The tariff classification of incomplete automatic data processing machines from China, Netherlands, and Mexico.

N304698 June 24, 2019 CLA-2-84:OT:RR:NC:N2:220 CATEGORY: Classification TARIFF NO.: 8473.30.5100; 9903.88.03 Adrienne Fusaro ZT Group International 333 Meadowlands Parkway Secaucus, NJ 07094 RE: The tariff classification of incomplete automatic data processing machines from China, Netherlands, and Mexico. Dear Ms. Fusaro: In your letter dated June 7, 2019 you requested a tariff classification ruling. The articles under consideration are described as barebones servers and you provided two versions of the servers at varying stages of their assembly process. The first version is identified as the Level 6 Server and consists of an enclosure, a motherboard, a power supply, cables, and a backplane. The second version is identified as the Level 7 Server and consists of an enclosure, a motherboard, a power supply, cables, a backplane, and a network interface card. You state that the processer and memory are not included in the Level 6 and Level 7 Servers at the time of importation. In your request, you reference NY N303818, which you state is the same motherboard as the instant devices under review that was classified as an automatic data processing (ADP) machine under 8471.50.0150, Harmonized Tariff Schedule of the United States (HTSUS). You suggest that the Level 6 and Level 7 Servers configurations should be classified the same as the merchandise in NY N303818. We disagree. Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRIs). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes. Merchandise that cannot be classified in accordance with GRI 1 is to be classified in accordance with subsequent GRI's taken in order. GRI 2(a) states as follows: Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled. Incomplete ADP machines with their processors, BIOS, and cache memory have been consistently deemed to possess the essential character of an ADP machine. However, unlike the motherboards classified in NY N303818, which possessed the processor, BIOS, and cache memory, the subject motherboards lack their processors at the time of importation. As such, we find that they fail to meet the criteria of Legal Note 5(A) to Chapter 84, HTSUS. While the presence of cache memory and BIOS gives the capability of storing the processing program or programs and at least the data immediately necessary for execution of a program, the absence of the processor renders the Level 6 and Level 7 Servers inoperable. In our view, the subject assemblies without their processors lack the essential character of a functional motherboard and therefore, we find that the subject merchandise is classifiable as a part of the ADP machine under heading 8473, HTSUS, and not the machine itself. The applicable subheading for the Level 6 and Level 7 Servers will be 8473.30.5100, HTSUS, which provides for “Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of headings 8469 to 8472: Parts and accessories of the machines of heading 8471: Not incorporating a cathode ray tube: Other”. The general rate of duty will be Free. With regard to those products that are manufactured in China, Effective July 6, 2018, the Office of the United States Trade Representative (USTR) imposed an additional tariff on certain products of China classified in the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(b), HTSUS. The USTR imposed additional tariffs, effective August 23, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(d), HTSUS. Subsequently, the USTR imposed further tariffs, effective September 24, 2018, on products classified under the subheadings enumerated in Section XXII, Chapter 99, Subchapter III U.S. Note 20(f) and U.S. Note 20(g), HTSUS. For additional information, please see the relevant Federal Register notices dated June 20, 2018 (83 F.R. 28710), August 16, 2018 (83 F.R. 40823), and September 21, 2018 (83 F.R. 47974). See also “Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” (June 20, 2018, 83 F.R. 28710). Products of China that are provided for in subheading 9903.88.01, 9903.88.02, 9903.88.03, or 9903.88.04 and classified in one of the subheadings enumerated in U.S. Note 20(b), U.S. Note 20(d), U.S. Note 20(f) or U.S. Note 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees and charges that apply to such products, as well as to those imposed by the aforementioned Chapter 99 subheadings. Products of China classified under subheading 8473.30.5100, HTSUS, unless specifically excluded, are subject to the additional 25 percent ad valorem rate of duty. At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.03, in addition to subheading 8473.30.5100, HTSUS, listed above. The tariff is subject to periodic amendment so you should exercise reasonable care in monitoring the status of goods covered by the Notice cited above and the applicable Chapter 99 subheading. Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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 Karl Moosbrugger at karl.moosbrugger@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division