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 > 2007 HQ Rulings > HQ W966876 - HQ W967935 > HQ W966995

Previous Ruling Next Ruling
HQ W966995





December 15, 2006

CLA-2-RR:CTF:TCM W966995 IOR

CATEGORY: CLASSIFICATION

Tariff No.: 8528.12.72, 8528.21.70

Port Director
Customs and Border Protection
301 E. Ocean Blvd.
Long Beach, CA 90802

Attn: Angelina Cano, SIS

RE: Multi-function LCD Monitors

Dear Port Director:

This is in response to the internal advice request received from your office by memorandum dated February 23, 2004, regarding the classification by Customs and Border Protection (CBP) of certain LCD monitors, under the Harmonized Tariff Schedule of the United States (HTSUS). Your request was initiated by a letter on behalf of Samsung Electronics America, Inc. (“SEA”), dated December 1, 2003 (“initial submission”), requesting that internal advice be sought. This decision follows a December 21, 2005 meeting between representatives and counsel of SEA, and members of the Tariff Classification and Marking Branch, and subsequent submissions of January 27, 2006 and February 3, 2006.

FACTS:

The merchandise at issue consists of twelve models of multi-function LCD monitors, marketed by SEA.

The models are as follows:

150 MP (15”), which has 15pin D-sub, S-Video, and RCA connectors, TV antenna/cable (built-in TV tuner), brightness of 270 candelas per square meter (cd/m2), separate H/V, Composite H/V, and synchronization on green (SOG) synchronization configuration, and Video Electronics Standards Association (VESA) compliant mounting.

1501 MP (15”), which has 15pin D-sub, S-Video, and RCA connectors, TV antenna/cable (built-in TV tuner), brightness of 270 cd/m2, separate H/V, and Composite H/V synchronization configuration, and VESA compliant mounting (identical to 150 MP, but without SOG).

151MP (15”), which has 15pin D-sub, S-Video, RCA, component x 2, and HDTV connectors, TV antenna/cable (built-in TV tuner), brightness of 250 cd/m2, separate H/V, Composite H/V, and SOG synchronization configuration, and VESA compliant mounting.

152MP (15”), which has a 15pin D-sub, and S-Video, TV antenna/cable (built-in TV tuner), brightness of 250 cd/m2, separate H/V and Composite H/V synchronization configuration, and VESA compliant mounting.

170MP (17”), which has 15pin D-sub, S-Video, and RCA connectors, TV antenna/cable (built-in TV tuner), brightness of 250 cd/m2, separate H/V, Composite H/V, and SOG synchronization configuration, and VESA compliant mounting (identical to 150MP, except for size and brightness is 250 cd/m2).

1701MP (17”), which has 15pin D-sub, S-Video, and RCA connectors, TV antenna/cable (built-in TV tuner), brightness of 250 cd/m2, separate H/V, and Composite H/V synchronization configuration, and VESA compliant mounting (identical to 1501MP, except for size and brightness of 250 cd/m2).

171MP (17”), which has 15pin D-sub, S-Video, RCA, component x 2, and HDTV connectors, TV antenna/cable (built-in TV tuner), brightness of 250 cd/m2, separate H/V, Composite H/V, and SOG synchronization configuration, and VESA compliant mounting (identical to 151MP, except for size).

172MP (17”), which has a 15pin D-sub, S-Video, and component connectors, TV antenna/cable (built-in TV tuner), brightness of 250 cd/m2, separate H/V and Composite H/V synchronization configuration, and VESA compliant mounting (identical to 152MP, except as to size, and has component connectors).

210T (21”), which has 15pin D-sub, DVI-D, S-Video, and RCA cable connectors, brightness of 230 cd/m2, separate H/V, Composite H/V, and SOG synchronization configuration, and VESA compliant mounting. The 210T does not have the TV antenna/cable or built-in TV tuner.

211MP (21”), which has 15pin D-sub, S-Video, RCA, component x 2, and HDTV connectors, TV antenna/cable (built-in TV tuner), brightness of 250 cd/m2, separate H/V, Composite H/V, and SOG synchronization configuration (identical to 151MP and 171MP, except for size, and it does not have VESA compliant mounting.

240T (24”), which has 15pin D-sub, DVI-D, S-Video, and RCA cable connectors, brightness of 270 cd/m2, separate H/V, Composite H/V, and SOG synchronization configuration, and VESA compliant mounting (identical to 210T, except for size, and brightness of 270 cd/m2). The 240T does not have the TV antenna/cable or built in-TV tuner.

