Application for Further Review of Protest No. 3195-07-100160

HQ H012549 April 14, 2008 CLA-2 OT:RR:CTF:TCM H012549 KSH CATEGORY: Classification TARIFF NO.: 8517.50.5000 Area Port Director U.S. Customs and Border Protection 605 W. 4th Avenue Suite 230 Anchorage, AK 99501 RE: Application for Further Review of Protest No. 3195-07-100160 Dear Area Director: This is in reply to your correspondence, forwarding the Application for Further Review of Protest (AFR) No. 3195-07-100160, filed on behalf of Xponent Phonetics, Inc. The protest is against Customs and Border Protection’s (CBP) classification and liquidation of forty-six entries of diplexers and triplexers under heading 9013 of the Harmonized Tariff Schedule of the United States (HTSUS). Between January 4, 2006 and September 25, 2006, protestant entered the merchandise subject to this protest under subheading 8542.70.0000, HTSUS, which provides for: “Electronic integrated circuits and microassemblies; parts thereof: Electronic microassemblies.” The merchandise was liquidated between October 27, 2006 and November 13, 2006, in subheading 9013.80.9000, HTSUS, which provides for: “Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter; parts and accessories thereof: Other devices, appliances and instruments: Other.” On October 3, 2006, CBP issued a Notice of Action giving notice of a rate advance and reclassifying the merchandise under subheading 9013.80.9000, HTSUS. On April 23, 2007, protestant filed a protest and application for further review against the classification and liquidation of the merchandise in subheading 9013.80.9000, HTSUS. Protestant’s AFR request was approved. The protest was timely filed pursuant to 19 U.S.C. 1514 (c)(3) and 19 C.F.R. 174.12 (e)(1). Protestant claims the merchandise is classified in subheading 8517.50.5000, HTSUS, which provides for: “Electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones; parts thereof: Other apparatus, for carrier-current line systems or for digital line systems: Other: Telephonic.”  In support of protestant’s application for further review, protestant alleges that the protest involves questions of fact and law, which have not been ruled upon by CBP or by the courts and that the decision is inconsistent with a decision by the port with respect to substantially similar merchandise. See 19 C.F.R. 174.24(a) and (b). Specifically, protestant cites to notification issued to protestant on December 6, 2005, accepting protestant’s prior disclosure reclassifying protestant’s triplexer in heading 8517, HTSUS. Further review is warranted pursuant to 19 C.F.R. §§174.24(a) and 174.25. FACTS: The merchandise at issue are diplexers and triplexers utilized solely in telecommunications systems. The diplexers are opto-electric converters that can transmit and receive different wavelengths simultaneously. They can convert electrical signals to optical signals so they can be transmitted optically at nominally 1310nm and receive optical signals at 1490nm and convert these to electrical signals which are then amplified using a Tans-Impedence Amplifier Integrated Circuit Chip (TIA IC) so they can be transported over electrical traces on a printed circuit board. The diplexer integrates a semiconductor laser, photodiodes, thin-film filters, TIA IC chip and fiber on a single printed circuit. The triplexers are substantially similar to the diplexers in design and use. However, they also have the ability to receive a third wavelength at 1550 nm. ISSUE: Whether the diplexers and triplexers are classified in heading 8517, HTSUS, as telecommunication apparatus for digital line systems or in heading 9013, HTSUS, as other optical appliances and instruments. LAW AND ANALYSIS: Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides, in part, that classification decisions are to be "determined according to the terms of the headings and any relative section or chapter notes." In the event that goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied, in order. The Harmonized Commodity Description and Coding System Explanatory Notes (EN) constitute the official interpretation of the Harmonized System at the international level (for the 4 digit headings and the 6 digit subheadings) and facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI. While neither legally binding nor dispositive of classification issues, the EN provide commentary on the scope of each heading of the HTSUSA and are generally indicative of the proper interpretation of the headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989). The headings under consideration are as follows: Electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones; parts thereof: 8517.50 Other apparatus, for carrier-current line systems or for digital line systems: Other: Telephonic Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter; parts and accessories thereof: 9013.80 Other devices, appliances and instruments: 9013.80.90 Other The ENs for heading 85.17 provide, in pertinent part, as follows: APPARATUS FOR CARRIER-CURRENT LINE SYSTEMS OR FOR DIGITAL LINE SYSTEMS These systems are based on the modulation of… a light beam by… digital signals. …. These systems are used for the transmission of all kinds of information (words, data, images, etc.) These systems include all categories of multiplexers and related line equipment for metal or optical-fibre cables. “Line-equipment” includes transmitters and receivers or electro-optical converters. Section XVI, note 1(m), HTSUS, provides, in pertinent part, as follows: This section does not cover: … (m) Articles of chapter 90; The diplexers and triplexers are apparatus used solely in telecommunication digital line systems. The diplexers and triplexers are opto-electric converters that transmit and receive different wavelengths. As such, the merchandise before us fits within the terms of the heading of 8517, HTSUS. The ENs to 85.17 support this finding. The diplexers and triplexers presently before us function in the same manner as merchandise previously ruled by CBP to be classified in heading 8517, HTSUS. See HQ 966888, dated May 10, 2004; NY R02506, dated September 8, 2005; NY R0402, dated June 8, 2006; R03275, dated March 15, 2006 and; R03287, dated March 16, 2006. The instant diplexers and triplexers are not classified in chapter 90, as they are solely used in telecommunication digital line system, and contain other equipment as noted above. Thus, at GRI 1, the diplexers and triplexers are specifically provided for in heading 8517, HTSUS. Section XVI, note 1(m), which excludes goods of chapter 90, does not operate in this instance. See HQ 965367, dated September 26, 2002. HOLDING: In accordance with GRI 1, the diplexers and triplexers are classified in heading 8517, HTSUS. They are provided for in subheading 8517.50.5000, HTSUS, which provides for: “Electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones; parts thereof: Other apparatus, for carrier-current line systems or for digital line systems: Other: Telephonic.” The 2006 column one, general rate of duty is Free. Protest number 3195-07-100160 is granted in full. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter.  Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon, Director Commercial and Trade Facilitation Division