In ruling NY N324883 (April 15, 2022), Customs and Border Protection (CBP) discussed the tariff classification of a wireless intercom headset system from China. The item, referred to as the “Solidcom C1 full-duplex wireless intercom headset system,” is compromised of up to 8 wireless headsets and a HUB station. The audio communication between the headsets is achieved by wirelessly sending voice data from one headset to the HUB station, which then forwards said voice data to the rest of the headsets that are also paired to the HUB station. The voice communication within the system uses a closed network that allows only the paired headsets to transmit voice signals. This is accomplished through the HUB station which encrypts the voice data using AES 128-bit encryption. The system uses radio frequency bands between 1,880 MHz and 1,900 MHz – depending on the country or region – with up to 1,000 feet of transmission range.
The headsets and the HUB station are designed to be used together and are regarded as a functional unit. CBP noted in its ruling that classification of these two items is governed by Note 4 of Section XVI of the Harmonized Tariff Schedule of the United States (HTSUS), which states that “where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.” Based on the above description, the wireless headsets and the HUB station work together to the clearly defined function of transmitting encrypted voice signals in a closed network. As such, CBP determined that the applicable subheading for the wireless intercom headset system was 8517.62.0090, HTSUS, which provides for “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…: Other apparatus for 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): Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: Other”. The general rate of duty is free.
Additionally, pursuant to U.S. Note 20 to Subchapter III, Chapter 99, HTSUS, Chinese products under subheadings 8517.62.0090, HTSUS, unless specifically excluded, are subject to an additional 7.5% ad valorem duty rate. As such, the chapter subheading 9903.88.15 must be reported in addition to subheading 8517.62.0090, HTSUS.