699 May 13, 1998 CLA-2-84:RR:NC:1:110 C87699 CATEGORY: Classification TARIFF NO.: 8471.50.0085; 8524.39.4000 Mr. Brian Barrett Sidus Systems Inc. 66 Leek Crescent Richmond Hill, Ontario L4B1H1 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of desk-top computers from Canada. Dear Mr. Barrett: In your letter dated May 4, 1998, you requested a tariff classification ruling on the status of desk-top computers from Canada under the NAFTA. The merchandise under consideration involves a multi-media desk-top computer system that is assembled in Canada with components that are manufactured in various countries such as Hong Kong, Taiwan, China, Japan, and the United States. The multi-media desk-top computers are assembled in Canada and converted into finished computers. They are then sold directly to consumers in the U.S. and shipped in a common box to these customers. The output unit for the computers, the monitors, are not included with the computer system. With the exception of the monitors, the multi-media desk-top computers are ready to operate when the components are connected. The components for the desk-top computers are claimed to originate from the following countries: Motherboard (w/o CPU & BIOS)- Hong Kong, Taiwan, or U.S. Microphones Taiwan Keyboard Hong Kong Adapters Taiwan Cases Taiwan Mouse China Manual & Diskette U.S. C.D. Rom drive Japan, Taiwan, or China Disk Drives Taiwan, China These multi-media desk-top computers will be shipped to the ultimate consumers as a retail set in one common box, but will be missing the monitor. It will also include the software for the computer system. Consideration as a "system" under 8471.49, would be precluded since it is missing at least on output unit as covered under Subheading Note 1 to Chapter 84 of the HTS. Noting in part GRI-1 and GRI-3 (B) to the HTS, this multi-media desk-top computer system has the essential character of a digital processing machine, and also meets the definition of a retail set. Classification of this multi-media desk-top computer machine, which includes the processor unit, input and storage components, adapters, microphones, cables, etc., would thus fall under HTS number 8471.50.0085, as other digital processing units other than those of subheading 8471.41 and 8471.49. The rate of duty will be free. Please note also ruling letters HQ 560782, C85699, and NY 806637 for similar merchandise. The software, which normally includes CD-ROM software, noting Legal Note 6 to Chapter 85, will be separately classifiable under 8524.39.4000, which provides for discs for laser reading systems, for 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 ADP machine. The rate of duty will be 1.9 percent ad valorem. Since the software is claimed to be of US origin, and if properly documented at time of importation, the software may become eligible for classification under HTS number 9801.00.10, as American Goods Returned. NAFTA APPLICABILITY Each of the non-originating materials used to make the desk-top computers has satisfied the changes in tariff classification required under HTSUSA General Note 12(t)84.192. The desk-top computers will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations and agreements. Since the software is claimed to be originating material (U.S.A.), it would be eligible under NAFTA, as per the requirements of HTSUSA General Note 12 (b) (i). This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR 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 Art Brodbeck at 212-466-5490. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division