Tariff classification of the JVC IF-2D3D1 3D Image Processor

HQ H118695 September 2, 2010 CLA-2 OT:RR:CTF:TCM H118695 GC CATEGORY: Classification TARIFF NO.: 8543.70.96 Jack Mlawski, Esq. Galvin & Mlawski245 Fifth Avenue, Suite 1902New York City, New York 10016 RE: Tariff classification of the JVC IF-2D3D1 3D Image Processor Dear Mr. Mlawski: This is in response to your request submitted on February 17, 2010, on behalf of your client JVC Americas Corporation (JVC) for a binding ruling on the classification of the IF-2D3D1 3D Image Processor under the Harmonized Tariff Schedule of the United States (HTSUS). Consideration was also given to your email submission of April 20, 2010. FACTS: According to JVC literature submitted with the ruling request and found on the internet, the instant 3D Image Processor is designed for use by three dimensional (3D) content creators. 3D content is created by one of two methods, the first of which is by converting preexisting two dimensional (2D) video into 3D format. The user inputs the 2D content into 3D Image Processor from one of various sources (i.e. content banking system, DVD player, etc.). Using unique algorithms, the instant 3D Image Processor converts a 2D image into a 3D image in one of four different formats (line-by-line, side-by-side, above-below, and checkerboard). The user may then edit the 3D images to adjust the stereoscopic settings (i.e. parallax and intensity) to produce the desired 3D effect. At the same time, the 3D Image Processor features an output that feeds into a 3D compatible display, which would allow the user to view the 3D images in real time. The resulting 3D content is then recorded for future viewing and/or broadcasting. The second method of 3D content creation involves the synching of two juxtaposed 2D cameras. The synched cameras form a “left image” and “right image”, the stereoscopic effect of which is adjusted to create the desired 3D image. Once editing is completed, the resulting 3D content is recorded for future viewing or broadcasting. LAW AND ANALYSIS: Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods 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 GRIs 2 through 6 may then be applied in order. The HTSUS provisions under consideration are as follows: 8517 Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528; parts thereof: * * * 8525 Transmission apparatus for radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video camera recorders: * * * 8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989). In the discussion of the scope of heading 8525, HTSUS, as it relates to “transmission apparatus of radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus”, EN 85.25(A) states the following, in pertinent part: [T]elevision apparatus falls [in heading 8525, HTSUS,] whether the transmission is by electro-magnetic waves or by line. This group includes: Transmitters for radio-broadcasting or television. Relay apparatus used to pick up a broadcast and retransmit it and so increase the range (including television relay apparatus for mounting in aircraft). Relay television transmitters for transmission, by means of an aerial and parabolic reflector, from the studio or site of an outside broadcast to the main transmitter. Television transmitters for industrial use (e.g., for reading instruments at a distance, or for observation in dangerous localities). With this apparatus the transmission is often by line. “CBP has consistently found that equipment that aids in the transmission of an RF signal is transmission apparatus of heading 8525, HTSUS”. Headquarters Ruling Letter (HQ) W967964, dated October 18, 2006. See also HQ 950866, dated March 18, 1992 and HQ 958318, dated December 8, 1995. Specifically, components of television transmission systems that lie in the transmission path, receive a signal and the output of which is relayed or fed further in the transmission system for eventual final reception and display are classified in heading 8525, HTSUS. See, e.g., HQ 955309, dated December 21, 1993, HQ 958422, dated February 1, 1996, and HQ H005123, dated December 29, 2008. In your ruling request, you propose that the instant 3D Image Processor is properly classified under heading 8525, HTSUS. In so doing, you correctly note that television transmission apparatus of heading 8525, HTSUS, are excluded from classification under heading 8517, HTSUS, by the terms of the legal text to that heading. Accordingly, we consider whether the instant 3D Image Processor falls under the scope of heading 8525, HTSUS, prior to determining whether the merchandise meets the terms of heading 8517, HTSUS. In your submission, you argue that the subject 3D Image Processor falls under heading 8525, HTSUS, because the essential function of the instant merchandise is to convert and decode television signals. You cited four rulings in which CBP classified in heading 8525, HTSUS, merchandise that you argue are analogous to the instant 3D Image Processor in the sense that they classify devices that process, encode, or convert single or multiple analog and/or video signals into a desired video signal for output onto video displays, televisions, or computers. In New York Ruling Letter (NY) N041476, dated October 28, 2008, CBP classified DIRECTV® transcoders in heading 8525, HTSUS. The transcoders functioned by receiving a selected high definition (HD) television signal from the DIRECTV® satallite, converting the digital video and audio stream, encrypting the digital data stream, and modulating the signal according to specifications. In