United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2004 HQ Rulings > HQ 966934 - HQ 967036 > HQ 967013

Previous Ruling Next Ruling
HQ 967013




October 27, 2004

CLA-2 RR: CR: GC 967013 DBS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8528.21.7001

Mr. David R. Ostheimer
Miller & Company PC
51st Floor, 233 Broadway
New York, NY 10279

RE: Reconsideration of HQ 966383; 42-inch gas plasma monitors; Prospective ruling for 50-inch gas plasma monitors

Dear Mr. Ostheimer:

This is in response to your letter of March 9, 2004, requesting reconsideration of Headquarters Ruling Letter (HQ) 966383, issued to your client, Gateway, Inc., on July 3, 2003. HQ 966383 classified a 42-inch gas plasma monitor (Gateway part #7004213, Model # GTW-P42M102) in subheading 8528.21.70, Harmonized Tariff Schedule of the United States (HTSUS), as a video monitor with a flat panel screen. (We note that HQ 966667, dated September 4, 2003, corrected a clerical error in HQ 966383.) You have also requested a binding prospective ruling on a 50-inch gas plasma monitor without a tuner (Model # GTW-50M103).

We have reviewed HQ 966383 and have taken into account the new facts and arguments presented in your submission, and the teleconference conducted on October 15, 2004. When new facts are presented that affect the classification of a good, the initial ruling stands and a new ruling is issued. In this case however, we do not find the new facts presented are material to the classification of the good. For the reasons set forth below, we affirm HQ 966383. The classification of the 50-inch monitor is also contained herein.

FACTS:

The description of the good as set forth in HQ 966383 is as follows:

The merchandise at issue is a 42-inch gas plasma color monitor. It is imported separately and not accompanied by any other computer or video equipment. As imported, it cannot function as a television or a video display because it lacks a television tuner and the connectors necessary for the reception and display of video and/or broadcast standard signals. The display comes with the following connectors already installed: RGB input and output, RS-232 and DVI (a newer computer display connector).

The display is not offered for sale in its imported condition. After importation, the monitor is subjected to further processing by either Gateway or a third party manufacturer. The monitor undergoes a multi-step process that installs a television tuner and connectors necessary for the reception and display of video and/or broadcast television signals. The display comes equipped with two decoder chips that take standard NTSC video and convert it to progressive scan component YPrPb video, thus allowing proper conversion of two independent video inputs simultaneously for picture in picture and side-by-side video windows. There are also internal connectors in the monitor as imported that would be able to accept video or NTSC signals. You note that when imported, these connectors are covered by a metal plate that is held in place by three screws and that the chips are not utilized in the display until it is configured. The monitor also contains internal speakers, but as there are no audio inputs no use can be made of them as imported.

You have presented new information that Gateway has ceased importing the good described in HQ 966383, and is currently importing 42-inch monitors with an integrated television tuner. This good is outside the scope of HQ 966383. However, you are requesting reconsideration of the ruling because Gateway would like to once again import the monitor in its condition as described in the ruling (i.e., without a tuner). You state Gateway intends to sell the monitors both with and without a tuner, and assert that this fact affects the classification of the good. In addition, you contend that the classification set forth in HQ 966383 is based on a mischaracterization of the good and is therefore incorrect.

You further state that Gateway has commenced importing a 50-inch monitor that is "virtually identical" to the monitor classified in HQ 966383. It is imported with and without a television tuner, and is sold with and without a tuner. You contend that the monitors should be classified as units of automatic data processing (ADP) machines in heading 8471, HTSUS. In the alternative, you argue for classification in heading 8543, HTSUS, which provides for electrical machines and apparatus, having individual functions, because certain flat panel displays have been classified in the provision.

ISSUES:

Whether the sale of Gateway's 42-inch monitor both with and without a television tuner affects its condition as imported as an unfinished video monitor of heading 8528, HTSUS, or whether it is classified as a unit of an ADP machine of heading 8471, HTSUS, or an electrical apparatus not specified or included elsewhere in Chapter 85.

What is the classification of Gateway's 50-inch monitor?

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). 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 GRIs may then be applied.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, though not dispositive or legally binding, provide commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUS provisions under consideration are as follows:

8471 Automatic data processing machines and units thereof

8471.60 Input or output units, whether or not containing storage units in the same housing:

Other:

Display Units:

8471.60.45 Other:

8528 Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors:

Video monitors:

8528.21 Color:

With a flat panel screen:

Other:

8528.21.70 Other.

8543 Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof:

Other machines and apparatus:

8543.89 Other:

Other:

Other:

8543.89.96 Other.

HQ 966383 stated that the 42-inch monitor at issue was not an article of commerce in its condition as imported because it underwent post-importation processing and therefore was an unfinished good. Because it was unfinished, the monitor could not be classified at GRI 1. It was necessary to apply GRI 2(a), which provides, in relevant part, that "[a]ny reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article."

The fact that GRI 2(a) was employed was based on the factual circumstances presented at the time of the ruling request. HQ 966383 held that the monitors were classified in heading 8528, HTSUS, as an unfinished video monitors, because they are in a class or kind of goods that are multimedia video monitors used for computers, plasma TV’s, home theatre options and other digital media products. US Customs and Border Protection (CBP) has consistently held that multimedia displays that contain the components necessary to display video signals fall to be classified under heading 8528, HTSUS. See HQ 960282, dated October 22, 1998; HQ 962557, dated October 12, 2000; HQ 966270, dated June 3, 2003; HQ 963152, dated July 30, 2001.

