February 10, 2010 CBP Bulletin Notice on Classification of Certain Multifunctional Digital Cameras

Proposed revocation of rulings; proposed revocation of treatment. CBP is proposing to revoke three rulings on the classification of certain JVC multifunctional digital cameras. Additionally, CBP proposes that this notice covers any rulings on this merchandise that may exist but have not been specifically identified. CBP is also proposing to revoke any treatment it has previously accorded to substantially identical transactions.

CBP states that any party who has received an interpretive ruling or decision on the merchandise that is subject to the proposed revocations, or any party involved with a substantially identical transaction, should advise CBP by March 12, 2010, the date that written comments on the proposed ruling are due. Furthermore, CBP states that an importer's failure to advise CBP of such rulings, decisions, or substantially identical transactions may raise issues of reasonable care on the part of the importer or its agent for importations subsequent to the effective date of the final decision in this notice.

Multifunctional digital cameras. The merchandise is identified as JVC Everio cameras, model GZ-MC500US, GZ-MG30US, and GZ-MG20US. Model GZMC500US was described as follows: The camera captures and stores up to 9,999 digital still images and up to sixty minutes of video. It employs three CCDs combined with advanced 5-mega-pixel shift technology. The camera can be connected to a PC and or television/monitor for viewing of images. The thousands of still images are stored as JPEG files and can also be directly connected to a printer for image reproduction.

Model GZ-MG30US was described as a digital camera that can capture and store nearly 10,000 digital still images to an internal 30GB hard disk drive with the capability for recording seven hours of DVD-quality video. This camera, which has a 2 inch LCD screen for easy viewing of still images, allows for five different modes (from sport to portrait settings) to capture optimal quality still photos; there is also a choice of four recording modes that allows the user to choose between more shooting time or higher quality. This camera can be connected to a television for viewing, a VCR/DVD recorder for recording onto a video tape or DVD, a printer to print still image photos, a computer for data transfer, or JVC's Everio Share Station which allows the user to burn images directly onto a DVD. It is also stated that all of the digital camera's capabilities are advertised equally on the good's packaging.

Model GZ-MG20US was described as having the same features as the GZ-MG30US, except that the GZ-MG20US had an internal 20 GB hard disk drive with the capacity for recording nearly 4 hours of DVD movie-quality video.

CBP is proposing to issue HQ H046643 in order to revoke NY R04381, NY R04507, and NY R04505 and reclassify the multifunctional digital cameras under HTS 8525.80.50 as "Television cameras, digital cameras and video camera recorders: Television cameras, digital cameras and video camera recorders: Other," rather than under HTS 8525.40.40 (now 8525.80.40) as "Television cameras; still image video cameras and other video camera recorders; digital cameras: Still image video cameras and other video camera recorders; digital cameras: Digital still image video cameras."

CBP proposes this change as a correction. The cameras at issue have the functionality of digital still image video cameras of subheading 8525.80.40 and of other cameras of subheading 8525.80.50. As a result, they meet the description of composite machines provided in Note 3 to Section XVI and must be classified according to their principal function.

CBP has found the analysis developed and utilized by the courts in relation to "principal use" (the "Carborundum factors") to be a useful aid in determining principal function. Generally, the courts have provided several factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. They include: (1) general physical characteristics, (2) expectation of the ultimate purchaser, (3) channels of trade, environment of sale (accompanying accessories, manner of advertisement and display), (4) use in the same manner as merchandise which defines the class, (5) economic practicality of so using the import, and (6) recognition in the trade of this use.

These cameras are able to function as both digital "point and shoot" cameras and as camcorders, and these functions have been extensively reviewed by the electronics industry. CBP quotes several reviews (see bulletin for details) which reveal that, based on the physical characteristics of the cameras, the electronics industry considers these cameras to be principally camcorders that are also capable of taking still images.

Based on the above-mentioned electronics industry assessments that the cameras at issue produce fair to poor quality still images but "excellent" video recordings, CBP finds that it would be economically impractical to purchase these cameras primarily for their still image functionality. Accordingly, CBP finds that that the economic practicality factor favors classification as other than as a digital still image video camera.

CBP's Carborundum analysis indicates that these cameras do not principally function as still image cameras. In particular, CBP refers to the fact that industry reviews of the cameras, which are based on their physical characteristics, all highlight the shortcomings of their still image function. In light of these reviews and given the cost of the cameras, CBP finds that it would be economically impractical to purchase such expensive cameras primarily for their still image function. CBP finds these factors to be persuasive evidence under a Carborundum analysis that the cameras at issue principally function as other than digital still image video cameras of subheading 8525.80.40

Furthermore, CBP notes that the ruling requestor provided information claiming that "the cameras in question contain no feature that predominates over any other feature to suggest that one capability constitutes the principal function," and therefore by the requestor's own admission, the cameras at issue are precluded from being classified as digital still image cameras.

CBP proposes that the JVC cameras at issue were erroneously classified as digital still image video cameras because they do not principally function as such. Accordingly, they must be classified in subheading 8525.80.50, as "other" than digital still image cameras of subheading 8525.80.40.

CBP now proposes that by application of GRI 1 and Note 3 to Section XVI, HTSUS, the JVC multifunction digital cameras, models GZ-MC500US, GZ-MG30US and GZ-MG20US, are classified in subheading 8525.80.50 which provides for: "Television cameras, digital cameras and video camera recorders: Television cameras, digital cameras and video camera recorders: Other."

Proposed: 8525.80.50, 2.1%; Current: 8525.80.40, duty-free

February 10, 2010 CBP Bulletin (Vol. 44, No. 7) available at: http://www.cbp.gov/xp/cgov/trade/legal/bulletins_decisions/bulletins_2010/Vol.%2044%20February%2010,%202010,%20No.%2007/