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HQ 965967




January 17, 2003

CLA-2 RR:CR:GC 965967 TPB

CATEGORY: CLASSIFICATION

TARIFF NO.: 8541.40.20

Port Director
U.S. Customs Service
P.O. Box 55580
Portland, OR 97328-5580

RE: Laser module; LED; NEC Electronics v. U.S.

Dear Port Director:

This is our decision on Protest No. 2904-02-1000007, filed against your classification of certain laser diode modules under the Harmonized Tariff Schedule of the United States ("HTSUS"), imported by PSC Scanning, Inc. ("PSC"). The entries were liquidated on October 26, 2001, and this protest timely filed on January 22, 2002.

FACTS:

The merchandise at issue (entry number PSC-052901, P/N 5-1095 & 5-0901) are laser diode modules. They are sub-assemblies built by Sony-Japan and distributed by AYASE, containing a VLD (visible laser diode), which provides a low watt light source for a laser scanner. The devices, consisting of other minor components, are welded together to create the assembly for the light source for PSC's model LM500 bar code scan module.

ISSUE:

Are the laser modules properly classified under subheading 8541.40.20, HTSUS, which provides for light emitting diodes, or under subheading 9013.80.90, HTSUS, which provides for other optical appliances or instruments?

LAW AND ANALYSIS:
Initially we note that the protest was timely filed (i.e., within 90 days after but not before the notice of liquidation; (see 19 U.S.C.§1514(c)(3)(A)) and the matters protested before the matters protested are protestable (see 19 U.S.C. §1514(a)(2) and (5)).

Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). GRI 1 states in part that for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes, and provided the headings or notes do not require otherwise, according to GRIs 2 through 6. GRI 2(a) states in part that incomplete or unfinished articles are to be classified as complete or finished if, as imported, they have the essential character of the complete or finished article. GRI 6 permits the comparison of same-level subheadings within the same heading, in part by application of Rules 1 through 5, applied by appropriate substitution of terms.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the HTSUS. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).

The HTSUS provisions under consideration are as follows:

8541 Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes; mounted piezoelectric crystals; parts thereof:

8541.40 Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes:

8541.40.20 Light-emitting diodes (LED's).

9013 Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter; parts and accessories thereof:

9013.80 Other devices, appliances and instruments:

9013.80.90 Other.

In classifying the laser modules under subheading 9013.80.90, HTSUS, the Port believed that because the merchandise in question contained retainer and collimation lenses (optical components), they satisfied the definition of "optical instruments" as set forth in Additional U.S. Note 3 to chapter 901. The collimation lens is used to make the light from the diode coherent.

Legal Note 1(m) to section XVI, HTSUS, states that: "this section does not cover . . . articles of chapter 90." Legal Note 4 to section XVI provides that:

Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in chapter 84 or chapter 85, then the whole falls to be classified in the heading appropriate to that function.

Note 4 to section XVI is relevant to this analysis as it is incorporated by reference into legal note 3 to Chapter 90. Thus, if the laser diodes and laser diode modules are classifiable under one of the headings of chapter 90, HTSUS, then they cannot be classifiable under heading 8541, HTSUS.

Heading 9013, HTSUS, provides for "liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter." The ENs to the heading provide, in pertinent part, at page 1793, that "this heading does not include . . . laser diodes (heading 85.41)[.]" The Court of International Trade has previously dealt with the issue of the classification of laser diodes and laser diode modules in NEC Electronics, Inc. v. United States, 21 CIT 327 (1997) affirmed, 144 F.3d 788 (CAFC 1998). In that case, the court found that laser diode modules that were comprised of different components were classified via GRI 3(b) as though they were wholly made of the component which imparted their essential character. Because the court found that the laser diode component gave the laser diode module its essential character, its finding with respect to laser diodes controlled the classification of laser diode modules. Customs has since followed this finding for similar products. See HQ 960815, dated July 1, 1998 and HQ 965524, dated August 29, 2002.

Thus, we find, by application of GRI 1, that the subject laser diodes and laser diode modules are not provided for under heading 9013, HTSUS, and therefore cannot be therein classified.

Heading 8541, HTSUS, provides for diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light emitting diodes; mounted piezo-electric crystals. The ENs to heading 8541 at page 1698 provide, in pertinent part, that:

(C) LIGHT EMITTING DIODES

Light emitting diodes, or electroluminescent diodes, (based, inter alia, on gallium arsenide or gallium phosphide) are devices which convert electric energy into visible, infra-red or ultra-violet rays. They are used, e.g., for displaying or transmitting data in control systems.

Laser diodes emit a coherent light beam and are used, e.g., in detecting nuclear particles, in altimetering or in telemetering equipment, in communication systems using fibre optics.

Laser diodes have been consistently classified by Customs under subheading 8541.40, HTSUS. See HQ 088628, dated August 20, 1991; HQ 088754, dated June 2, 1992; and HQ 960815, dated July 1, 1998.

We find that the essential character of the laser diode modules is imparted by the laser diode. While the collimating lens focuses (or makes coherent) the converted light energy, the laser diode module accomplishes the indispensable function of converting the form of the energy from electrical to visible light. For that reason, the laser diode module is classifiable under subheading 8541.40.20, HTSUS.

The NEC decision revokes, by operation of law, any rulings concerning the classification of laser diode modules substantially similar to those therein considered (see Section 152.16(e), Customs Regulations, 19 CFR 152.16(e)) that classify such articles in a heading other than 8541, HTSUS. New rulings may be requested where necessary pursuant to the provisions of part 177 of the Customs Regulations (see 19 CFR § 177 et seq.).

HOLDING:

For the reasons set forth above, the protest should be ALLOWED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision 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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