HQ 952556: 8517.40.50; Video conference system; HQ 083611

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 952556

                        November 4, 1992

CLA-2 CO:R:C:M 952556 RFA

CATEGORY: Classification

TARIFF NO.:  8517.40.50

Mr. Mark Jones
Hitachi America, Ltd.
50 Prospect Avenue
Tarrytown, NY  10591-4698


RE:  8517.40.50; Video conference system; HQ 083611


Dear Mr. Jones:

     In a letter dated August 3, 1992, to the Regional
Commissioner of Customs in New York, you inquired as to the
tariff classification under the Harmonized Tariff Schedule of the
United States (HTSUS), of the Hitachi DP-200 and CA-200 Video
Conferencing Systems manufactured in Japan.  Your letter was
referred to this office for a direct response.

FACTS:

     The merchandise in question are two video conference
systems, Hitachi models DP-200 and the CA-200 from Japan.  Both
versions of the video conferencing system (VCS) are tabletop
systems for small group conferences, designed to provide
simultaneous voice, data and visual information between two or
more locations.  

     Both the DP-200 and the CA-200 with a television monitor
contain all the necessary equipment for a video conference,
including: wide-angle color camera with automatic focus and 8:1
zoom ratio; high-quality, echo-cancelling audio system with a
built-in microphone and connections for three additional
microphones; built-in speakerphone with automatic redial, hold
and speed-dial directory; and advanced electronics, including a
built-in CCITT H.261 video coder/decoder (codec) and the
audio/video controller.  The high-resolution video images are 
transmitted at up to 15 frames per second, and images can be
stopped for detailed inspection with a freeze-frame feature.  


     An easy-to-use keypad controls the video images, audio
volume, telephone dialing, and other functions.  On-screen
programming simplifies set up and configuration, and includes a
20-number speed-dial directory and help screens for real-time
assistance.

     A Group III fax or a personal computer also can be attached
to the VCS to simultaneously transmit data, voice, video, and
facsimile information over the same communication link for cost-
effective multimedia interactions.  Both VCS links are based on
worldwide integrated services digital network (ISDN) standards,
the video compression on CCITT H.261 standards, and both fax and
data transmission on worldwide CCITT standards.  Both units work
with the ISDN lines or Switched 56 digital telephone networks.   

ISSUE:

     Are the video conferencing systems electrical apparatus for
line telephony or are they articles designed for connection to
telephonic apparatus or instruments under the Harmonized Tariff
Schedule of the United States (HTSUS)?

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 shall be
determined according to the terms of the headings and any
relative section or chapter notes, and if not, by the following
GRI's, taken in order.

     Heading 85.17, HTSUS, provides for electrical apparatus for
line telephony or line telegraphy, including such apparatus for
carrier-current line systems.  The Harmonized Commodity
Description and Coding System Explanatory Notes (EN) constitute
the Customs Cooperation Council's official interpretation of the
Harmonized System.  While not legally binding, the ENs provide a
commentary on the scope of each heading of the Harmonized System
and are generally indicative of the proper interpretation of
these headings.  EN 85.17, page 1360, defines the term
"electrical apparatus for line telephony or line telegraphy" as
an 

     apparatus for the transmission between two points of
     speech or other sounds (or of symbols representing
     written messages, images or other data), by variation
     of an electric current or of an optical wave flowing in
     a metallic or dielectric (copper, optical fibres,
     combination cable, etc.) circuit connecting the
     transmitting station to the receiving station. . . .


      The heading covers all such electrical apparatus
     designed for this purpose, including the special
     apparatus used for carrier-current line systems.

     The term "apparatus" has been defined by the courts as a
combination of articles and materials which are intended,
adapted, and necessary for the accomplishment of some purpose.
The Deseret Co., v. United States, 10 CIT 609, 611, Slip Op. 86-
93 (1986).

