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HQ 955743

May 25, 1994

CLA-2 CO:R:C:M 955743 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8529.90.43

Ms. Sandra Liss Friedman
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016

RE: Television Chassis; Printed Circuit Board Assemblies; Chapter 85, Additional U.S Notes 4(a) and 10; 8528.10.08; 8529.90.06; NAFTA; General Notes 12(b)(i) and (ii)(A), and 12(t)/85.97; Change in Tariff Classification

Dear Ms. Friedman:

This is in response to your letter of January 14, 1994, on behalf of Toshiba America Consumer Products, Inc., concerning the applicability of the North American Free Trade Agreement (NAFTA) and classification of television chassis under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

You describe the operations performed in Mexico as follows:

The assembly of the television chassis in Mexico begins with the inspection of the materials received from the suppliers. The parts are classified for distribution to five different processes, which are: auto insertion shop; preliminary shop; unit shop; chassis shop; and finished goods shop. Each of these process areas performs different operations in the production of the television chassis.

In the auto insertion shop, eyelets (averaging 54 in number) are pressed into a printed circuit board (PCB), and approximately 900 electronic components are inserted and clinched onto the PCB, including jumpers, resistors, capacitors, coils, transistors, and diodes. These operations are performed by axial and radial machines. After inspection, conducted on an automatic parts checking machine, this subassembly is sent to the main production line in carton boxes.

In the preliminary shop, electronic components, which cannot be mounted directly onto the PCB, are lead trimmed and shaped either manually or by automatic forming machines. Wires are cut to size and stripped, and leads are preassembled to the holders.

In the unit shop, 300 electronic components, including the tuner, flyback transformer integrated circuits, are hand inserted into the chassis. The chassis are then subjected to wave- soldering, solder touch-up, lead dressing, visual inspection, inspection on an "in-circuit tester", reception adjustments, deflection adjustments, and checking. The merchandise is then transferred to the chassis line.

On the chassis line, the chassis frame, antenna terminal board, and power cord are assembled. The leads are dressed, and the chassis is passed through the "final inspection tester".

Thereafter, the chassis are packed on a tray, placed on a pallet, which forms a skid, and sent to the finished goods warehouse. The skid is then stretch film wrapped, put into a container, and exported to the U.S.

You also state the following concerning the origin of the chassis components. Many of the components which are part of the television chassis are imported into Mexico from other countries. These components are separately imported from various areas around the world. Because the parts are not entered together and in kits, they will not constitute unfinished and unassembled television chassis upon importation into Mexico.

In addition, four types of PCB subassemblies for use in the television chassis are imported from Japan. Specifically, you describe these subassemblies as follows: they consist of the Picture Intermediate Frequency/Sound Intermediate Frequency/Multi- Television Sound (PIF/SIF/MTS), the PIF/SIF, the Picture-in- Picture (PIP) pre-assembly, and the Digital Sound Processing (DSP) pre-assembly. The PIF/SIF/MTS separates the video and audio from the intermediate frequency signal. The PIF/SIF is the same as the PIF/SIF/MTS without the MTS. The PIP pre-assembly generates a small picture within the main television screen, allowing the viewer to watch two screens simultaneously. The DSP pre-assembly processes audio signals to create the ambiance and acoustics of four different environments: movie theater; night club; concert hall; and stadium.

The subheadings under consideration are as follows:

8528.10.08: [t]elevision receivers (including video monitors and video projectors), whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus: [c]olor: [i]ncomplete or unfinished (including assemblies for television receivers consisting of all the parts specified in additional U.S. note 10 to this chapter plus a power supply, and assemblies for video monitors and video projectors consisting of the parts specified in subparagraphs (a), (b), (c), and (e) in additional U.S. note 4 to this chapter plus a power supply), not incorporating a cathode-ray tube, flat panel screen or similar display device: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 5 percent ad valorem.

8529.90.43: [p]arts suitable for use solely or principally with the apparatus of headings 8525 to 8528: [o]ther: [c]ombinations of parts specified in additional U.S. note 10 to this chapter:
[s]ubassemblies, for color television receivers, containing two or more printed circuit boards or ceramic substrates with components assembled thereon, except tuners or convergence assemblies: [e]ntered with components enumerated in additional U.S. note 4 to this chapter.

