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HQ 964043




July 25, 2000

CLA-2 RR:CR:GC 964043 GOB

CATEGORY: CLASSIFICATION

TARIFF NO.: 8528.30.66

Mr. Sidney N. Weiss
90 Park Avenue
New York, N.Y. 10016

RE: LCD projector; NY A81603 revoked

Dear Mr. Weiss:

This is with respect to New York Ruling Letter (“NY”) A81603, issued to counsel by the Customs National Commodity Specialist Division, New York, on March 22, 1996, on behalf of Toshiba America Consumer Products, Inc. (“Toshiba”). In that ruling, an LCD projector equipped with a data source and a video source was classified under subheading 8471.60.30, Harmonized Tariff Schedule of the United States (“HTSUS”). We have reviewed that classification and have determined that it is incorrect. This ruling sets forth the correct classification.

In response to the Notice of Proposed Revocation of NY A81603 which was published in the Customs Bulletin on June 7, 2000, you submitted a comment dated July 6, 2000. In summary your claims are as follows. The LCD data projector’s technology and specifications indicate that it is principally used as an ADP display, not as a TV or video monitor. The projector’s applications indicate that it is principally used in group settings, not in individual recreational or home environments. Toshiba’s marketing materials indicate that the projectors have been designed, marketed, and sold, and will continue to be marketed and sold, with the idea that computers are the primary input devices. The projectors are properly classifiable under subheading 8471.60.30, HTSUS, by reference to GRI 1 only, because they perform only one principal function – that of display. Customs has made the error that the projectors’ different inputs somehow equal their functions or control. 97% of the projector’s components are devoted to receiving and processing computer signals, and only about 3% of its components are devoted to receiving and processing video signals. The projectors’ high cost effectively precludes them from home use by all but the most affluent Americans. Finally, you contend that Customs has ignored the Harmonized Commodity Description and Coding System Explanatory Notes in reaching its decision.

Customs response to your claims is discussed in the LAW AND ANALYSIS section of this ruling.

FACTS:

The LCD projector was described as follows in NY A81603:

The TLP-310 LCD Data Projector utilizes three 1.3 inch polysilicon fine LCDs with a resolution of 644 by 484 pixels, which is very close to the VGA resolution of 640 by 480 pixels used in most IBM compatible computers. The TLP-310 LCD Data Projector is equipped with data and video inputs and outputs, and a RS-232 type serial port for attachment to a computer. The device is also equipped with a wireless remote, lens cap, power cord, AV (audio-video) cable, VGA (computer video) cable, and an Apple Macintosh computer adapter.

The TLP-310 LCD Data Projector is capable of using different signal sources for the video to be projected, including VGA, VHS, and S-VHS (using NTSC, PAL, SECAM and NTSC 4.43 signals).

ISSUE:

Are the above-described LCD projectors provided for in heading 8471, HTSUS, as automatic data processing units, or in heading 8528, HTSUS, as video projectors?

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI’s”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied.

The Harmonized Commodity Description and Coding System Explanatory Notes (“EN’s”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s 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.

Heading 8471 covers:

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[.]

Heading 8528 covers:

Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors[.]

Legal Note 3 to Section XVI, HTSUS, provides:

Unless 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.

The EN to Legal Note 3 to Section XVI, HTSUS (EN (VI)), provides in pertinent part:

Where it is not possible to determine the principal function, and where, as provided in Note 3 to the Section, the context does not otherwise require, it is necessary to apply General Interpretive Rule 3 (c)

Customs has reconsidered the uses of projectors and the evidentiary requirements of Legal Note 3 to Section XVI. The courts have provided factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. They include: general physical characteristics, expectation of the ultimate purchaser, channels of trade, environment of sale (accompanying accessories, manner of advertisement and display), use in the same manner as merchandise which defines the class, economic practicality of so using the merchandise, and recognition in the trade of such use. See U.S. v. Carborundum Co., 63 CCPA 98, 102, 536 F. 2d 373, 377 (1976), cert denied, 429 U.S. 979 (1976). We note that in Lenox Collections v. U.S., 19 CIT 345, 347 (1995) and Kraft, Inc. v. U.S., 16 CIT 483, 489 (1992) the court applied the Carborundum factors to principal use. See also G. Heileman Brewing Co. v. U.S., 14 CIT 614, 620 (1990).

