Friday, February 24, 2017

Ruling of the Week 2017.6: Printers vs. Printing Machines

This one will be quick, for lots of reasons. Mostly, I don’t have much to add to the ruling other than a question. The ruling at issue is HQ H128416 (Feb. 9, 2017). It involves the tariff classification of digital wide-format ink-jet printer used to print and cut vinyl graphics for outdoor advertising and similar applications.

The printer is a combination of a printing machine and a cutting machine. As such, the competing tariff provisions are in Heading 8443 (Printing machinery) and 8477 (Machinery for working rubber or plastic). That is the sole question addressed in the ruling.

To resolve the classification, Customs and Border Protection applied Note 3 to Section XVI of the HTSUS, which states in relevant part:

Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.

According to the importer, the principal function is printing, making the machine an article of 8433. Customs agreed, finding that the machine would not be used solely for cutting but that it might be used for printing without cutting. Customs examined the factors set out in United States v. Carborundum Co., 63 C.C.P.A 98, 536 F.2d 373 (1976), including physical characteristics, channels of trade, expectation of the ultimate purchaser, and recognition in the trade to ultimately agree that this machine is primarily a printer.

OK, so here’s my question: Why not consider this to be an 8471 unit of an automatic data processing machine? In other words, why is this ink-jet printer different than the ink-jet printer on my desk? The difference between 8471 printers and 8443 printing machines was discussed at length by the Court of International Trade in Xerox, which we reviewed here. The ruling states that these are “digital” printers. That means that they function in conjunction with a computer to translate digital data into signals to the printer. The only difference is that they print on large format plastic rather than on paper and they can cut the plastic. Once we determine that printing is the principal function, it seems to me that the cutting becomes irrelevant. What we know from Xerox is that large scale digital printing is still a data processing function. That would make these printers units of ADP machines of Heading 8471.

I am probably wrong for some factual reason not stated in the ruling. Heck, I may be wrong on the legal analysis. My analysis ends up with the potentially absurd result that all digital printers are ADP machines and 8443 printing machines would cover only Gutenberg-style presses and similar analog machines. It would be nice to know whether this was discussed and how it was decided that 8471 is not relevant.


Larry said...

From a reader . . .

I think you bring up a valid point: although perhaps not as ancient as Gutenburg.
I too am curious as to the discussion and if 8471 was addressed. As someone who is not in the printing or technology industry, it seems to me additional direction for use of 8471 or perhaps a review of the applicability in current state of technology is required.

When you mention ADP machines, I envisioned the olden days of business computing when reams of green bar paper automatically printed into boxes in the printer room. When a user submitted a report request and the IT department brought the 6 inch high stack of folded paper to you the next day.

The lines between Computing and Automatic Data Processing have blurred rapidly and is an area where regulations are hard pressed to keep up.

Excellent article as always - thank you.

Anonymous said...

I feel 8443 was the right choice as 8443.32.1040 is for ink jet printers capable of connecting to an automatic data processing machine or to a network.

Larry said...

To Anonymous, I get your point, but I am questioning whether it is still valid. It is correct that CBP has classified inkjet printers as printing machines of 8443. See, for example, NY L88419 (11/18/2005)( But, that was before the Xerox decision I mentioned in the post. After that decision, is it still true that a digital printer working in conjunction with an ADP machine, taking digital signals, and converting them to printed pages is a printing machine rather than a unit of an ADP machine? Note 5(e) needs to mean something. Also, the printer in this rulings, like the printer in the 2005 ruling did not print data on paper, it was a special purpose machine. I get that. But, I am not certain that the analysis is consistent with Xerox.