Tariff classification and Country of Origin of Monolith Station

HQ H328731 June 6, 2023 OT:RR:CTF:EMAIN H328731 PF/AMW CATEGORY: Classification TARIFF NO.: 8476.89.00 Ruta Riley Lyft, Inc. 441 9th Ave., 2nd Floor New York, NY 10023 RE: Tariff classification and Country of Origin of Monolith Station Dear Ms. Riley: This is in reply to your request for a prospective ruling on the tariff classification and country of origin, under the Harmonized Tariff Schedule of the United States (HTSUS), of a Monolith Station. Your request was forwarded by the National Commodity Specialist Division to this office for a response. Our decision follows. FACTS: The subject merchandise, entitled the Monolith Docking station (the Monolith) is a street mounted locking platform for the securing and dispensing of E-bikes or E-scooters. This rack system is used mainly for the locking/securing, docking and rental of compatible vehicles (bikes and scooters). The docking station functions as a type of vending machine in that it allows riders to rent shared bikes and scooters. It has the ability to electronically transmit operational information such as bike availability information at a particular station to remote cloud-based servers running service operator programs. This docking/vending machine uses an internal cellular transceiver to connect to Lyft’s server back-end, which in turn communicates with the end-user’s mobile application to enable use of the shared service. The cloud-based server provides a user with access information and allows a user to verify payment and billing information prior to dispensing the E-bike to a potential user. A rider is charged for the ride when they return the vehicle into any compatible docking station. Lyft app users are required to connect a credit card to their Lyft account for payment. Each Monolith docking station is composed of a fixed number of bollards capable of docking/undocking compatible vehicles which are attached to a baseplate assembly. The station may also include optional modules such as an advertisement panel (optional modules will be imported separately into the U.S. and attached to Monolith in the local market). When the user pushes the vehicles into the bollard it activates the lock. The bollard checks bike/scooter ID and relays docking information to Lyft back-end users. The user receives updates in the Lyft mobile app and their account is charged for the ride. Payment is processed by charging the rider’s credit card connected to the Lyft’s app or as part of an annual subscription fee. The Monolith will consist of approximately seven main subassemblies: the bollard metal structure; cassette module; receiver subassembly; lock module; electronic components and printed circuit board assemblies (“PCBAs”); solar components (in the solar SKU only); and street infrastructure (e.g., base plates, optional ad panels). The bollard is constructed of steel, and serves as the main structural component of the docking station, onto which all other modules (subassemblies) and parts are attached to create the final product. The cassette module consists of a housing that contains all of the core electronic components, namely: the LTE antenna, Main PCBA, battery, speaker, and triangle PCBA. The main PCBA is said to communicate with the other active modules (e.g., User Interface (“UI”) near-field communication (“NFC”) module, UI flipdot module) and provides a connection to Lyft back-end services via its LTE antenna. The triangle PCBA incorporates an NFC antenna to identify vehicles during docking and relays this information to the main PCBA. The receiver subassembly “accepts” or receives and releases the vehicles from Monolith during docking and undocking. The receiver subassembly consists of the receiver, the NFC module, the UI module, and detents. The receiver is a metal part that interacts with bicycles and scooters while docking and is the structure to which the NFC module and UI module are attached. The NFC module houses the NFC PCBA with integrated NFC antenna. The NFC PCBA relays collected NFC information to the main PCBA, which can include commands sent from operators/technicians in addition to rider-provided information such as transit card ID. The NFC module also provides an indicator LED as a visual indicator for riders and service technicians. The bollard provides visual feedback to users via a UI module enabled by a UI PCB and flip dot display. The UI module receives input from the main PCBA to determine the status of visual, physical indicators (flipdots) to communicate bollard status to users and operators. A flip dot