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HQ 956830



March 27, 1995

CLA-2 CO:R:C:M 956830 KCC

CATEGORY: CLASSIFICATION

TARIFF NO.: 8531.20.00

Ms. Betty Bell
Critikon, Inc.
4110 George Road
P.O. Box 31800
Tampa, Florida 33631-3800

RE: Display Panels for blood pressure monitors; substantial transformation; Texas Instruments; HRL 555706; C.S.D. 85-25; signaling apparatus; Additional U.S. Rule of Interpretation 1(a); principal use; EN 85.31; HRLs 954788, 953155, 952505, 951868, 952360, 951288, 955062, 954638; 8471.92.30; other display units without cathode-ray tube, having a visual display diagonal not exceeding 30.5 cm; 9813.00.05; temporary duty-free entry under bond

Dear Ms. Bell:

This is in response to your letter dated August 2, 1994, concerning the tariff classification of display panels under the Harmonized Tariff Schedule of the United States (HTSUS), and whether the display panels are substantially transformed into a product of the U.S. when incorporated into blood pressure monitors. Additional information obtained by telephone was considered in rendering this decision.

FACTS:

Your letter indicates that Critikon Inc. purchases foreign-origin electroluminescent display panels (display panels), 320X256 PART NUM 614165 and PART NUM 614186, from a U.S. company, Planar Systems, Inc. The display panels weigh two pounds and cost $360. These display panels are used in the manufacture of Critikon's "electronic blood pressure monitors" in the U.S. In a telephone conversation we were advised that the display panel is plugged into the blood pressure monitor with a connector.

Additional information obtained indicates that the display panels are used with apparatus which monitors more than blood pressure. The simplest apparatus monitors blood pressure and temperature, while the most sophisticated apparatus monitors blood pressure invasively and non-invasively, temperature and electrocardiogram (ECG).

Additionally, you state that the "electronic blood pressure monitors" are sold and exported abroad. If a display panel in an "electronic blood pressure monitor" does not function properly, it is removed from the monitor and returned to the U.S. for replacement. The defective panel is either destroyed or repaired and returned to stock. The display panels may or may not be under the manufacturer's warranty when they are returned to the U.S.

You claim that Planar Systems originally imports the display panels into the U.S. under subheading 8471.92.30, HTSUS, as other display units without cathode-ray tube, having a visual display diagonal not exceeding 30.5 cm.

ISSUE:

I. Is the display panel substantially transformed into a product of the U.S. when it is plugged into the blood pressure monitor?

II. What is the tariff classification of the display panel under the HTSUS when imported into the U.S.?

LAW AND ANALYSIS:

I. Substantial Transformation

Subheading 9801.00.10, HTSUS, provides for the free entry of products of the U.S. that have been exported and returned without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are satisfied. See 59 Fed. Reg. 25563 (May 17, 1994), for recent amendments to 19 CFR 10.1. While some change in the condition of the product while it is abroad is permissible, operations which either advance the value or improve the condition of the exported product render it ineligible for duty-free entry upon return to the U.S. Border Brokerage Company, Inc. v. United States, 314 F. Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).

For a foreign-origin product imported into the U.S. to be considered a product of the U.S., it must be substantially transformed in the U.S. A substantial transformation occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character, or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See, Texas Instruments v. United States, 681 F.2d 778, 782 (CCPA 1982).

In Headquarters Ruling Letter (HRL) 555706 dated May 3, 1991, it was held that light emitting diodes ("LEDs") imported from Mexico did not become products of the U.S. when they were combined with lamp strip assemblies. The processes performed in the U.S. to produce the lamp strip assemblies included the creation of a base which provided the electrical contacts to the LEDs. The base consisted of a series of metal electrical connections on a molded plastic structure. The LEDs were then extracted from magazines and connected to the base by bending and trimming the wires to fit the configurations of the base.

Referring to C.S.D. 85-25, 19 Cust.Bull. 544 (1985) (HRL 071827 of September 25, 1984), it was determined that there was no substantial transformation of the LEDs in the U.S. In C.S.D. 85-25, Customs held that an assembly process will not constitute a substantial transformation unless the operation is "complex and meaningful", which depends on the nature of the operation, including the number of components assembled, number of different operations involved, and whether a significant period of time, skill, detail and quality control are necessary for the assembly operation. In HRL 555706, it was held that the assembly operations were not complex in nature and did not require a significant period of time and skill to assemble the LEDs into the finished products. Moreover, the LEDs did not become new articles of commerce, with a new name, character or use, and the essential character and use of the imported LEDs was to function as signaling devices. After the lead wires of the LEDs were bent and trimmed and attached to the base, the essential character and use of the LEDs remained the same-- they were signaling devices. Accordingly, since the LEDs were not substantially transformed into products of the U.S., but rather remained products of Mexico, when they were subsequently shipped to Mexico for assembly into telecommunication products, the LEDs were not eligible for item 807.00, Tariff Schedules of the United States (TSUS) (the precursor tariff provision to subheading 9801.00.10, HTSUS), treatment, when the telecommunication products were imported into the U.S.

Similarly, in this case, we find that the display panel is not substantially transformed into a product of the U.S. when it is plugged into the blood pressure monitor. The display panel is only plugged into the blood pressure monitor with the use of a connector which is not a complex and meaningful assembly operation. This is especially evident from the fact that it can be easily unplugged if it is defective. Consequently, we find that when a defective display is returned to the U.S. for repair, it is not eligible for duty-free treatment under subheading 9801.00.10, HTSUS. However, we note that the display panels may be entered under subheading 9813.00.05, HTSUS, which provides for the temporary duty-free entry, under bond (TIB), for merchandise imported into the U.S. for the purpose of repair, alteration or processing. This provision requires that the imported merchandise be exported or destroyed within one year of the date of importation, and when the components are exported in accordance with subheading 9813.00.05, HTSUS, the bond will be canceled.