In HQ 966383, CBP reasoned that they were not units of an ADP machine, not only because they were subject to post-importation processing to become video monitors, but because they did not satisfy Note 5(B) to Chapter 84, the prerequisite, in the case, to being classifiable as an ADP output unit under heading 8471, HTSUS. Note 5(B) provides, that, subject to Note 5(E), a machine is a unit of an ADP system if it meets all the following conditions:

(a) It is of a kind solely or principally used in an [ADP] 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 966383, CBP determined that the good met the requirements of Note 5(B)(b) and 5(B)(c), but that there was insufficient evidence to show that the monitor is of a kind principally or solely used with an ADP system.

The new information presented in your submission does not overcome the deficiency in satisfying Note 5(B)(a). You assert that the monitors satisfy Note 5(B) because Gateway intends to market and sell some of the monitors in their condition as imported, which are only capable of receiving and displaying computer signals. Thus, you argue, it is a finished article of commerce, solely used as a unit of an ADP system. However, this reasoning is flawed. A good's ability to function only with an ADP machine at importation does not address the requirement of Note 5(B)(a). Further, you rely on rulings that classify certain gas plasma monitors in heading 8471, HTSUS, that are actually distinguishable from the instant monitors, for the reasons set forth below.

Note 5(B)(a) requires that a good be "of a kind solely or principally used" in an ADP system. That is, we must determine the class or kind to which the monitor falls, and whether that kind of good is solely or principally used in an ADP system. As we discussed in HQ 966383, class or kind is determined by weighing all pertinent factors, which the Court of International Trade has stated include: (1) the general physical characteristics of the merchandise; (2) the expectation of the ultimate purchasers; (3) the channels of trade in which the merchandise moves; (4) the environment of the sale (e.g. the manner in which the merchandise is advertised and displayed). See United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, cert. denied, 429 U.S. 979, 50 L. Ed. 2d 587. 97 S. Ct. 490 (1976). Whether a good falls in a particular class is determined by applying the individual facts presented to all of the relevant criteria. No single factor is determinative. The determination of principal use is similarly discrete. See HQ 966105, February 27, 2003; HQ 960624, August 29, 1997;

As discussed in HQ 966383, in this case, the general physical characteristics include connectability to an ADP machine and circuitry that is evidence of its intended use as a multi-media video monitor, such as decoder chips that convert standard NTSC video to progressive scan component YPrPb video, allowing for simultaneous picture in picture and side-by-side video windows and internal connectors which would be able to accept video or NTSC signals once configured. Such features are consistent with digital video home entertainment for which the monitors are advertised in the descriptive literature provided to this office. Given that the good is no longer imported without a tuner, and new facts presented of the dual purpose of the goods as ADP units and multi-media video monitors are only prospective, evidence of the channels of trade and expectations of the ultimate purchasers cannot be presented, only presumed. Based on the information before us, it appears these two factors would not favor one heading over the other. Moreover, the dual purpose of the monitors is indicative of a lack of principal use for this good.

Gateway's desire to market and sell some of the monitors in their condition as imported for use as an ADP output unit has no effect on the monitors' condition as imported for purposes of tariff classification or on the application of the Carborundum factors. It is up to an importer to decide whether to enter an imported good into the stream of commerce or to subject it to post-importation processing, which, in the case of these particular goods may implicate (but not dictate) different tariff provisions. It is not for CBP officials to discern the intent of an importer at the time of entry. If the merchandise is sold in its condition as imported, the monitors are physically identical to the product classified in HQ 966383. The new information you provided does not present any further evidence that the monitors satisfy Note 5(B)(a). Thus, the monitors are not classified in subheading 8471, HTSUS.

Regarding classification in heading 8528, HTSUS, you note that CBP has stated that monitors of heading 8528, HTSUS, must be capable of accepting video signals. You claim these monitors can only receive signals from an ADP machine upon importation. Though the instant monitors may not be fully operational upon importation, hence the application of GRI 2(a) in HQ 966383, they contain connectors and decoder chips that are capable of accepting video signals. This is consistent with our determination in HQ 963152, dated July 30, 2001, whereby one of the monitors classified therein contained video inputs and was classified in heading 8528, yet the other monitor contained no inputs and thus was classified in heading 9013, HTSUS.

As an alternative to heading 8471, you presented a new argument for classification in heading 8543, HTSUS, where you noted certain monitors have been classified. See, e.g., HQ 966481, dated August 19, 2003. As per the text of heading 8543, HTSUS, a good must not be provided for elsewhere in Chapter 85 to be classified in that heading. For the reasons stated in HQ 966383 and above, Gateway's 42-inch gas plasma monitors are multimedia video monitors in their condition as imported, incomplete or unfinished, covered in heading 8528, HTSUS. Thus, heading 8543, HTSUS is precluded from consideration. Accordingly, the classification set forth in HQ 966383 is affirmed.

Gateway's 50-inch monitors have been described as "virtually identical" to the 42-inch monitors in all material aspects, other than size. Therefore, they are also classified in subheading 8528.21.7001, HTSUS.

HOLDING:

Gateway’s 42-inch gas plasma monitor is classified under subheading 8528.21.7001, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for: "Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Video monitors: Color: With a flat panel screen: Other; Other." The 2004 rate of duty is 5% ad valorem.

Gateway’s 50-inch gas plasma monitor imported with or without a television tuner is classified under subheading 8528.21.7001, HTSUSA, which provides for: "Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Video monitors: Color: With a flat panel screen: Other; Other." The 2004 rate of duty is 5% ad valorem.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.

EFFECT ON OTHER RULINGS:

HQ 966383, March 9, 2004, is affirmed.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

Previous Ruling Next Ruling

See also: