CIT Rules on System to Manufacture CDs and DVDs
In Zomax Optical Media, Inc. v. U.S., the Court of International Trade (CIT) considered the classification of a digital mastering system imported in 1997 to manufacture CDs and DVDs that was purchased as a single operating unit under a single commercial invoice but was split by the carrier during shipment. The CIT concurred with Zomax that the system was properly classified under HTS 8479.89.85 as a machine for the manufacturing of video laser discs (duty-free).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The government had argued that classification for this machinery was improper for various reasons, including: (1) as it entered the U.S. in separate shipments its "condition as imported" was not in keeping with HTS 8479.89.85, (2) the merchandise as imported did not constitute a "complete system," and (3) CDs and DVDs are not video laser discs, and therefore the system makes "masters," not CDs and DVDs. The CIT rejected these and other arguments.
First, with respect to Customs argument about the machine's condition as imported, the CIT states that in the past Customs has at some ports invoked the "condition as imported" rule to require the separate classification of shipments that were split by the carrier; however, at other ports (e.g, LA Xand JFK Airports) Customs treated split shipments as a single entry for purposes of classification. Moreover, the CIT notes that 19 USC 1484(j)(2) was promulgated in 2000 to ensure that split shipments were classified pursuant to the importer's intention.
Secondly, the CIT rejects the argument that the machine is not complete because it lacks, among other things, a laser which is replaced every six months or so. The CIT states that, even assuming for argument's sake, that the system were incomplete, it would nevertheless be classifiable as though it were complete pursuant to General Rule of Interpretation (GRI) 2(a), which provides that merchandise consisting of either a complete article entered in an "unassembled" state or an unfinished article that has the "essential character" of the complete article is classified under the same tariff provision as the complete, assembled article.
In response to Customs' third argument, the CIT explains that the tariff term "video laser discs" encompasses CDs and DVDs with video content. In addition, CIT notes that "masters" are simply the original recorded discs from which copies are made for commercial distribution. (Slip Op. 05-44, dated 04/01/05, available at http://www.cit.uscourts.gov/slip_op/Slip_op05/05-44.pdf)
Zomax is currently known as Zomax Incorporated.