HQ 086171: Protest 2904-8-000195, Code-A-Phone telephone answering machines

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 086171

                         March 22, 1990

CLA-2 CO:R:C:G  086171  JMH

CATEGORY:  Classification

TARIFF NO.:  685.40, 684.58

District Director
U.S. Customs Service
511 N.W. Broadway Fed. Bldg.
Suite 198
Portland, OR  97209

RE:  Protest 2904-8-000195, Code-A-Phone telephone answering
     machines

Dear Sir:

     The following is our decision regarding the Protest for
Further Review No. 2904-8-000195, dated October 7, 1988.  At
issue is the classification under the Tariff Schedules of the
United States (TSUS) of Entry No. 062-2017327-9, which consists
of Code-A-Phone Model 2650 telephone answering machines.

FACTS:

     The U.S. Customs Service issued  Headquarter's Ruling
Letter 052602 (HQ 052602), dated August 9, 1977, to Ford
Industries, now Code-A-Phone.   HQ 052602 classified the Code-A-
Phone Model 1600 telephone/telephone answering machine under item
685.40, TSUS, as "[t]ape recorders and dictation recording and
transcribing machines..."

     The functions of the Code-A-Phone Model 1600 include those
of a regular telephone along with the abilities to answer an
incoming call, transmit a prerecorded announcement, and record a
message dictated by the calling party.  Model 1600 has a capacity
to receive 20 calls at a length of 30 seconds each.  Other
functions include fast forward, reverse, the monitoring of
incoming messages, and remote access to messages by using a
beeper device.

     The shipment in question, Entry No. 062-2017327-9, was
entered on May 25, 1988.  The shipment consisted of Code-A-Phone
Model 2650 telephone answering machines.  Code-A-Phone Model 2650


                               -2-


includes the following features:  dual recording on
microcassettes, one-touch message playback, voice activated
recording, conversation record, call screening, personal memo,
fast forward, reverse, blinking message counter, ten-number
speed dialer, last number redial, programmable pause, tone or
pulse dialing, ringer volume control, beeperless remote control,
repeat, toll saver, remote announcement change, remote turn on,
save or cancel messages, security code, and announcement
breakthrough.

     During the ten years and nine months between the issuance of
HQ 052602 and the present entry, at least fifteen models of Code-
A-Phone telephone/telephone answering machines were entered and
classified under item 685.40, TSUS.  This progression of entries
evidences a continual advancement in style and technology.

     The first notice received by Code-A-Phone of a modification
of the classifiication of these articles and a subsequent
increase in duty was a U.S. Customs Service Form 29 Notice of
Action, dated June 27, 1988.  This Notice of Action informed
Code-A-Phone that the classification of telephone answering
machines had been modified to item 684.58, TSUS.  This item
describes "[t]elephone sets and other terminal equipment and
parts thereof..."

     This change in tariff classification first occurred in
Headquarters Ruling Letter 553975 (HQ 553975), dated March 10,
1986.  HQ 553975 was issued to Phone-Mate Inc..  The ruling
classified models of telephone/telephone answering machines
similar to the Code-A-Phone Models 1600 and 2650 within item
684.58, TSUS.  This ruling was challenged in the Court of
International Trade.  In Phone-Mate, Inc. v. United States, 690
F. Supp. 1048 (CIT 1988), affirmed 867 F.2d 1404 (Fed. Cir.
1989), the Court ruled that telephone/telephone answering
machines are properly classified within item 684.58, TSUS.  This
case was published in the Customs Bulletin, Vol. 22, No. 32, p.
42, on August 10, 1988.

     Consequently, your office classified Entry No. 062-2017327-9
under item, 684.58, TSUS, the heading for telephone apparatus.
Item 685.40, TSUS, dictates a rate of duty of 3.9% ad valorem,
while item 684.58, TSUS, requires a rate of duty of 8.5% ad
valorem.  It is from this action the instant protest was filed.

ISSUE:

     Whether Entry No. 062-2017327-9 should be classified under
item 685.40, TSUS, as "[t]ape recorders and dictation recording
and transcribing machines..." in accordance with HQ 052602, or
whether the entry should be classified under item 684.58, TSUS,

                               -3-


as "[t]elephone sets and other terminal equipment and parts
thereof..." in conformity with the U.S. Customs Service present
position.