display consists of painted discs that can be rotated electronically to display information. Lyft has not yet selected a final assembly process or location for the Monolith. Instead, Lyft proposes four sourcing and production scenarios, which are outlined in the following table: MONOLITH MODULE Sourcing Scenario One Sourcing Scenario Two Sourcing Scenario Three Sourcing Scenario Four  Bollard metal structure (material source & Mfg. location) China China Mexico China  Cassette Module assembly site China China Mexico Vietnam  Cassette- Main PCBA PCB: China PCB population (“pop.”): China Electronics: China/Asia PCB: China PCB pop.: Vietnam Electronics: China/Asia PCB: China PCB pop.: Mexico Electronics: China/Asia PCB: China PCB pop.: Vietnam Electronics: China/Asia  Cassette- NFC Triangle PCBA PCB: China PCB population: China Electronics: China/Asia PCB: China PCB pop.: Vietnam; Electronics: China/Asia PCB: China PCB pop.: Mexico; Electronics: China/Asia PCB: China PCB pop.: Vietnam; Electronics: Asia  Battery China China China China  Receiver assembly site China China Mexico Vietnam  User interface NFC module assembly site China China Mexico Vietnam  User Interface – NFC PCBA PCB: China PCB pop.: China; Electronics: China/Asia PCB: China PCB pop.: Vietnam; Electronics: China/Asia PCB: China PCB pop: Mexico; Electronics: China/Asia PCB: China PCB pop.: Vietnam; Electronics: China/Asia  Flipdot display module assembly China China Mexico Vietnam  Flipdot PCBA PCB: China PCB pop.: China Electronics: China/Asia PCB: China PCB pop.: Vietnam; Electronics: China/Asia PCB: China PCB pop.: Mexico; Electronics: China/Asia PCB: China PCB pop.: Vietnam; Electronics: China/Asia  Lock Module Metal: China PCB: China PCB pop.: China Metal: China PCB: China PCB pop.: China Metal: China PCB: China PCB pop.: China Metal: China PCB: China PCB pop.: China  Solar Assembly site (only Solar SKU) China China Mexico Vietnam  Solar cell origin Thailand Thailand Thailand Thailand  Cell incorporated into panel India India India India  [DC-DC charger (only Static SKU)] Thailand Thailand Thailand Thailand  Final Monolith Assembly Site China China Mexico Vietnam   ISSUES: Whether the Monolith is classified in heading 8476, HTSUS as an automatic goods-vending machine, heading 8479, HTSUS, as a machine having an individual function not specified or included elsewhere, or in heading 8517, HTSUS, as other apparatus for the transmission or reception of data? What is the country of origin for the Monolith? LAW AND ANALYSIS: Merchandise Classification Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (“GRIs”) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes. GRI 1 requires that classification be determined first 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 heading 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: 8476 Automatic goods-vending machines (for example, postage stamp, cigarette, food or beverage machines), including money-changing machines; parts thereof: 8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter; parts thereof: 8517 Telephone sets, including smartphones and other 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: In understanding the language of the HTSUS, the Explanatory Notes (“Ens”) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989). EN 84.76 provides, in part, as follows with respect to the scope of heading 8476, HTSUS: This heading covers the various kinds of machines which supply some kind of merchandise when one or more coins, tokens or a magnetic card are put in a slot (other than those machines covered more specifically by other headings of the Nomenclature or excluded from the Chapter by a Chapter or Section Note).  The term “vending” in the context of this heading refers to a “monetary” exchange between the purchaser and the machine in order to acquire a product.  This heading does not cover machines which dispense a product but do not have a device to accept payment.   * * *   The heading covers not only machines in which the distribution is automatic, but also those consisting of a number of compartments from which the merchandise can be withdrawn after the coin has been inserted, the machine incorporating a device for releasing the lock of the appropriate compartment (e.g., by pressing on a corresponding button). * * * You maintain that the Monolith is classified in heading 8517, HTSUS, as other apparatus for the transmission of data. You rely on New York Ruling (“NY”) N256564, dated September 9, 2014, in support of classification in heading 8517, HTSUS. NY N256564, addressed the classification of a docking station for medical tools, such as pulse oximeters. These docking stations allowed for the transfer of data from the portable medical monitoring systems to computers and other devices. They also enabled data sharing with multi-dimensional patient monitors and provided a nurse call functionality. In addition to the data transfer function, the docking stations also provided power to the oximeters to charge their internal batteries. The merchandise in NY N256564 is different from the Monolith because the Monolith is not of a telecommunication device. While the Monolith enables the reception and transmission of some data through a cellular transceiver, such functionality is merely in support of the product’s principal function, which is to facilitate the user in obtaining a bicycle to rent. As such, the subject Monolith is not covered by the scope of heading 8517, HTSUS, on the basis of GRI 1. In the alternative, you contend that the Monolith is classified in heading 8476, HTSUS, as an “automatic goods-vending machine.” In support of your contention, you rely on Headquarters Ruling (“HQ”) H269223, dated June 8, 2017. In HQ H269223, the subject merchandise was described as dispensers of personal protective equipment (“PPE”) and maintenance, repair, and operations (“MRO”) equipment. Dispensation of the PPE or MRO equipment was regulated by an external control device, which included a touchscreen-operated automatic data processor and radiofrequency or magnetic card reader. The majority of the dispensers were sold to industrial suppliers, which installed the dispensers in their customer’s facilities – generally industrial worksites - and continually stocked the dispensers’ internal compartments. Employees at the worksites could access the dispenser’s contents by swiping or scanning an employer-issued, dispenser-calibrated card and navigated a series of prompts displayed on the touchscreen to select specific equipment. Selection of the equipment initiated a turn of an internal drum and a corresponding door that allowed a user to retrieve the equipment. Upon removal of the equipment, a notification indicating the removal was electronically transmitted to the supplier (or in some cases to the dispenser’s manufacturer for batching and transmission to the supplier). The supplier billed the customer for any items removed at regular intervals. In HQ H269223, CBP held that an apparatus incorporating a payment mechanism qualified as a vending machine within the meaning of heading 8476, HTSUS, even if the temporal nexus between delivery and payment was not necessarily direct. The term “vending machine” is not defined in the HTSUS. In the absence of a statutory definition, a tariff term is construed according to its common and commercial meaning, which are presumably identical. Tyco Fire Products v. United States, 841 F.3d 1353, 1357 (Fed. Cir. 2016). Dictionaries and other lexicographic authorities may be utilized to determine a term's common meaning. See Mast Indus., Inc. v. United States, 9 C.I.T. 549 (1985), aff’d, 786 F.2d 1144 (Fed. Cir. 1986). Among the sources that are regularly consulted pursuant to this maxim is industry literature, which may inform a term’s commercial meaning. See Rocknell Fastener, Inc. v. United States, 267 F.3d 1354, 1361 (Fed. Cir. 2001) (citing ANSI specifications as industry standards indicative of commercial designation); see also Well Luck Co., Inc. v. United States, 208 F. Supp. 3d 1364 (Ct. Int'l Trade 2017); and Specialty Commodities, Inc. v. United States, 190 F. Supp. 3d 1277, 1285-1286 (Ct. Int'l Trade 2016) (both citing industry references in defining tariff terms at issue). “Vending machine” is consistently defined in dictionaries as an apparatus that dispenses merchandise in exchange for coins or another form of payment. See, e.g., Oxford English Dictionary (2023), available at http://www.oed.com/view/Entry/222068 (defining vending machine as a “slot machine from which comestibles or other small goods may be obtained”); Merriam-Webster.com, definition of VENDING MACHINE, https://www.merriam-webster.com/dictionary/?vending%?20machine (defining term as “a coin-operated machine for selling merchandise”); Collins English Dictionary, vending machine, https://www.collinsdictionary.com/?us/?dictionary/?english/vending-machine (defining term as “a machine that automatically dispenses consumer goods such as cigarettes, food, or petrol, when money is inserted.”) (last visited June 5, 2023). This definition of vending machine is consistent with characterizations of such in industry literature and EN 84.76. See National Automatic