Application for Further Review of Protest 3004-07-100164; e-Link receiver

HQ H014781 March 19, 2008 CLA-2: OT:RR:CTF:TCM H014781 KSH CATEGORY: Classification TARIFF NO.: 8527.90.95 Port Director U.S. Customs and Border Protection Attn: Entry Unit 9901 Pacific Highway Blaine, WA  98230 RE: Application for Further Review of Protest 3004-07-100164; e-Link receiver Dear Port Director: This is in reply to your correspondence forwarding Application for Further Review of Protest (AFR) 3004-07-100164, filed by Strader-Ferris international, on behalf of its client Verichip, Corp. The protest is against Customs and Border Protection’s (CBP) classification and liquidation of eighteen entries of e-Link receivers under the Harmonized Tariff Schedule of the United States (HTSUS). Between February 2, 2006 and June 2, 2006, protestant entered the subject merchandise in subheading 8527.90.5000, HTSUS, which provides for “Reception apparatus for radiotelephony, radiotelegraphy or radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Other apparatus: Other: Infant nursery monitor systems, each consisting in the same package of a radio transmitter, an electrical adapter, and a radio receiver.” On May 2, 2006, CBP issued a Request for Information to obtain information concerning how the receivers operate. On January 23, 2006, protestant responded to the Request for Information. On December 15, 2006, the merchandise was rate advanced and reclassified in subheading 8527.90.9590, HTSUS, which provides for “Reception apparatus for radiotelephony, radiotelegraphy or radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Other apparatus: Other: Other: Other, Other.” The entries were liquidated on January 5, 2007. On June 22, 2007, protestant filed a protest and application for further review against the classification and liquidation of the merchandise in subheading 8527.90.9590, HTSUS. Protestant’s AFR request was approved. The protest was timely filed pursuant to 19 U.S.C. 1514(c)(3). In support of protestant’s application for further review, protestant alleges that the protest is inconsistent with court decisions and New York Ruling Letter (NY) M82159, dated April 8, 2006. See 19 C.F.R. 174.24(a) and (b). Further review is warranted pursuant to 19 C.F.R. §§174.24(a) and 174.25. FACTS: The merchandise at issue is an e-Link receiver which is a component of an infant protection system. It receives radio frequency signals from deployed infant transponder tags (monitors) and passes this information via Ethernet cable connection to a PC server running proprietary software. It can detect tag messages within a 20 foot radius. Information passed from the receiver is used by the proprietary software to make decisions such as sounding an alarm, lock or unlock a door, presenting information on screen regarding the position of a particular tag on a floor plan. The receivers are placed at specific points throughout a facility to ensure communications from tags are received through the area of concern. The complete infant protection system can be used in various types of settings including adult and infant monitoring. ISSUE: Whether the e-Link receiver is classified in heading 8517, HTSUS, as other telegraphic apparatus or in heading 8527, HTSUS, as other reception apparatus. LAW AND ANALYSIS: Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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 GRI may then be applied. The Harmonized Commodity Description and Coding System Explanatory Notes (EN), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN provide a commentary on the scope of each heading of the HTSUSA and are generally indicative of the proper interpretation of the headings. It is Customs and Border Protection’s (CBP) practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUSA. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). In support of the application for further review, protestant argues that the e-Link receiver is akin to networking apparatus as its primary function is to provide a network link between wireless transceivers at one end of the network and a personal computer on the other end of the network. In support of this claim, protestant cites to NY M82159, which classified a Wireless IP Access System in subheading 8517.50.9000, HTSUS. Subheading 8517.50.9000, HTSUS, 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: Telegraphic: Other.” The EN to heading 8517, HTSUS, states in relevant part: These systems are based on the modulation of an electrical carrier-current or of a light beam by analogue or digital signals.  Use is made of the carrier-current modulation technique and pulse code modulation (PCM) or some other digital system.  These systems are used for the transmission of all kinds of information (characters, graphics, images, or other data, etc.). * * * * Similar apparatus used for radio transmission systems is excluded (heading 85.25 or 85.27). As heading 8517, HTSUS, covers only apparatus for line telephony or telegraphy, classification of the subject merchandise, which receives radio frequencies, under heading 8517, HTSUS, is precluded. The EN to heading 8517, HTSUS, supports this conclusion. Subheading 8527.90.9590, HTSUS, provides for: “Reception apparatus for radiotelephony, radiotelegraphy or radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Other apparatus: Other: Other: Other, Other.” The EN to heading 8527, HTSUS, provides in relevant part: The sound radiobroadcasting apparatus falling in this heading must be for the reception of signals by means of electromagnetic waves transmitted through the ether without any line connection. This group includes : (1)   Domestic radio receivers of all kinds (table models, consoles, receivers for mounting in furniture, walls, etc., portable models, receivers, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock). * * * * The instant merchandise receives radio frequency signals from the patients’ tags through the ether without any line connection and passes that information via a local area network to a PC server. Its principal function is radio frequency reception. Indeed, the radio frequency reception is a necessary predicate to the subsequent transmission of the signals to the infant monitoring system. Therefore, we find it is classified in heading 8527, HTSUS, as reception apparatus for radiotelegraphy. It is distinguishable from the merchandise at issue in NY M82159, which transmitted a signal through optical fiber cable and coaxial cable thereby precluding classification in heading 8527, HTSUS. Rather, it is more akin to the Nurse Call Local Unit at issue in NY C82035, dated December 19, 1997, which was designed to receive signals concerning a patient’s condition in a hospital, nursing home or other care facility. The Nurse Call Local Unit was classified in heading 8527, HTSUS. HOLDING: Protest number 3004-07-100164 is DENIED. Pursuant to GRI 1, the e-Link receiver is classified in heading 8527, HTSUS. It is provided for in subheading 8527.90.9590, HTSUS, which provides for “Reception apparatus for radiotelephony, radiotelegraphy or radiobroadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock: Other apparatus: Other: Other: Other, Other.” The rate of duty at the time of entry was 6% ad valorem. In accordance with the Protest/Petition Processing Handbook, (CIS HB, January 2002, pp 18 and 21), 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