241MP (24”), which has 15pin D-sub, S-Video, RCA, component x 2, and HDTV connectors, TV antenna/cable (built-in TV tuner), brightness of 270 cd/m2, separate H/V, Composite H/V, and SOG synchronization configuration (identical to 151MP and 171MP, except for size, brightness of 270 cd/m2, and it does not have VESA compliant mounting).

The maximum native resolutions vary among the monitors, from 1024 x 768 for the 15 inch monitors, to 1920 x 1200 for the 24 inch monitors. The pixel pitch varies from 0.264 mm to 0.297 mm. For those monitors for which the aspect pitch specification was provided, it is 4:3. For those monitors for which the response time is provided, it is 25 milliseconds (ms). The horizontal scan frequency of the subject monitors ranges from 30-60 khz to 30-93 khz.

SEA’s initial submission included a specification sheet for each of the subject monitors (with the exception of the 152 MP, for which we found specifications elsewhere) from its website, which includes a descriptive paragraph about the monitor. The description for the 1501MP reads as follows:

The Samsung SyncMaster 1501MP is a 15-inch TFT-LCD display that functions as a computer monitor, a TV and a video monitor – all in one. It delivers next-generation TV and high quality images with its built-in TV tuner. The 1501 MP features a 400:1 contrast ratio, 270 cd/m2 brightness, 1024 x 768 resolution, 0.297 pixel pitch and viewing angle of 150/120 degrees. It also includes a remote control, RCA video & audio, S-video and a built-in antenna connector to accommodate RGB input and NTSC.

The description for the 172MP states that it is a “display delivering next-generation TV and high-definition images,” and that the “[p]icture-in-picture functionality lets you watch TV or VCR and DVD movies.”

The description of the 211MP is as follows:

The SyncMasterTM 211MP is perfect for video and audio professionals looking to produce digital content material for computer video games, film and HDTV production. The MP allows users to create combinations of real video and animation and combine these elements using computer-based tools. A true multimedia display, the MP is also designed for general non-linear video editing. It offers analog RGB and CVBS video input, component video, S-Video, HDTV capability and includes a modular TV tuner with an antenna connection for cable TV and satellite viewing.

The description of the 240T is as follows:

Introducing the revolutionary new SyncMaster 240T – the World’s First 24” analog/digital LCD Monitor. With extensive multimedia capabilities, brilliant colors, and immaculate clarity, the 240T expands your productivity as it expands your viewing area. The powerful 240T will redefine the way you do high-end graphics, spreadsheets and drawings with a complete desktop multimedia presentation and video display in one exquisitely designed device.

SEA takes the position that the monitors listed are capable of use as computer monitors, video monitors and televisions (except models 210T and 240T which do not have TV antenna/cable and built-in TV tuner), and are principally used with automatic data processing (ADP) systems. On this basis, SEA asserts the monitors are distinguishable from monitors previously classified in heading 8528, HTSUS, and are classifiable in heading 8471, HTSUS. In support of its position, SEA asserts that the brightness levels, synchronization configuration, and VESA compliant mounting features are physical characteristics indicative that the monitors are principally used in ADP systems. SEA has also submitted lists of retailers selling the monitors and quantities sold, to support that the monitors are principally used in ADP systems. SEA has subsequently submitted a marketing study made by an independent consultant, that pertains to four of the subject monitors. In addition, SEA has provided additional argument that the scalers, response time, and size are factors that support that the monitors are principally used in ADP systems.

ISSUE:

Whether the LCD monitors are classified as ADP monitors under heading 8471, HTSUS, or reception apparatus for television under heading 8528, HTSUS, or video monitors under heading 8528, HTSUS.

LAW AND ANALYSIS:

Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, 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 2 through 6 may then be applied in order.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. 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:
Other:
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: Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus:
8528.12 Color:
With a flat panel screen:
Other:
8528.12.72 Other.
Video monitors:
8528.21 Color:
With a flat panel screen:
Other:
8528.21.70 Other.

