HQ 954935: Dense Code Reader System; Explanatory Note 84.71(II)(A); Chapter 84, Note 5(A)(a); ADP Machine; Chapter 90, Additional U.S. Note 3; Optical Appliance or Instrument; HQ's 952992, 952298, and 952297; Section XVI, Note 1(m); 8471.99.90; 8471.20.00

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 954935
                           May 18, 1994


CLA-2 CO:R:C:M 954935 DWS

CATEGORY: Classification

TARIFF NO.: 9013.80.60

Mr. Myles J. Ambrose
Ms. Evelyn M. Suarez
Ross & Hardies
888 Sixteenth Street
Washington, DC 20006-4103

RE: Dense Code Reader System; Explanatory Note                    
    84.71(II)(A); Chapter 84, Note 5(A)(a); ADP Machine; 
    Chapter 90, Additional U.S. Note 3; Optical Appliance or      
    Instrument; HQ's 952992, 952298, and 952297; Section XVI,
    Note 1(m); 8471.99.90; 8471.20.00

Dear Mr. Ambrose and Ms. Suarez:

     This is in response to your letters of August 31, 1993, and
February 17, 1994, on behalf of United Parcel Service (UPS),
concerning the classification of a dense code reader system under
the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

     The merchandise consists of a dense code reader system.  The
purpose of the system is to provide package origin and
destination information for the user's operations. To accommodate
various customer systems, the merchandise will decode both dense
codes and one-dimensional codes.  It will retrieve and collect
data encoded on a label placed on a parcel or document pack, and
decode and process the data.

     The system is comprised of a system box, a height sensor
system or light curtain (consisting of an array of light imaging
diodes), and a rotary encoder (belt speed sensor).  The system
box includes a power supply box, lighting, a cooling system, a
camera system, and electronic hardware including software.  

     The electronic hardware includes a number of printed circuit
boards.  One board is a system processor whose main task is
controlling the reader operation and communications to the hub
controller.  The central processing unit synchronizes overall
label processing and decodes a reconstructed label.  A signal
board sends digital values to the analogue/digital (A/D) board
and controls attenuation gains.  The A/D board takes raw analog
camera data, adjusts the gain and digitizes it for decoding. 
Other boards run the bull's-eye code; perform image processing;
hold system codes; and receive, buffer, translate, and transmit
data.

     The camera system includes: lenses; a charged couple device
(CCD) board which provides drive signals to the CCD chip which
enables the board to produce video output (electrical signal)
proportional to the optical image; a signal processor which is
used to strip out reset noise from a video image; and a focus
board which drives the speaker connected to the CCD board and
focuses it according to the package height.

     The system is mounted over the conveyor belt of an existing
package sorting system.  Packages with applied labels move on
conveyor belts under the system.  As a package passes by the
height sensors near the belt, the height sensors transmit a
message to the camera to focus according to the height of the
package.  When the package passes beneath the camera, a signal
from the camera is sent to the system to detect the presence of
the bull's eye.  After the bull's-eye is detected from the
signal, the image is filtered to leave only address label
information, which is decoded by the software that runs on the
system processor.  After the data is processed, it is transmitted
and used to control diverters which route the packages to their
proper destinations.

     The subheadings under consideration are as follows:

     8471.99.90: [a]utomatic data processing machines and units
                 thereof; magnetic or optical readers, machines
                 for transcribing data onto data media in coded
                 form and machines for processing such data, not
                 elsewhere specified or included: [o]ther: 
                 [o]ther: [o]ther: [o]ther.

     The general, column one rate of duty for goods classifiable
     under this provision is 3.7 percent ad valorem.

     8471.20.00: [d]igital automatic data processing machines,
                 containing in the same housing at least a
                 central processing unit and an input and output
                 unit, whether or not combined.

     The general, column one rate of duty for goods classifiable
     under this provision is 3.9 percent ad valorem.

     9013.80.60: . . . other optical appliances and instruments,
                 not specified or included elsewhere in this 
                 chapter . . . : [o]ther devices, appliances 
                 and instruments: [o]ther.

     The general, column one rate of duty for goods classifiable
     under this provision is 9 percent ad valorem.