Merchandising Association, Vending 101 (stating that vending involves provision of service at an “unattended point of sale” through the use of monetarily-driven equipment); and EN 84.76 (“’Vending’ in the context of this heading refers to a ‘monetary’ exchange between the purchaser and the machine in order to acquire a product.”); see also HQ 962415, dated February 22, 2000 (determining that medication dispenser did not qualify as a vending machine because dispensation did not involve a monetary transaction). Industry literature and EN 84.76 both further indicate that vending machines may incorporate a broad range of payment mechanisms, including, among other things, card readers and devices designed to process other forms of “cashless” payment. See, e.g., National Automatic Merchandising Association, Vending 101; Chris Mumford, The Components Of Credit Card Vending, Automatic Vending Merchandiser, July 22, 2014, http://www.vendingmarketwatch.com/home/article/?10256874/?the-components-of-credit-card-vending; and Tim Sanford, AVA Study Shows UK’s Vending Industry and Cashless Payments on Upswing, Vending Times, May 17, 2017, https://www.vendingtimes.com/news/ava-study-shows-uks-vending-industry-and-cashless-payments-on-upswing/ (last visited June 5, 2023) (all discussing the prevalence of non-cash payment mechanisms in vending machines). These mechanisms may not effectuate direct and immediate payment but instead trigger a process by which payment is eventually delivered, via third party institutions, from the purchaser’s account to that of the vendor. See Chris Mumford, The Components Of Credit Card Vending, Automatic Vending Merchandiser, July 22, 2014, http://www.vendingmarketwatch.com/home/?article?/10256874/the-components-of-credit-card-vending (last visited December 15, 2022); see also Credit Cards.com, How does a credit card transaction work, http://?www.creditcards.com/?credit-card-news/how-a-credit-card-is-processed-1275.php (last visited June 5, 2023). Moreover, the types of goods that are sold through vending machines are varied. The following article notes examples of the types of goods that can be sold through automatic merchandising: Snacks, beverages, tobacco products, boxes of detergent, fabric softener sheets, as well as rental DVDs. See https://www.wise-geek.com/what-is-automatic-merchandising.htm (last visited June 5, 2023). In NY K82080, dated January 22, 2004, CBP classified a machine used to sell and rent DVDs in heading 8476, as a vending machine. The machine in NY K82080 was described as having three components: a store, a console, and a graphics package for use with the console. The store contained a rack type storage compartment for storing and dispending videos and DVDs. The console had a touch screen and was similar in operation to a bank ATM machine and had a magnetic “swipe card” interface, it allowed a user to select a video or DVD, and once the video or DVD was dispensed from the machine the appropriate fee was immediately deducted for the video or at the time of return for the rented videos. The machine accepted cash or credit cards to re-load the magnetic card. The machine also allowed software to be configured to rent videos and DVDs without the “swipe card” using only a credit card. Here, the Monolith is a machine where rental E-bikes and E-scooters can be obtained in exchange for cashless payment. The Monolith is used to securely hold/lock E-bikes and E-scooters until a valid payment or user code has been transmitted to the docking station. The device, which connects to a cloud-based server communicates directly with a user’s cell phone and Lyft app to provide the required access to the rack. Lyft app users are required to connect a credit card to their Lyft account for payment. After verifying a user’s payment and billing information, the Monolith will dispense an E-bike or E-scooter for rental. A rider is charged for the ride when they return the vehicle into any compatible docking station. As we determined in HQ H269223, dated June 8, 2017, an apparatus that incorporates a payment mechanism qualifies as a vending machine within the meaning of heading 8476, HTSUS, even if the temporal nexus between delivery and payment is not necessarily direct. See also NY N131698, dated December 7, 2010 (indicating that hotel minibar which transmits consumption data to hotel system for subsequent billing is classified in heading 8476, HTSUS). Here, the Monolith allows for the rental of an E-bike or E-scooter, incorporates a payment mechanism, and charges a user after returning the E-bike or E-scooter. We find that the Monolith