II. Tariff Classification

The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation (GRI's). GRI 1, HTSUS, states, in part, that "for legal purposes, classification shall be determined according to terms of the headings and any relative section or chapter notes...." The competing subheadings are:

8471.92.30 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included...Other...Input or output units, whether or not entered with the rest of a system and whether or not containing storage units in the same housing...Other...Display units...Without cathode-ray tube (CRT), having a visual display diagonal not exceeding 30.5 cm.

8531.20.00 Electric sound or visual signaling apparatus (for example, bells, sirens, indicator panels, burglar or fire alarms), other than those of heading 8512 or 8530; parts thereof...Indicator panels incorporating liquid crystal devices (LCD's) or light emitting diodes (LED's)....

We are of the opinion that the display panel is classified under subheading 8531.20.00, HTSUS, as indicator panels incorporating liquid crystal devices. Heading 8531, HTSUS, has been held to be a use provision. See, HRL 951288 dated July 7, 1992. Additional U.S. Rule of Interpretation 1(a), HTSUS, states that:

[A] tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.

Therefore, to be classified in this heading, the apparatus must be principally used for "signaling."

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be consulted. The ENs, although not dispositive nor legally binding, provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See, T.D. 89-80, 54 Fed. Reg. 35127, 35128, (August 23, 1989). EN 85.31 (pg. 1381) is fairly descriptive and restrictive as to the types of "signaling" indicator panels and the function they must perform in order to be classifiable in heading 8531, HTSUS. EN 85.31 states indicator panels and the like: "[a]re used (e.g., in offices, hotels and factories) for calling personnel, indicating where a certain person or service is required, indicating whether a room is free or not. They include:

(1) Room indicators. There are large panels with numbers corresponding to a number of rooms. When a button is pressed in the room concerned the corresponding number is either lit up or exposed by the falling away of a shutter or flap.

(2) Number indicators. The signals appear to illuminated figures on the face of a small box; in some apparatus of this kind the calling mechanism is operated by the dial of a telephone. Also clock type indicators in which the numbers are indicated by a hand moving round a dial.

(3) Office indicators, for example, those used to indicate whether the occupant of a particular office is free or not. Some types are merely a simple "come in" or "engaged" sign illuminated at will by the occupant of the office.

(4) Lift indicators. These indicate, on an illuminated board, where the lift is and whether it is going up or down.

(5) Engine room telegraph apparatus for ships.

(6) Station indicating panels for showing the times and platforms of trains.

(7) Indicators for race course, football stadiums, bowling alleys, etc.

Certain of these indicator panels, etc., also incorporate bells or other sound signalling devices (emphasis in original).

Therefore, only those display panels which are principally used and/or limited by design to "signaling" are classifiable under subheading 8531.20.00, HTSUS. See, HRL 954788 dated December 1, 1993, HRL 953115 dated May 10, 1993, HRL 952502 dated March 18, 1993, HRL 951868 dated October 31, 1992, HRL 952360 dated October 15, 1992, and HRL 951288.

The display panels at issue provide limited indication information to a user, i.e., blood pressure, temperature, and electrocardiogram. The display panels provide similar indication information as those types of limited indication functions enumerated in EN 85.31. See also, HRL 955062 dated March 21, 1994 (global positioning, traffic signal controller, portable data collector, lottery system, pipeline monitoring, gasoline pump indicator, and medical, measurement and industrial instruments), and HRL 954638 dated December 2, 1993 (electronic price tags, medical instrumentation, diving equipment, camera controls, and industrial controls), in which liquid crystal displays with limited operational capabilities for signaling functions were classified under subheading 8531.20.00, HTSUS, as signaling apparatus. Therefore, we are of the opinion that the instant display panels are principally used for visual signaling.

Subheading 8471.92.30, HTSUS, provides for other display units without cathode-ray tube, having a visual display diagonal not exceeding 30.5 cm which are principally used for automatic data processing machines. Automatic data processing machine liquid crystal panel displays (laptop and notebook computer displays) typically exhibit the following characteristics: pixel configuration (640 x 480), dot pitch 9.27 to .30mm), thin profile, light weight, liquid crystal material mix 9150 to 200 milliseconds response time signal to signal), and low power consumption (5V). Based on the information available, the display panels at issue are not principally used for automatic data processing machines, but are principally used, as described above, as signaling apparatus for blood pressure monitors. Therefore, the display panels are not classifiable under subheading 8471.92.30, HTSUS, as other display units without cathode-ray tube, having a visual display diagonal not exceeding 30.5 cm.

HOLDING:

On the basis of the information presented, it is our opinion that the display panel is not substantially transformed into a product of the U.S. when it is plugged into the blood pressure monitor. Accordingly, it is not eligible for duty-free treatment under subheading 9801.00.10, HTSUS, when it is subsequently returned to the U.S. for repair.

The display panels are classified under subheading 8531.20.00, HTSUS, as "[e]lectric sound or visual signaling apparatus...[i]ndicator panels incorporating liquid crystal devices (LCD's)...." The corresponding duty rate for articles of this subheading is 2.7 percent ad valorem.

The display panels may be entered under subheading 9813.00.05, HTSUS, which provides for the temporary duty-free entry, under bond (TIB), for merchandise imported into the U.S. for the purpose of repair, alteration or processing, provided the applicable requirements are met.

Sincerely,

John Durant, Director
Commercial Rulings Division

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