NY C89058, dated July 21, 1998, CBP classified several multiplexers that take images from several video security cameras and digitizes the incoming pictures and encodes them by camera number to allow the images from multiple cameras to be viewed, recorded or transmitted at one time, under subheading 8525.10.30, HTSUS (1998), as other television transmission apparatus. In NY N045300, dated December 15, 2008, CBP classified a video/audio converter set consisting of a “RF modulator” that converts RCA-type video output (composite video/stereo audio) from devices such as DVD players, video games, camcorders into “3/4 signal” compatible for televisions equipped only with coaxial inputs under heading 8525, HTSUS. Finally, you cite NY R02514, dated September 15, 2005, where CBP classified an HD digital image processor in heading 8525, HTSUS. The device was designed to process an analog video signal from the originating signal source and convert it to a HD digital video signal, which would be transmitted directly to various types of televisions and video monitors (e.g., LCD, Gas Plasma and Rear Projections). We note that all of the devices subject to the above cited rulings are designed to process a television signal and then transmit that signal along the transmission path for eventual final reception and viewing. We understand that the 3D Image Processor is capable of converting a 2D video signal to a 3D video signal for real-time transmission, as evidenced by the fact that the product features an output to a 3D compatible monitor. However, as indicated in the JVC product literature and confirmed in email communications with you, the resulting 3D video signal would not reflect the desired stereoscopic effects of the content creator. Rather, the instant 3D Image Processor is designed to facilitate the editing of 3D video content, which is then stored for future transmission or viewing. This 3D process occurs entirely outside the television signal transmission path. Accordingly, we find that the instant 3D Image Processor does not fall under the scope of heading 8525, HTSUS. This conclusion is supported by the list of products of heading 8525, HTSUS, mentioned in EN 85.25(A), supra, which illustrates the connection that all of the products of the heading have to transmitting a television signal. The subject merchandise does not perform such a function. While the 3D Image Processor features an output for a 3D monitor or display, we note that the monitor will be used for the user to see the results of altering the stereoscopic settings of a given frame or scene, and not for a viewer to watch 3D content. Turning to the issue of whether the merchandise falls under the scope of heading 8517, HTSUS, as an apparatus for the transmission or reception of other data, we note that EN 85.17 explains, in pertinent part, that heading 8517: [C]overs apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electromagnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks. We note that just like the instant 3D Image Processor creates or converts 3D video images entirely outside a television transmission path, it also does not operate in a wired or wireless network in the same manner as apparatus for the transmission or reception of other data provided for in heading 8517, HTSUS. The 3D Image Processor does not receive data from a wired or wireless network, nor does it transmit the resulting 3D video signal to one. Rather, it functions to edit and create data for possible future transmission and reception in a data network. The 3D Image Processor is more akin to the Sony SYX 124 subject to HQ 084703, dated September 13, 1989. The Sony SYX 124 is designed for use by broadcast stations or production houses to perform video editing. Particularly, the device creates special effects on video images such as enlarging, reducing, or applying the images to spheres and cylinders. It was classified under heading 8543, HTSUS, as an electrical apparatus having an individual function not elsewhere specified in Chapter 85.( Like the merchandise subject to HQ 084703, the instant 3D Image Processor is designed to manipulate a video signal. In this case, this manipulation comes in the form of converting a 2D signal or signals into a 3D video signal. This is a function not covered under heading 8525, HTSUS, or heading 8517, HTSUS, or any other heading in the Nomenclature. Accordingly, we find that the merchandise is properly classified under heading 8543, HTSUS, as an electrical apparatus having an individual function not elsewhere specified. We note that HQ 084703 was issued prior to the enactment of the current legal text of heading 8517, HTSUS, which occurred in 2007. Nevertheless, we find this ruling to be helpful in the classification of the instant 3D Image Processor inasmuch as it illustrates that merchandise that manipulates data for purposes other than advancing the transmission of that data fall under the scope of heading 8543, HTSUS, if that merchandise has an individual function. HOLDING: By application of GRI 1, the instant JVC IF-2D3D1 3D Image Processor is classified under heading 8543, HTSUS. It is specifically provided for under subheading 8543.70.96, HTSUS, which provides for: Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other….” The column one, general rate of duty is 2.6 percent ad valorem. Duty rates are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov/tata/hts. A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction. Sincerely, Ieva K. O’Rourke, Chief Tariff Classification and Marking Branch