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HQ 952973




August 5, 1993

CLA-2 CO:R:C:M 952973 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8471.92.30; 8531.20.00; 9013.80.60

Mr. Dennis Heck
Tower Group International, Inc.
5420 West 104th Street
Los Angeles, CA 90045

RE: Modification of HQ 952246; Modification of NY 843928; Modification of NY 849402; Epson America, Inc.; Liquid Crystal Display; LCD; Signaling; ADP Display; 8531; 8471; 9013; HQ 951609; HQ 951288; HQ 952360; HQ 086929; E.M. Chemicals v. United States

Dear Mr. Heck:

This is our reply to your letter of November 24, 1992, requesting reconsideration of HQ 952246, dated November 10, 1992, regarding the classification of Liquid Crystal Displays (LCDs), under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

EPSON's dot matrix LCD modules consist of a newly developed TN and STN positive/reflective type liquid crystal display with high-contrast, wide-viewing angle and wide operating temperature range, C-MOS LSI driver and controller. EPSON's easily installed LCD modules have a multiple instruction set, and a wide variety of applications. The provided literature delineates the following applications: portable computers, hand-held terminals, computer terminals, word processor/typewriters, instrument devices, POS terminals, telecommunications terminals, and synthesizers. The EA and EG-X Series have built-in DATA RAM for display data storage/refresh on board which provide for easy microprocessor interface with most CPUs.

The features of the EA Series are as follows: alphanumeric and special symbols, 5 x 7 dot matrix with cursor, 5 x 11 dot matrix without cursor, 5 x 12 dot matrix without cursor, and 16 to 80 character display.

The EG Series features are as follows: 1/64 to 1/242 multiplexing, graphics and characters, special controller. The EG- X Series provides easy connection to the bus line of most 4-bit/8- bit microcomputers, and has both graphics and characters.

You also import "LCD Panels" which consist of a twisted nematic liquid crystal cell sandwiched between two polarizers in which light enters the first polarizer in one plane, is twisted and passes through the second polarizer resulting in a light colored background. When one of the transparent pixels is activated, the twist is inhibited and the second polarizer blocks the light creating a dark pixel. In their imported condition, these LCD sandwiches do not contain a printed circuit board, row and column drivers, or integrated circuits of any kind. However, at importation they do have either rubber connectors, heat seal connectors, or dual-in-line (DIL) pin connectors.

The Test and Control Module (TCM) and the Epson Custom Module (ECM) contain row and column drivers and are utilized as ADP displays, fish finders, point of sale terminals, medical equipment, etc.

ISSUE:

Are the instant liquid crystal displays classifiable under heading 8531, HTSUS, which provides for electric sound or visual signaling apparatus, or under heading 8471, HTSUS, which provides for ADP output devices, or under heading 9013, HTSUS, which provides for liquid crystal devices, under the Harmonized Tariff Schedule of the United States (HTSUS)?

LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) to the HTSUS govern the classification of goods in the tariff schedule. GRI 1 states, in pertinent part:

...classification shall be determined according to the terms of the headings and any relative section or chapter notes...

Liquid crystal displays (LCDs) are prima facie classifiable under the following subheadings:

8531 Electric sound or visual signaling apparatus (for example, bells, sirens, indicator panels...

8531.20.00 Indicator panels incorporating liquid crystal devices (LCD's) or light emitting diodes (LED's)

9013 Liquid crystal devices not constituting articles provided for more specifically in other headings

9013.80.60 Other devices, appliances and instruments: Other

8471 Automatic data processing machines and units thereof

8471.92.30 Other: Input or output units...: Other: Display units: Without cathode-ray tube (CRT), having a visual display diagonal not exceeding 30.5 cm

Heading 8531, HTSUS, provides for electric sound or visual signaling apparatus. Therefore, to be classifiable in this heading, the apparatus must be designed for "signaling," as that term is defined for tariff purposes.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) to heading 8531, HTSUS, page 1381, are fairly descriptive and restrictive as to the types of "signaling" indicator panels and the like must perform in order to be classifiable in that provision. It states: "[t]hese are 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. These are large panels with numbers corresponding to a number of rooms...

(2) Number indicators. The signals appear as 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...

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

Therefore, only those LCDs which are limited by design and function to that of "signaling," are classifiable in heading 8531, HTSUS. In HQ 952246, dated November 10, 1992 (citing HQ 951288, dated July 7, 1992), we held that the Epson EA-D16125AR-S (2 lines of 16 characters) is restricted by its limited operational
capabilities to that of signaling functions, and is classifiable under subheading 8531.20.00, HTSUS.

E.M. Chemicals v. United States, Appeal No. 90-1141, Cust. Bul. Vol. 24, No. 51, (1990), 13 CIT 849, 728 F. Supp. 723 (1989), held that under the TSUS, the actual liquid crystals themselves were classifiable under item 685.70 (the predecessor provision to heading 8531, HTSUS). However, there has been a significant change in the relevant tariff provisions under the HTSUS. In fact, heading 9013, HTSUS, which provides for LCDs specifically, is a new provision under the HTSUS. Furthermore, LCDs have been technologically developed for a myriad of uses, many of which cannot be said to be for "signaling."