     "Carrier current" is used in connection with both power and
communications circuits, however, the principle is basically the
same for both systems.  As defined by  Van Nostrands's Scientific
Encyclopedia, Seventh Edition, Vol. 1, page 518 (1989), the term
"carrier current"

     refers to the use of a relatively high-frequency
     alternating current superimposed on the ordinary
     circuit frequencies in order to increase the usefulness
     of a given transmission line.  Thus, in the case of
     power systems, carrier currents of several kHz
     frequency are coupled to the 60-Hz transmission lines. 
     These carrier currents may be modulated to provide
     telephone communication between points on the power
     system or they may be used to actuate relays on the
     system.  This latter use is known as carrier relaying. 
     Carrier currents have greatly extended the usefulness
     of existing line facilities of the telephone and
     telegraph companies.  Several carrier frequencies may
     be coupled to the lines already having regular voice or
     telegraph signals on them.  Each of these carrier
     frequencies may be modulated with a separate voice or
     telegraph channel and thus a given line may carry the
     regular signal plus several new carrier channels, each
     of which is equivalent to another circuit at regular
     frequencies.  At the receiving end, the various
     channels are separated by filters and the signals are
     demodulated and then fed to conventional phone or
     telegraph circuits.  The number of carrier channels
     which may be applied to a given line depends upon the
     characteristics of the line, varying from one or two
     for some lines to several hundred for a coaxial cable. 
     
     Transmission equipment involves the forwarding of
electromagnetic signals over wire or cable.  In Fanon Electronic
Industries, Inc. v. United States, 65 Cust. Ct. 542, 546 (1970),
the court stated that the intent of Congress in enacting the
provision (the predecessor of heading 8517) for electrical
telegraph and telephone apparatus was to encompass all
communications equipment by wire within that provision.


     In HQ 083611 (May 11, 1990), we stated that
"telecommunications equipment, both in a common and commercial
sense, encompasses the transfer of sound, written information,
video information, and data, as well as combinations thereof." 
There has been a "continuing recognition by Congress that,
regardless of distance (i.e., "long- haul" or "local area") or
type of signal (i.e., analog or digital), all transmission of
information via an electromagnetic signal is, for tariff
purposes, within the telephone and telegraph category. . ." HQ
083611.  Based upon HQ 083611, the VCS are telecommunication
devices because they allow parties who are far apart to
communicate verbally and visually as well as send each other
documents. 
  
     You argue that the VCS should be classified under subheading
8543.80.60, HTSUS, which provides for: "[e]lectrical machines and
apparatus, having individual functions, not specified or included
elsewhere in this chapter. . .[o]ther machines and apparatus:
[a]rticles designed for connection to telegraphic or telephonic
apparatus or instruments or to telegraphic or telephonic
networks."  EN 85.43, page 1402, states that "[t]his heading
covers all electrical appliances and apparatus, not falling in
any other heading of this Chapter, nor covered more specifically
by a heading of any other Chapter of the Nomenclature, nor
excluded by the operation of a Legal Note to Section XVI or to
this Chapter." (emphasis in the original)

     We believe that both VCS models are telephonic apparatus
which use a carrier-current line system.  The VCS are
telecommunications apparatus because both VCS models are the type
of apparatus covered by EN 85.17.  The DP-200 and the CA-200 VCS
transmit sound, video images, written information and data from
one unit to another by the use of a carrier-current line.  As
stated in the literature, the VCS can simultaneously transmit
signals for sound, video images, written information and data.  

     The proper classification for both VCS models is under
subheading 8517.40.50, HTSUS, which provides for: "[e]lectrical
apparatus for line telephony or telegraphy, including such
apparatus for carrier-current. . .[o]ther apparatus, for carrier-
current line systems: [o]ther: [t]elephonic.  Because both models
are specifically covered by heading 8517, HTSUS, they are
therefore precluded from being classified under heading, 8543,
HTSUS.








HOLDING:


     The video conference systems are classifiable in subheading,
8517.40.50, HTSUS.  The general column 1 rate of duty is 8.5
percent ad valorem. 

                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division