LAW AND ANALYSIS:

     Section 177 of the Customs Regulations governs
administrative rulings.  19 C.F.R. 177 (1989).  A ruling letter
issued by Customs Headquarters represents the official position
of the Customs Service regarding the circumstances of that
ruling.  Such a ruling is binding upon all Customs personnel
until notice of revocation or modification.  19 C.F.R. 177.9(a)
(1989).  A ruling letter applies not only to the merchandise
which was the subject of the ruling, but also to all articles
identical to those of the ruling and all articles with identical
descriptions to those in the ruling.  19 C.F.R. 177.9(b)(2)
(1989).

     Should the position taken by the Customs Service change,
notice must be given to the person to whom the original ruling
was addressed.  19 C.F.R. 177.9(d)(1) (1989).

     The modification or revocation of a ruling letter will
     not be applied retroactively with respect to the person
     to whom the ruling was issued, or to any person
     directly involved in the transaction to which that
     ruling related... 19 C.F.R. 177.9(d)(2) (1989).

     Where a modification or revocation of a ruling letter will
change a practice or position of the Customs Service, resulting
in a higher rate of duty, such change must be printed in the
Federal Register and interested parties must be afforded an
opportunity to comment.  19 C.F.R. 177.10(c)(1) (1989).

     When a judicial change in a tariff classification occurs
which is favorable to the Government, the decision must be
applied to all merchandise which is similar to the subject of
the court case.  However, the court decision's principles may
only be applied after thirty days from the date of the decision's
publication in the Customs Bulletin.  19 C.F.R. 152.16(b) (1989).

     HQ 052602 was issued by Headquarters and represented the
official position of the Customs Service in 1977.  The ruling
concerned only Model 1600 telephone/telephone answering machine,
but was applied for over ten years to other telephone/telephone
answering machines imported by Code-A-Phone.  The model at issue,
Model 2650, has the same features as Model 1600.  Although the
original features are advanced and additional functions have
been included, the description of the Model 2650 is not
materially different from the description of Model 1600.

                               -4-


     On March 10, 1986, the Customs Service modified its
position regarding the classification of telephone answering
machines within HQ 553975, the Phone-Mate ruling.  This change
occurred in a ruling addressed to another party.  The ruling was
not published in the Customs Bulletin.  Therefore, Code-A-Phone
did not receive the required notice and HQ 553975 could not bind
Code-A-Phone.

     Code-A-Phone's shipment of Model 2650 telephone answering
machines was entered on May 25, 1988, prior to the receipt of any
notice regarding the change in tariff classification.  The first
notification received by Code-A-Phone was dated June 27, 1988.
To apply this notice to the May 25, 1988, shipment would be a
retroactive application which is prohibited by the Customs
Regulations. 19 C.F.R. 177.9(d)(2).

     Furthermore, despite the judicial approval that the
modification received in Phone-Mate Inc. v. United States, 690 F.
Supp. 1048 (CIT 1988), the court decision was not published in
the Customs Bulletin until August 10, 1988.  This decision was
not applicable to similar merchandise for thirty days after the
date of publication, approximately September 10, 1988.  To bind
Code-A-Phone's May entry to a decision unenforceable until
September is a retroactive application of the law, which is
prohibited.  19 C.F.R. 152.16(b).

     It is the decision of this office that HQ 052602 governs
Entry No. 062-2017327-9.  The proper classification for the
Code-A-Phone Model 2650 telephone answering machines entered on
May 25, 1988, is under item 685.40, TSUS, as "[t]ape recorders
and dictation recording and transcribing machines..."  Only
shipments entered after Code-A-Phone received notice of the
modification are classified under 684.58, TSUS.

HOLDING:

     The classification of Entry No. 062-2017327-9, a shipment of
Code-A-Phone Model 2650 telephone answering machines, under item
684.58, TSUS, as "[t]elephone sets and other terminal equipment
and parts thereof..." is a retroactive application of both
Customs's modified position and the judicial change in tariff
classification.  Both retroactive acts are prohibited.

     The proper classification for Entry No. 062-2017327-9 is
under item 685.40, TSUS, as "[t]ape recorders and dictation
recording and transcribing machines..."

     The present position of the Customs Service is that
telephone/telephone answering machines are classified under item
item 684.58, TSUS, as "[t]elephone sets and other terminal
equipment and parts thereof..."
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     The protest should be granted.  A copy of this decision
should be forwarded to the protestant with the Form 19, grant of
protest.

                              Sincerely,


                              John Durant, Director
                              Commercial Rulings Division