The general, column one rate of duty for goods classifiable under this provision is 5 percent ad valorem.

ISSUES:

Whether the television chassis are classifiable under subheading 8528.10.08, HTSUS, as other unfinished television receivers, or under subheading 8529.90.43, HTSUS, as subassemblies for color television receivers.

Whether the chassis are eligible for preferential tariff treatment under the NAFTA.

LAW AND ANALYSIS:

CLASSIFICATION

Classification of merchandise under the HTSUS is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes.

Chapter 85, additional U.S. note 10, HTSUS, states that:

[s]ubheadings 8529.90.29, 8529.90.33, 8529.90.36 and 8529.90.39 cover the following parts of television receivers (including video monitors and video projectors):

(a) Video intermediate (IF) amplifying and detecting systems;

(b) Video processing and amplification systems;

(c) Synchronizing and deflection circuitry;

(d) Tuners and tuner control systems; and

(e) Audio detection and amplification systems.

You state that the deflection yoke, which is an integral part of deflection circuitry, is not imported with the television chassis but is added to the chassis in the U.S. Because the television chassis are imported without complete deflection circuitry, they are not classifiable under subheading 8528.10.08, HTSUS, which requires assemblies classifiable in that provision to consist of all the parts listed in chapter 85, additional U.S. note 10, HTSUS.

Chapter 85, additional U.S. note 4(a), HTSUS, states that:

[f]or the purposes of . . . 8529.90.43 . . . :

(a) Each subassembly that contains as a component, or is covered in the same entry with, one or more of the following television components, viz.,
tuner, channel selector assembly, antenna, deflection yoke, degaussing coil, picture tube mounting bracket, grounding assembly, parts necessary for fixing the picture tube or tuner in place, consumer-operated controls or speaker
shall be classified in subheading . . . 8529.90.43 . . . as appropriate . . .

The subject television chassis consist of PCBs and several of the items enumerated in chapter 85, additional U.S. note 4(a), HTSUS. The chassis contain the electronic circuitry for reception, sound, channel selection, and tuning, specifically containing the tuner, the channel selector assembly, and the antenna terminal board. Therefore, it is our position that the television chassis, which contain Japanese PCBs, specifically meet the terms of subheading 8529.90.43, HTSUS, and are so classifiable.

NAFTA APPLICABILITY

To be eligible for tariff preferences under the NAFTA, goods must be "originating goods" within the rules of origin in General Note 12(b), HTSUS. General Notes 12(b)(i) and (ii)(A) state:

[f]or the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if --

(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that --

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein . . .

Because the television chassis contain parts from countries other than Mexico, Canada, and/or the U.S., General Note 12(b)(i), HTSUS, does not apply. Therefore, we must resort to General Note

General Note 12(t)/85.97, HTSUS, states:

[a] change to tariff items 8529.90.43 . . . from any other tariff item.

Therefore, any non-originating materials of the television chassis must come from a tariff item other than subheading 8529.90.43, HTSUS. The non-originating PCBs are classifiable under subheading 8529.90.06, HTSUS, which provides for:

[p]arts suitable for use solely or principally with the apparatus of headings 8525 to 8528: [o]ther: [p]rinted circuit assemblies: [o]f television apparatus: [p]rinted circuit boards and ceramic substrates with components assembled thereon, for color television receivers; subassemblies containing one or more of such boards or substrates, except tuners or convergence assemblies: [o]ther.

Consequently, a change in tariff classification does occur. We also note that the many non-originating components, other than the PCBs, referred to earlier are classifiable under provisions other than subheading 8529.90.43, HTSUS, and meet the terms of General Note 12(t)/85.97, HTSUS. Therefore, the television chassis incorporating the non-originating PCBs and the other non- originating components are eligible for preferential tariff treatment under the NAFTA.

HOLDING:

The television chassis are classifiable under subheading 8529.90.43, HTSUS, as subassemblies for color television receivers.

The television chassis are eligible for preferential tariff treatment under the NAFTA.

Sincerely,

John Durant, Director

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