In HQ 952246 we held that due to the expansive character capabilities of the EG-2401S-ER-1 (1 line with 64 characters) and EG-7500B-NS-1 (1 line with 200 characters) a principal use of signaling cannot be supported. However, due to the submission of supplemental information regarding the principal use of LCDs, we are now of the opinion that LCDs having 80 or less characters are restricted to signaling functions by virtue of their operational limitations. Furthermore, they are complete, finished indicator panels that are ready to be plugged into other machines. Therefore, the EG-2401S-ER-1 (1 line with 64 characters) is classifiable in subheading 8531.20.00, HTSUS.

We agree that there is a class of LCDs that are principally used for ADP display. Automatic Data Processing machine LCD flat panel displays (laptop and notebook computer displays) typically exhibit the following characteristics: pixel configuration (640 X 480), dot pitch (.27 to .30mm), thin profile, light weight, liquid crystal material mix (150 to 200 milliseconds response time signal to signal), and low power consumption (5V). The Epson EG7009N-NS 8834COS ADP display subassembly is a complete ADP Flat Panel Display, missing only the exterior housing. Therefore, pursuant to GRI 2(a), this model has the essential character of a finished ADP display, classifiable under subheading 8471.92.30, HTSUS, which provides for ADP display units without cathode ray tubes.

Previously, we issued NY 843928, dated August 7, 1989, to you in which Customs classified the Epson computer display module (projectable LCD) model ECM-A0360 under subheading 8473.30.40, HTSUS, which provides for parts of ADP machines not incorporating cathode ray tubes. However, we have received supplemental information that this ADP display subassembly is a complete ADP Flat Panel Display, missing only the exterior housing. Therefore, pursuant to the above analysis, we now consider this module to impart the essential character of an ADP display without a cathode ray tube. Therefore, it is classifiable in subheading 8471.92.30, HTSUS, which provides for ADP displays without cathode ray tubes.

We also issued NY 849402, dated February 12, 1990, to you in which Customs classified the Epson "Magnabyte Computer Projection System" (projectable computer display module LCD) model ECM-A0275 under subheading 8473.30.40, HTSUS, which provides for parts of ADP machines not incorporating cathode ray tubes. However, we now also have information that this ADP display subassembly is a complete ADP Flat Panel Display, missing only the exterior housing. Therefore, we consider this module to impart the essential character of an ADP display without a cathode ray tube. Consequently, it is classifiable in subheading 8471.92.30, HTSUS, which provides for ADP displays without cathode ray tubes.

Section XVI, Legal Note 1(m) states that: "[t]his section does not cover: [a]rticles of chapter 90." Heading 9013, HTSUS, provides for: "[l]iquid crystal devices not constituting articles provided for more specifically in other headings." Therefore, if the Epson LCDs are provided for more specifically in another heading, they would not be classifiable in heading 9013, HTSUS.

You have requested classification of "LCD Panels" which consist of a twisted nematic liquid crystal cell sandwiched between two polarizers in which light enters the first polarizer in one plane, is twisted and passes through the second polarizer resulting in a light colored background. When one of the transparent pixels is activated, the twist is inhibited and the second polarizer blocks the light creating a dark pixel. In their imported condition, these LCD sandwiches do not contain a printed circuit board, row and column drivers, or integrated circuits of any kind. However, at importation they do have either rubber connectors, heat seal connectors, or dual-in-line (DIL) pin connectors.

Heading 9013, HTSUS, provides for: "[l]iquid crystal devices not constituting articles provided for more specifically in other headings. The ENs to heading 9013, HTSUS, page 1478, state:

(1) Liquid crystal devices consisting of a liquid crystal layer sandwiched between two sheets or plates of glass or plastics, whether or not fitted with electrical connections, presented in the piece or cut to special shapes and not constituting articles described more specifically in other headings of the Nomenclature. (Emphasis added).

Customs has determined that the instant LCD glass sandwich is a component part of an ADP display. However, the instant importation merely consists of the LCD glass sandwich with electrical connections. It is imported without all of the additional components usually necessary to complete an ADP flat panel display, such as; a printed circuit board (which activates the row and column drivers), row and column drivers (which activate the LCD pixels), and integrated circuits. Therefore, the instant
glass sandwich is determined not to impart the essential character of a finished ADP display. See, for example, HQ 086929, dated January 31, 1991, which held that a cathode ray tube for an ADP output unit was not classifiable as an unfinished ADP output device, and was instead classifiable in subheading 8540.30.00, HTSUS, which provides for other cathode-ray tubes.

Subheading 8473.30.40, HTSUS, provides for: "[p]arts and accessories...suitable for use solely or principally with machines of headings 8469 to 8472: [p]arts and accessories of the machines of heading 8471: [n]ot incorporating a cathode ray tube." However, heading 9013 specifically provides for: "[l]iquid crystal devices not constituting articles provided for more specifically in other headings." It is Customs position that heading 9013, HTSUS, is more specific than heading 8473, HTSUS.

