دستگاه حضور و غیاب با تشخیص چهره و RFID: «ماشین داده‌پردازی» ۸۴۷۱ نیست، دستگاه برقی ۸۵۴۳ است

OT:RR:CTF:EMAIN H332747 JRG/PF

TARIFF NOs.: 8543.70.98; 9903.88.02 Center Director Electronics Center of Excellence and Expertise U.S. Customs and Border Protection 1 World Trade Center, Suite 741 Long Beach, CA 90831 Attn: David Pulkrabek, Import Specialist

Dear Center Director:

This is our decision regarding an Application for Further Review (AFR) of Protest No. 1704-22-105446 filed by counsel on August 31, 2022, on behalf of Lathem Time Corporation (Protestant). The Protest and AFR concern the classification of the CT74-X Electronic Time Clock from China under the Harmonized Tariff Schedule of the United States (HTSUS). The AFR was forwarded to this office for consideration.

The CT74-X Electronic Time Clock allows employees to clock in and out of work through its touchscreen interface, using either a PIN number, RFID Badge, or facial recognition. The CT74-X tracks hours worked, vacation/PTO balances, an employee’s in and out status, and transfers between departments, making the data accessible for supervisors and employees. The CT74-X can also send text messages and transmit audio messages.

The CT74-X is comprised of two front facing cameras for facial recognition, a wireless RFID card reader, an RJ45 Ethernet Socket, powered output relay sockets, and a USB socket. The merchandise also features an ARM Cortex A8 Processor, 256 megabytes of onboard RAM memory, and uses either a Windows CE6 or CE7 operating system. The CT74-X is also Wi-Fi capable, which allows it to connect with the Payclock Online, a cloud-based, proprietary software program that provides employee time and attendance management services from any location and at any time, using only a Wi-Fi connection and the Payclock Online web application.

The subject merchandise was entered between June 19, 2020, and September 15, 2021 and liquidated on April 8, 2022 and April 29, 2022. The CT74-X was liquidated under heading 8543, HTSUS, specifically under subheading 8543.70.99, HTSUS (2020 and 2021) [Footnote 1: Subheading 8543.70.99, HTSUS (2020 and 2021), was renumbered to 8543.70.98, HTSUS, in January 2022. The relevant tariff language did not change.], 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.” As a product of China, the CT74-X was also classified under heading 9903.88.02, HTSUS.

On August 31, 2022, Protestant filed the instant Protest and AFR. Protestant argues the CT74-X is properly classified, as entered, under heading 8471, HTSUS, specifically subheading 8471.49.00, HTSUS, which provides for “Automatic 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: Other automatic data processing machines: Other, entered in the form of systems.”

Whether the CT74-X Electronic Time Clock is properly classified as an automatic data processing (ADP) machine under heading 8471, HTSUS, or as an other electrical machine or apparatus having an individual function under heading 8543, HTSUS.

A decision on classification and the rate and amount of duties chargeable is a protestable matter under 19 U.S.C. §1514(a)(2). The subject Protest was timely filed on August 31, 2022, within 180 days of liquidation of the entry, pursuant to 19 U.S.C. § 1514(c)(3). Further Review of Protest No. 1704-22-105446 is properly accorded pursuant to 19 CFR § 174.24(c), because the decision against which the protest was filed involves matters previously ruled upon by U.S. Customs and Border Protection (CBP), but facts are alleged or legal arguments presented as justification for which were not considered at the time of the original ruling. The Protestant contends the CT74-X is distinguishable from the biometric devices in CBP Ruling Letter (HQ) H310654 [Footnote 2: HQ H310654 was the basis for CBP’s classification of the merchandise under heading 8543, HTSUS, as explained in its CF 29 Notice of Action. The biometric devices in HQ H310654 are described as follows: According to the submission, the names of the products imported by Protestant vary depending on the product type. The items are the interface for the customers of Protestant’s clients, who develop systems that capture various types of data from their actual end-users. The captured data could be whatever clients deem necessary to provide the functionality their system offers, based on the market niche, application, or other parameters determined during product review and deployment. The products are used to verify the identity of a person using biometrics (such as fingerprint or facial recognition); end-user card swipes using a built-in card reader; or capturing data that end-users enter or input into the device. The collected data is sent to the client's host application, which provides integration and communication from the data collection device to their system. Protestant indicates that each device has an operating system like Unix, Android, or Windows. Protestant’s software client can write its own application for the device to communicate with their specific software, which is either located to their end-user customers' locations or hosted in the Cloud.], dated May 18, 2021, which were classified under heading 8543, HTSUS, because the CT74-X is not merely a data collection machine, but a data processing machine.

Classification under the HTSUS is in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods is determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event 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 will then be applied in order.

The 2020 and 2021 HTSUS provisions at issue are:

Note 5 [Footnote 3: Note 5 to Chapter 84 was renumbered as Note 6 in January 2022. The relevant tariff language did not change.] to Chapter 84, in relevant part, provides:

Subheading Note 2 to Chapter 84, HTSUS, provides:

For the purposes of subheading 8471.49, the term "systems" means automatic data processing machines whose units satisfy the conditions laid down in note 5(C) to chapter 84 and which comprise at least a central processing unit, one input unit (for example, a keyboard or a scanner), and one output unit (for example, a visual display unit or a printer).

