CIT Finds Audio Consoles are Electrical Machinery; Rules on HTS Definition of 'Work in Conjunction'
“Control surfaces” used by professionals in the audio industry to record and edit music are not classifiable in the tariff schedule as automatic data processing machines, ruled the Court of International Trade on Jan. 22 (here). The consoles imported by Digidesign have functions other than sending signals or data to a computer, like adjusting signals fed in by microphones. They also “work in conjunction” with the automatic data processing machine, defined in CIT’s ruling as “functioning or operating in a specified manner while joined together for a common purpose.” Meeting both the conditions of a note to chapter 84, the consoles are excluded from classification as automatic data processing machines, and are instead classifiable as “other” electrical machinery, said CIT.
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Digidesign’s “Control 24” and “002 Factory” music consoles allow users to edit and mix music in digital format on a computer’s hard drive with switches, faders and knobs. Both machines are connected by a cable to a computer that has been loaded with Digidesign’s Pro Tools software system. No recording, editing or mixing occurs on the consoles themselves. Instead, when the user manipulates a key, fader or knob, a signal is sent to the computer. Each of the consoles also performs certain functions not related to telling the computer what to do, however. Both have premixers that allow the user to manipulate audio inputs before being sent to the computer. They also both have speakers, headphones, and LEDs that gives feedback to the user in the control room.
CBP liquidated the music consoles under HTS heading 8471 as “electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter,” imposing a 2.6% duty. Digidesign protested, arguing the consoles were elsewhere specified or included in heading 8471 as units of automatic data processing machines, and should enter duty free. CBP denied the protest, and Digidesign filed suit at CIT in 2008.
At the heart of the case were two notes to chapter 84 on the classification of automatic data processing machines. Note 5(B) says automatic data processing machines include systems consisting of separate units, and those units are considered part of a complete system if it is (a) principally used in an automatic data processing system; (b) connectable to the central processing unit; and (c) is able to accept deliver codes or signals that can be used by the system. However, Note 5(B) is limited by Note 5(E), which says “machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.”
CIT found that the consoles have functions other than data processing, as they include premixers and control room monitors. With the issue in dispute of whether the consoles are “working in conjunction with an automatic data processing machine,” CIT turned to dictionaries to define the phrase “working in conjunction” in the tariff schedule as functioning or operating in a specified manner while joined together for a common purpose.” Finding the Digidesign music consoles meet both requirements of Note 5(E) to Chapter 84, CIT ruled they cannot be classified as units of automatic data processing machines. With nowhere else to put them, it confirmed CBP’s initial classification as “other” electrical machinery under heading 8471.
(Digidesign, Inc. v. U.S., Slip Op. 15-06, #08-00331, dated 01/22/14, Judge Barzilay)
(Attorneys: Michael Horton for plaintiff Digidesign, Inc.; Joyce Branda for defendant U.S. government)