Customs classification of IP phones turns on essential telephony function and specificity of tariff entry.

Imported CISCO IP Phones were held classifiable as telephone sets of push-button type under Customs Tariff Item 8517 18 10 rather than as other apparatus under Customs Tariff Item 8517 62 90. Classification had to follow the tariff headings, Section and Chapter Notes, and the General Rules for Interpretation. The goods were treated as complete telephone instruments with handset, keypad, display and speaker, whose internet-based protocol did not alter their essential telephony function. Applying the rule of specificity, the more specific telephone-set entry prevailed over the residuary communication-apparatus entry. The coordinate-bench decision on video conferencing equipment was distinguished on facts.

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Issues: Whether imported CISCO IP Phones were classifiable under Customs Tariff Item 8517 18 10 as telephone sets of push-button type, or under Customs Tariff Item 8517 62 90 as other apparatus for transmission or reception of voice, images or other data.

Analysis: Classification under the Customs Tariff must be determined by the terms of the tariff headings and the General Rules for Interpretation, read with the relevant Section and Chapter Notes. Heading 8517 covers both telephone sets and other communication apparatus, so the dispute turned on the proper sub-heading. The imported goods were found to be complete telephone instruments with handset, keypad, display, speaker and functions directed to voice communication. Their internet-based protocol did not change their essential nature or principal function as telephony. Applying the rule of specificity, the entry for telephone sets of push-button type was held to be more specific than the residuary entry for other apparatus. The relied-upon coordinate-bench decision concerning video conferencing equipment was distinguished on facts.

Conclusion: The imported IP Phones were classifiable under Customs Tariff Item 8517 18 10 and not under Customs Tariff Item 8517 62 90. The classification adopted by Revenue was rejected.

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