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The EN to heading 8543, HTSUS, incorporates the EN to heading 8479, HTSUS, which states:

For this purpose the following are to be regarded as having an individual function:

a. Is distinct from that which is performed by the machine or appliance whereon they are to be mounted, or by the entity wherein they are to be incorporated, and

b. Does not play an integral and inseparable part of the operation of such machine, appliance, or entity.

The CT74-X is not an ADP machine of heading 8471, HTSUS, because it does not satisfy the criteria of Note 5(A) to Chapter 84, HTSUS. The CT74-X is an electronic time clock that verifies the identity of an employee using biometrics (i.e. facial recognition), RFID card reading, or a PIN number, then sends the collected timekeeping data to PayClock Online, an online, cloud-based proprietary program. The CT74-X requires connectivity to PayClock Online to function as intended, with PayClock Online performing any data processing or storage. In essence, the CT74-X is a terminal with the primary function of data collection. Therefore, the CT74-X is not freely programmable due to its dependency on connectivity to PayClock Online and, consequently, is not classifiable as an ADP machine under heading 8471, HTSUS.

The CT74-X is also not an ADP system of heading 8471, HTSUS. An ADP system, pursuant to Note 5(B) and Subheading Note 2 to Chapter 84, HTSUS, must “consist[] of a variable number of separate units,” which “satisfy the conditions laid down in note 6(B) to chapter 84” including “a central processing unit, one input unit . . . and one output unit.” The CT74-X fails to satisfy Note 5(B) because it is a standalone device and, as such, not comprised of multiple units. Therefore, the CT74-X cannot be classified under 8471, HTSUS, as an ADP system.

The Protestant contends the CT74-X is distinguishable from the biometric devices in CBP Ruling Letter (HQ) H310654 [Footnote 5: HQ H310654 was the basis for CBP’s classification of the merchandise under heading 8543, HTSUS, as explained in its CF 29 Notice of Action. The biometric devices in HQ H310654 are described as follows: According to the submission, the names of the products imported by Protestant vary depending on the product type. The items are the interface for the customers of Protestant’s clients, who develop systems that capture various types of data from their actual end-users. The captured data could be whatever clients deem necessary to provide the functionality their system offers, based on the market niche, application, or other parameters determined during product review and deployment. The products are used to verify the identity of a person using biometrics (such as fingerprint or facial recognition); end-user card swipes using a built-in card reader; or capturing data that end-users enter or input into the device. The collected data is sent to the client's host application, which provides integration and communication from the data collection device to their system. Protestant indicates that each device has an operating system like Unix, Android, or Windows. Protestant’s software client can write its own application for the device to communicate with their specific software, which is either located to their end-user customers' locations or hosted in the Cloud.], dated May 18, 2021, which were classified under heading 8543, HTSUS. Specifically, the Protestant argues that the CT74-X is not merely a data collection machine, but a data processing machine. [Footnote 6: Protest Memorandum, pages 9-10.] However, we note that the functions performed by the CT74-X, including biometric facial recognition, RFID card reading, and access control are very specific functions that are not data processing functions and fall outside the scope of heading 8471, HTSUS. See HQ W968259, dated August 29, 2006 (biometric door access system was classified in heading 8543, HTSUS) and New York Ruling N328964, November 10, 2022 (biometric scanner that included with facial recognition scanner and RFID reader was classified in subheading 8543, HTSUS).

Based on the previously detailed description of the merchandise, the CT74-X is properly classified under heading 8543, HTSUS. The CT74-X is an electrical machine with an individual function, namely data collection, that is not provided for elsewhere in the HTSUS. The ENs for heading 8543, HTSUS, also support finding the CT74-X’s data collection capabilities as its individual function as it “perform[s] [the function] distinctly from and independently of any other machine or appliance.” Therefore, the CT74-X is correctly classified under heading 8543, HTSUS.

By application of GRIs 1 and 6, the CT74-X Electronic Time Clock will be classified under 8543.70.99, HTSUS (2020 and 2021), 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 general, column one rate of duty is 2.6%.

Pursuant to U.S. note 20 to subchapter III, chapter 99, HTSUS, products of China classified under subheading 8543.70.99, HTSUS, unless specifically excluded, were subject to an additional 25 percent ad valorem rate of duty. As such, the subject merchandise is properly classified under heading 9903.88.02, in addition to subheading 8543.70.99, HTSUS, listed above.

This ruling does not address the applicability of any additional duties that may apply to the goods discussed herein. Likewise, 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 at www.usitc.gov.

You are instructed to notify the Protestant of this decision no later than 60 days from the date of this decision. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to this notification. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/, or other methods of public distribution.

Sincerely, for Yuliya A. Gulis, Director Commercial and Trade Facilitation Division