Therefore, the Epson "LCD Panels" glass sandwich with electrical connections is classifiable in subheading 9013.80.90, HTSUS. See HQ 951609, dated October 20, 1992, for a decision regarding ADP LCD glass sandwiches, which were not classifiable as unfinished ADP output units because they lacked the essential character of the finished display. For other rulings regarding LCDs, see HQ 952360, and HQ 951288, dated July 7, 1992.

Therefore, unless a principal use for "signaling" (heading 8531, HTSUS) or for ADP display (heading 8471, HTSUS) can be established satisfactorily either by design limitation or other reliable means, LCD displays are classifiable in subheading 9013.80.60, HTSUS, which provides for: "[l]iquid crystal devices not constituting articles provided for more specifically in other headings: [o]ther devices, appliances and instruments: [o]ther."

The Test and Control Module (TCM) and the Epson Custom Module (ECM) contain row and column drivers and are utilized in numerous applications, such as point of sale terminals, medical equipment, etc. Therefore, since there appears to be no principal use and no design limitations, the TCM and ECM are classifiable in subheading 9013.80.60, HTSUS. We continue to disagree with your assertion that we should classify these models as ADP displays absent a showing of principal use as such.

We also disagree with your assertion that the EG (graphics displays) series LCD modules are classifiable under the provision for ADP displays, absent a showing of sole or principal use of each model for ADP display.

HOLDING:

The Epson "LCD Panels" glass sandwich with electrical connections is classifiable in subheading 9013.80.60, HTSUS, which provides for: "[l]iquid crystal devices not constituting articles
provided for more specifically in other headings: [o]ther devices, appliances and instruments: [o]ther."

The Epson EA-D16125AR-S (2 lines of 16 characters) and the EG- 2401S-ER-1 (1 line with 64 characters), are restricted by their limited operational capabilities to that of signaling functions, therefore, they are classifiable in subheading 8531.20.00, HTSUS, which provides for: "[e]lectric sound or visual signaling apparatus (for example, bells, sirens, indicator panels...: [i]ndicator panels incorporating liquid crystal devices (LCD's) or light emitting diodes (LED's)."

Due to the expansive character capabilities of the EG-7500B- NS-1 (1 line with 200 characters), a principal use of signaling is not found. Therefore, they are classifiable in subheading 9013.80.60, HTSUS, which provides for: "[l]iquid crystal devices not constituting articles provided for more specifically in other headings: [o]ther devices, appliances and instruments: [o]ther."

The Epson EG7009N-NS 8834COS ADP display subassembly is a complete ADP Flat Panel Display, missing only the exterior housing. Therefore, pursuant to GRI 2(a), this model has the essential character of a finished ADP display, and is classifiable under subheading 8471.92.30, HTSUS, which provides for ADP display units without cathode ray tubes.

The Test and Control Module (TCM) and the Epson Custom Module (ECM) contain row and column drivers and are utilized in numerous applications, such as point of sale terminals, and medical equipment. Therefore, since there appears to be no principal use and there are no design limitations, the TCM and ECM are classifiable in subheading 9013.80.60, HTSUS.

EFFECT ON OTHER RULINGS:

In HQ 952246, dated November 10, we held that, due to the expansive character capabilities of the EG-2401S-ER-1 (1 line with 64 characters), a principal use of signalling was not present. However, due to the submission of supplemental information regarding the principal use of LCDs, we are now of the opinion that LCDs having 80 or less characters are restricted to signaling functions by virtue of their operational limitations. Therefore, the EG-2401S-ER-1 (1 line with 64 characters) is classifiable in subheading 8531.20.00, HTSUS.

In HQ 952246, we classified LCDs designed for ADP display under subheading 8471.92.80, HTSUS, which provides for ADP output units suitable for physical incorporation. However, upon further analysis, the correct classification is under subheading 8471.92.30, HTSUS, which provides for ADP display units without cathode ray tubes.

In NY 843928, dated August 7, 1989, Customs classified the Epson computer display module (projectable LCD) model ECM-A0360 under subheading 8473.30.40, HTSUS, which provides for parts of ADP machines not incorporating cathode ray tubes. However, we now consider this module to impart the essential character of an ADP display without a cathode ray tube. Therefore, it is classifiable in subheading 8471.92.30, HTSUS, which provides for ADP displays without cathode ray tubes.

In NY 849402, dated February 12, 1990, Customs classified the Epson "Magnabyte Computer Projection System" (projectable computer display module LCD) model ECM-A0275 under subheading 8473.30.40, HTSUS, which provides for parts of ADP machines not incorporating cathode ray tubes. However, we now consider this module to impart the essential character of an ADP display without a cathode ray tube. Therefore, it is classifiable in subheading 8471.92.30, HTSUS, which provides for ADP displays without cathode ray tubes.

These rulings are modified under authority of section 177.9(d), Customs Regulations (19 CFR 177.9(d).

Sincerely,

John Durant, Director

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