In applying these factors to the merchandise, we note that the TLP-310 projector at issue has two functions. It may be connected to a computer for the projection of computer-generated data images. It may also be connected directly to video devices for the projection of video images. In general, such projectors may be used to project video from a growing array of sources, including VCRs, camcorders and laser discs, as is noted in the Toshiba marketing literature.

In the original ruling request it was stated that “[t]he TLP-310 LCD Data Projector will be sold primarily for use as a data projector” and that the “[p]rocessing and display of computer signals will be the principal function of the projector, and a larger percentage of the components of the TLP-310 are devoted to receiving and processing computer signals than video signals.” In your comment to the proposed revocation, you state that the projectors have been designed, marketed and sold as primarily computer output devices. You claim that 97% of the projector’s components are devoted to receiving and processing computer signals. However, no probative documentary evidence in support of these assertions was submitted, as we specifically requested in the proposed ruling revocation. The advertising narrative submitted lists the video capabilities ahead of the computer capabilities, and the specifications give no weight to any individual attribute over another.

You indicate that the projectors will be used in group settings, and are too expensive to be used in most home or recreational environments. This comment suggests that projectors are used in the same manner as ADP displays, that ADP units are principally used in group settings and that projectors are too expensive for home or recreational use. Without concrete evidence to support this notion, we are unable to give it much weight. We are aware that ADP display units are used in many environments, and for many purposes. Moreover, more probative of the environment of use would be evidence of whether consumers use the goods more often to display video signals or ADP signals.

You factually misstate that the good at issue is used as a TV or video monitor. We note that the article is a projector. You claim that Customs is ignoring the Explanatory Notes in classifying the instant good. You cite the EN to heading 8471 as support for your claim, when in fact the EN’s require that a separately presented ADP display must be capable only of accepting a signal from a central processing unit. Toshiba’s projectors are more versatile. In any event, principal use or function is the legal standard that must be met. Alternatively, you claim that the principal function is display. Since both headings 8471 and 8528 include units which display, this claim is unhelpful. Legal Note 3 to Section XVI does not resolve the classification at issue because the projectors are composite machines and satisfactory documentary evidence has not been submitted with respect to the principal function of the projectors. As a result, we are now of the view that the projectors cannot be classified based upon GRI 1. GRI 2 is not applicable here. GRI 3 provides as follows:

When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.

When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

EN (VIII) for GRI 3(b) provides:

The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.

At GRI 3(a), neither of the two competing headings provides a more specific description than the other. Pursuant to GRI 3(b), the projector is a composite good. There is no essential character to the projector because both functions are equally important. Accordingly, we proceed to GRI 3(c), i.e., the good shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

Pursuant to GRI 3(c), we determine that the projector is provided for in heading 8528, HTSUS. It is classified in subheading 8528.30.66, HTSUS as: “Video projectors: Color: With a flat panel screen: Other: With a video display diagonal not exceeding 34.29 cm.” In your comment on the proposed revocation, you state that Customs is equating the projectors’ inputs with their function. Classification at GRI 3(c) is not an indication that the principal function of the video projector is video, but rather an indication that there is no principal function.

Our determination is consistent with a recent decision on similar merchandise published in the World Customs Organization (“WCO”) Compendium of Classification Opinions on the Harmonized Commodity Description and Coding System where the classification of a projector which received signals from an automatic data processing machine and a video source and whose principal function could not be determined was based upon GRI 3(c). See Opinion No. 8528.30/1 of the WCO Compendium of Classification Opinions, Amending Supplement No. 24 (August 1999). As we stated in T.D. 89-80, decisions in the Compendium of Classification Opinions should be treated in the same manner as the EN’s, i.e., while neither legally binding nor dispositive, the they provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. T.D. 89-80 further states that EN’s and decisions in the Compendium of Classification Opinions “should receive considerable weight.”

HOLDING:

The LCD projector is provided for in heading 8528, HTSUS, and is classified in subheading 8528.30.66, HTSUS, as “Video projectors: Color: With a flat panel screen: Other: With a video display diagonal not exceeding 34.29 cm.”

EFFECT on OTHER RULINGS:

NY A81603 is revoked.

Sincerely,

John Durant, Director
Commercial Rulings Division

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