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HQ 965390




August 2, 2002

CLA-2 RR:CR:GC 965390 RFA

CATEGORY: CLASSIFICATION

TARIFF NO.: 8528.21.70

Port Director
U.S. Customs Service
301 East Ocean Blvd.,
Long Beach, CA 90802

RE: I/A 02/005; 50-Inch Gas Plasma Display Monitor

Dear Port Director:

The following is our decision regarding the request for Internal Advice (I/A 02/005), dated October 17, 2001, filed by counsel on behalf of Pioneer Electronics USA, Inc., concerning the classification of the Pioneer PDP-503CMX Plasma Monitor under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The Pioneer PDP-503CMX Plasma Monitor is a 50-inch high-resolution gas plasma monitor. The PDP-503CMX Plasma Monitor has a 1,280 x 768 pixel configuration. The device is capable of accurately displaying computer signals ranging from 640 x 400 and 640 x 480 (VGA) to 1,024 x 768 (XGA) and 1,280 x 768 (Wide XGA). It has a pixel pitch of 0.858 mm x 0.808 mm and is completely compatible with data processors that utilize the VESA VGA through UXGA standards. The screen has an aspect ratio of 16:9. The product does not contain a video tuner or television receiver. The monitor has a depth of less than 4 inches or 98 mm and a weight of 85.12 pounds, or 38.9 kg. The technology allows viewing images on the screen in a breadth of 160 degrees without seeing any image distortion. The monitor has connectors for speakers, RS-232C, 2 mini D-sub 15-pin VGA-compatible ports, and RGBHV-signal (Red Green Blue Horizontal sync and Vertical sync) BNC jacks.

According to the product literature, the PDP-503CMX is designed to meet a variety of application requirements such as use as information displays at airports, train stations and other public places, visual displays at trade shows and other events, industrial control and monitoring, and electronic advertising. Counsel also claims that it can be used to display automatic data processing (ADP) information in presentations to groups of people.

The information provided by counsel indicates that the monitor does not have a television receiver or tuner and that the monitor cannot be used with any standard television tuner, conventional television receiver or video reproduction device. Counsel asserts that it is incapable of decoding or displaying video or television signals such as RF-modulated video and audio signal, Composite video (NTSC, PAL, SECAM, etc.), Component Video or High Definition Component video without the addition of the PDA-5002 Video Card. Product literature for this optional video card indicate that the card contains input connectors for S-Video, Digital RGB and BNC composite video that would allow the plasma display monitor to accept video signals.

ISSUE:

Whether the Pioneer PDP-503CMX Plasma Monitor is classifiable as an automatic data processing (ADP) unit under heading 8471, HTSUS, or as a video monitor under heading 8528, HTSUS?

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

To be classified as an ADP output unit within heading 8471, HTSUS, the subject merchandise must meet the terms of Legal Note 5(B) to Chapter 84, HTSUS, which provides that:

(B) Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. Subject to paragraph (E) below, a unit is to be regarded as being a part of a complete system if it meets all the following conditions:

(a) It is of a kind solely or principally used in an automatic data processing system;

(b) It is connectable to the central processing unit either directly or through one or more other units; and

(c) It is able to accept or deliver data in a form (codes or signals) which can be used by the system.

In HQ 961466, dated April 6, 1999, Customs dealt with the classification of a 42-inch color plasma display monitor that can be used to display ADP information in presentations to groups of people as well as act as a video monitor because it accepts signals from video equipment such as video cassette recorders (VCRs), laser disc players, and camcorders. In precluding classification under heading 8471, HTSUS, as an ADP output unit, Customs held that the importer did not provide evidence of principal use and thereby did not meet the terms of Legal Note 5(B) to chapter 84. Noting that the monitors accepted signals from video equipment such as VCRs, laser disc players, and camcorders, Customs concluded that the plasma display monitors were classified under heading 8528, HTSUS, as video monitors.

In HQ 962677, dated September 23, 1999, Customs dealt with the classification of another 42-inch color plasma display capable of displaying computer images through connection to a personal computer and capable of displaying video signals from various sources. In that ruling, the importer asserted that the monitor’s principal use would be as a display unit for computers. Customs noted that factors tending to support a principal use are well established and include channels of trade, environment of sale such as advertisements, and recognition of use in the trade. See, e.g., HQ 960354, dated October 22, 1998. Because no evidence was provided to indicate that it was solely or principally used as such, Customs precluded classification under heading 8471, HTSUS. Customs noted that the monitor was capable of displaying any type of video signal from any video source and thereby met the terms of heading 8528, HTSUS, as a video monitor. This ruling was affirmed in HQ 963314, dated July 30, 2001.

Counsel for the importer of the subject merchandise believes that the monitor meets the terms of Legal Note 5(B) to chapter 84 and is properly classified under heading 8471. The basis for counsel’s conclusions is that they claim that the subject merchandise is a complete, finished article and requires no additional parts or manipulation to perform its designed for function, to receive and display signals from an ADP system. According to counsel, because of the design and circuitry, the PDP-503CMX monitor cannot accept RF modulated video and audio signals, composite video (NTSC, PAL, SECAM, etc.), component video or High Definition video without the addition of the PDA-5002 Video Card. Counsel further asserts that the PDP-503CMX belongs to the class or kind of displays which are used in “data only” applications such as business presentations, financial market exchanges, airline and other transportation information systems, medical and industrial instruments and information systems, computer monitors and process control systems.

As part of its submission, counsel provided Customs with a 1999 report prepared by Stanford Resources, Inc., on statistical data involving units of sale and market value for plasma display panels, ranging in size from less than 21 inches to 50 inches or more. Besides the 6 categories cited by counsel, we note that this report also lists consumer televisions, retail outlets, and kiosks as applications for plasma display panels. Out of all these categories, the only categories where 50 inch plasma displays show any use and future sales is in consumer television, business presentation system, financial exchanges, transportation information systems, and retail outlets. The study predicts that less than a thousand units of 50 inch or greater plasma displays will be sold in 2005 for financial exchanges, transportation information systems, and retail outlets. The study also predicts a significant growth reaching over 200,000 units in the market for consumer television per year by 2005 for this size display with only a growth of about 7,000 in business presentation systems. We further note that this report indicates zero growth in sales for computer monitors through 2005 for plasma display monitors equal to or greater than 50 inches. Based upon the information provided and the analyses in HQs 961466, 962677 and 963314, we find that the subject merchandise does not meet the principal use requirements as an ADP monitor under Legal Note 5(B) to chapter 84. Therefore, classification under heading 8471 is precluded.

According to counsel, the subject merchandise does not have the capability to receive, process, or display standard video, television or high definition video signals, nor signals from any other video sources such as VCRs, laser disc players, and camcorders. Counsel further asserts that the monitor cannot process these signals without the addition of the PDA-5002 Video Card and that therefore, Customs cannot classify the subject merchandise under heading 8528, HTSUS. However, in examining the subject merchandise, we note that it has several ports to allow for the connection of different devices. The15-pin D-Sub VGA-compatible port allows for both computers and video devices that use component video signals, such as progressive scan DVD players, to be connected to the plasma display monitor. A progressive scan DVD player connects to the monitor with an RCA to VGA cable We further note that the screen of the subject merchandise has an aspect ratio of 16:9. This aspect ratio is an indicator of the screen being designed for use as a High Definition television. See Additional U.S. Note 8(a) to Chapter 85. Based upon the factors presented here and the rulings cited above, we find that the Pioneer PDP-503CMX Plasma Monitor in its condition as imported, is classified in heading 8528, HTSUS, as video monitors.

HOLDING:

For the foregoing reasons, the Pioneer PDP-503CMX Plasma Monitor is classifiable under subheading 8528.21.70, HTSUS, which provides for: “[r]eception apparatus for television, . . . : video monitors and video projectors: [v]ideo monitors: [c]olor: [w]ith a flat panel screen: [o]ther: [o]ther. . . .” Goods classifiable under this provision, have a column 1, general rate of duty of 5 percent ad valorem.

You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Acting Director
Commercial Rulings Division

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