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HQ 960873



November 12, 1997

CLA-2 RR:CR:GC 960873 DWS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8529.90.99

Mr. A.J. Spatarella
Kanematsu USA Inc.
114 West 47th Street
New York, NY 10036

RE: Reconsideration of NY B84243; LCD Indicator Modules; Section XVI, Notes 2 and 3; General Explanatory Note (VI) to Section XVI; HQ 955447; Kores Manufacturing Inc. v. U.S.; 9013; 8537.10.90; 8531.20.00

Dear Mr. Spatarella:

This is in response to your letters of June 27, 1997, to the Director, National Commodity Specialist Division of Customs, New York, and August 29, 1997, to this office, concerning NY B84243, issued to you on May 9, 1997, relating to the classification of liquid crystal display (LCD) indicator modules under the Harmonized Tariff Schedule of the United States (HTSUS).

Pursuant to 625(c)(1), Tariff Act of 1930 [19 U.S.C. 1625(c)(1)], as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub.L. 103-82, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of NY B84243 was published on October 1, 1997, in the CUSTOMS BULLETIN, Volume 31, Number 40. No comments were received in response to the notice.

FACTS:

The merchandise consists of LCD indicator modules which are designed for and dedicated to mobile cellular phones. Each module consists of an LCD glass sandwich connected by a ribbon connector to a printed circuit board (PCB) on which numerous depression switches are mounted. The glass sandwich consists of a liquid crystal layer sandwiched between two plates of glass. The row and column drivers for the LCD are contained within the PCB, as are the keypad controls for the operation of a cellular telephone.

ISSUE:

Whether the LCD indicator modules are classifiable under subheading 8529.90.99, HTSUS, as other parts suitable for use solely or principally with the apparatus of headings 8525 to 8528, HTSUS; under subheading 8531.20.00, HTSUS, as indicator panels incorporating LCDs; or under subheading 8537.10.90, HTSUS, as other boards for electric control or the distribution of electricity.

LAW AND ANALYSIS:

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

8529.90.99: [p]arts suitable for use solely or principally with the apparatus of headings 8525 to 8528: [o]ther: [o]ther:
[o]ther.

Goods classifiable under this provision receive duty-free treatment.

8531.20.00: [e]lectric 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:
[i]ndicator panels incorporating liquid crystal devices (LCD's) or light emitting diodes

The general, column one rate of duty for goods classifiable under this provision is 1.4 percent ad valorem.

8537.10.90: [b]oards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 8535 or 8536, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 8517: [f]or a voltage not exceeding 1,000 V: [o]ther.

The general, column one rate of duty for goods classifiable under this provision is 3.7 percent ad valorem.

Section XVI, note 3, HTSUS, states that:

[u]nless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.

In NY B84243, Customs held that the indicator modules, each consisting of a LCD glass sandwich and a PCB fitted together by the ribbon connector, constituted a composite machine as defined in section XVI, note 3, HTSUS, with the functions of the indicator modules described by subheadings 8531.20.00, HTSUS, and 8537.10.90, HTSUS. Because a principal function could not be ascertained, Customs classified the indicator modules under subheading 8537.10.90, HTSUS, the provision describing a function of the indicator modules which appears last in order in the HTSUS. See General Explanatory Note (VI) to section XVI (p. 1227). You continue to claim that the indicator modules are properly classifiable under subheading 8531.20.00, HTSUS.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive or 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). In part, Explanatory Note 90.13 (p. 1600) states that:

[t]his heading includes:

(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.

Because LCD glass sandwiches are properly classifiable under heading 9013, HTSUS, we disagree with the holding in NY B84243 that the indicator modules constitute composite machines as defined in section XVI, note 3, HTSUS. For a good to qualify for consideration as a section XVI, note 3, HTSUS, composite machine, the separate functions it performs must be described under different headings in section XVI, HTSUS. See General Explanatory Note (VI) to section XVI (p. 1227). As the LCD sandwiches are classifiable in chapter 90, HTSUS, section XVI, note 3, HTSUS, is inapplicable. We note that there is not a similar "composite machine" note to chapter 90, HTSUS, as there is with functional units.

You cite HQ 955447, dated February 9, 1994, as precedence for classifying the indicator modules under subheading 8531.20.00, HTSUS. In that ruling we held LCD indicator panel modules with row and column drivers to be classifiable under subheading 8531.20.00, HTSUS. However, the subject indicator modules are distinguishable from those in HQ 955447, because the PCB part of the subject modules incorporates the LCD drivers and keypad controls for the operation of a cellular telephone. The PCB in each of the indicator modules in HQ 955447 incorporated the LCD drivers only. Therefore, it is our position that the subject indicator modules are beyond the scope of articles classifiable under heading 8531, HTSUS.

Whether an article is a part of another article depends on the nature of the so-called "part" and its usefulness, function and purpose in relation to the article in which it is designed to serve. Kores Manufacturing Inc. v. U.S., 3 CIT 178, 179 (1982), aff'd appeal No. 82-83 (C.A.F.C. 1983). It is our position that the indicator modules are parts of cellular telephones, in that their function is essential to the operation of cellular telephones.

Section XVI, note 2, HTSUS, states:

[s]ubject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:

(a) Parts which are goods included in any of the headings of chapters 84 and 85
(other than headings 8485 and 8548) are in all cases to be classified in their respective headings;

(b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading
8517;

(c) All other parts are to be classified in heading 8485 or 8548.

Because the indicator modules are not goods described under any of the headings of chapters 84 and 85, HTSUS, section XVI, note 2(a), HTSUS, is inapplicable. However, based upon section XVI, note 2(b), HTSUS, because the indicator modules are parts dedicated for use with mobile cellular telephones classifiable under heading 8525, HTSUS, they are classifiable under subheading 8529.90.99, HTSUS.

HOLDING:

The LCD indicator modules are classifiable under subheading 8529.90.99, as other parts suitable for use solely or principally with the apparatus of headings 8525 to 8528, HTSUS.

NY B84243 is revoked in full. In accordance with 19 U.S.C. 1625(c)(1), this ruling will become effective 60 days after its publication in the CUSTOMS BULLETIN. Publication of rulings or decisions pursuant to 19 U.S.C. 1625(c)(1) does not constitute a change of practice or position in accordance with section 177.10(c)(1), Customs regulations [19 CFR 177.10(c)(1)

Sincerely,

John Durant, Director
Tariff Classification Appeals

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