ISSUE:

     Whether the dense code reader system is classifiable under
subheading 8471.99.90, HTSUS, as an optical reader, under
subheading 8471.20.00, HTSUS, as a digital automatic data
processing (ADP) machine, or under subheading 9013.80.60, HTSUS,
as an other optical appliance or instrument.

LAW AND ANALYSIS:

     Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's),
taken in order.  GRI 1 provides that classification is determined
according to the terms of the headings and any relative section
or chapter notes.

     In understanding the language of the HTSUS, the Harmonized
Commodity Description and Coding System Explanatory Notes may be
utilized.  The Explanatory Notes, although not dispositive, are
to be used to determine the proper interpretation of the HTSUS. 
See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).  In
part, Explanatory Note 84.71(II)(A) (p. 1300) states that:

     [m]agnetic or optical readers read characters, generally in
     a special form, and convert them into electric signals
     (impulses) which can be directly used by machines for 
     transcribing or processing coded information.

     (1) Magnetic readers. . . 

     (2) Optical readers.  These do not require the use of 
         special ink.  The characters are read directly by a 
         series of photoelectric cells and translated on the 
         binary code principle.

     The readers described above are classified in this heading   
     only if presented separately.  When combined with other      
     machines (e.g., machines for transcribing data onto data     
     media in coded form and machines for processing such data in 
     coded form) they are classified with those machines provided
     they are presented with them.

     It is our position that, based upon the above Explanatory
Note, the dense code reader system is precluded from
classification as an optical reader.  The system does possess an
optical reader; however, the reader is not presented separately
but is combined with other components.  Because the optical
reader is presented and combined with other machines, it is to be
classified with those machines.  Therefore, the system is not
classifiable under subheading 8471.99.90, HTSUS.

     In an alternative claim, you contend that, in meeting the
requirements of chapter 84, note 5(A)(a), HTSUS, the system is
classifiable as a digital ADP machine.  Chapter 84, note 5(A)(a),
HTSUS, states:

     (A) For purposes of heading 8471, the expression "automatic
         data processing machines" means:

         (a) Digital machines, capable of (1) storing the
             processing program or programs and at least the data
             immediately necessary for execution of the program;
             (2) being freely programmed in accordance with the
             requirements of the user; (3) performing
             arithmetical computations specified by the user; 
             and, (4) executing, without human intervention, a
             processing program which requires them to modify
             their execution, by logical decision during the
             processing run . . .

         (b) - (c) xxx

     It is true that part of the dense code reader system does
perform the functions of an ADP machine, and those functions meet
the above definition of an ADP machine.  However, the system is
comprised of many other components performing different
functions.  The system taken as a whole cannot be classifiable as
and ADP machine.  Such a classification would ignore the equally
essential functions which the other components perform. 
Consequently, the dense code reader system is not classifiable
under subheading 8471.20.00, HTSUS.

     Chapter 90, additional U.S. note 3, HTSUS, states that:

     [f]or the purposes of this chapter, the terms "optical
     appliances" and "optical instruments" refer only to those
     appliances and instruments which incorporate one or more
     optical elements, but do not include any appliances or
     instruments in which the incorporated optical element or
     elements are solely for viewing a scale or for some other
     subsidiary purpose.

     It is our position that the dense code reader system meets
the above definition as an optical appliance.  The system
incorporates an optical element and that element (camera system)
is not used for a subsidiary purpose.  In fact, without the
optical element, the system would be useless for the purpose for
which it was created.

     Therefore, because the system is not described elsewhere in
the HTSUS, it is classifiable under subheading 9013.80.60, HTSUS.
See HQ 952992, dated December 11, 1992, and HQ 952298 and HQ
952297, dated July 30, 1993, for similar rulings.

     We note chapter 84, note 1(m), HTSUS, which states that:

     [t]his section does not cover:

     (m) Articles of chapter 90.

     Because the system is classifiable under chapter 90, HTSUS,
it is precluded from classification under chapter 84, HTSUS.

HOLDING:

     The dense code reader system is classifiable under
subheading 9013.80.60, HTSUS, as an other optical appliance or
instrument.

                            Sincerely,



                            John Durant, Director
                            Commercial Rulings Division

cc: Area Director, New York Seaport