The subject monitors are composite machines that have the functions of both an ADP machine monitor and a video monitor. In order to be classified under heading 8471, HTSUS, the monitor must meet the criteria set forth in Legal Note 5(B) to Chapter 84, which provides guidance regarding units of ADP machines. It states that “[a]utomatic data processing machines may be in the form of systems consisting of a variable number of separate units.” A unit is to be regarded as a part of a complete system if it meets all of the following conditions:

It is of a kind solely or principally used in an automatic data processing system; It is connectable to the central processing unit either directly or through one or more other units; and It is able to accept or deliver data in a form (codes or signals) which can be used by the system.

With regard to (a), above, in HQ 966270, dated June 3, 2003, in footnote 1, it is explained that despite the limitations set forth in the EN 84.71, which could preclude classification of the subject monitors in heading 8471, HTSUS, we must give weight to the fact that it is possible to have a multi-functional display unit that is used both with an ADP system and as a video monitor. In HQ 966270, we found that despite the restrictions in EN 84.71, a multifunction LCD monitor can be of a kind used with an ADP system. Therefore, in accordance with HQ 966270, and the fact that these monitors can be used both with ADP systems and as televisions and/or video monitors, we find that each of the subject monitors are of a kind used with an ADP system. In addition, each of the subject monitors is directly connectable to the central processing unit, and can accept data in a form which can be used by the system.

The monitors are also capable of displaying a variety of video signals through the various video inputs, and all of the monitors, with the exception of 210T and 240T, also function as reception apparatus for television because they have built-in TV tuners. Therefore, the monitors are also provided for, eo nomine, under heading 8528, HTSUS, as reception apparatus for television and/or video monitors.

Under Note 3 to Section XVI, HTSUS, the subject monitors are therefore considered to be composite machines that have the functions of both an ADP machine monitor and reception apparatus for television and/or video monitors. Note 3 to Section XVI, HTSUS, provides that:

Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed 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.

Application of Note 3 does not require a determination of classification under two or more subheadings but rather determination of the ability to perform two or more complementary or alternative functions. Therefore, the conclusion that a monitor is a composite machine, one of the functions of which is as an ADP monitor, does not mean that a monitor is classifiable under heading 8471, HTSUS.

In HQ 966270, in footnote 4, it was stated that a principal use analysis could be helpful to establishing the principal function of composite merchandise. In HQ 966270, upon concluding that a principal use for the merchandise at issue could not be determined, it was found that a principal function of the merchandise could not be established.

As stated above, for classification under heading 8471, HTSUS, Legal Note 5(b) to Chapter 84, requires that an article be “of a kind solely or principally used in an ADP system.” When a tariff classification is controlled by use, Additional U.S. Rule of Interpretation (AUSRI) 1 dictates how the tariff classification should be construed. See, e.g., Primal Lite, Inc. v. United States, 182 F.3d 1362 (Fed. Cir. 1999). AUSRI 1 provides that:

In the absence of special language or context which otherwise requires –

(a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.

It is the principal use of the class or kind of goods to which the imports belong, at or immediately prior to the time of importation, and not the principal use of the specific import that is controlling under the General Rules of Importation. See Group Italglass U.S.A., Inc. v. United States, 17 CIT 1177, 1177, 839 F. Supp. 866, 867 (1993). The class or kind of goods is limited to those with which the imported goods are “commercially fungible.” Primal Lite, Inc. v. United States, supra.

The courts have provided factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. These factors include: 1) general physical characteristics; 2) expectation of the ultimate purchaser; 3) channels of trade; 4) environment of sale (accompanying accessories, manner of advertisement and display); 5) usage of the merchandise; 6) economic practicality of so using the import; and 7) recognition in trade of this use. See Essex Manufacturing, Inc. v. United States, No. 2006-1, slip op. at 14 (Ct. Int’l Trade Jan. 3, 2006). See also Lenox Collections v. United States, 20 CIT 194, 196 (1996). See also United States v. Carborundum Co., 63 CCPA 98, 102, 536 F.2d 373, 377 (1976), cert denied, 429 U.S. 979 (1976); G. Heileman Brewing Co. v. United States, 14 CIT 614, 620 (1990); and Kraft, Inc. v. United States., 16 CIT 483, 489 (1992).

In SEA’s submissions and presentation to this office, SEA sets forth analyses with respect to five of the seven factors. We will address the arguments and facts within the context of the seven factors, as they apply to the subject merchandise.

General Physical Characteristics

The subject monitors, given their inputs of at least 15pin D-sub and S-Video connectors, are clearly suitable for use both as ADP system monitors and video monitors. The ten monitors with the built in TV tuners are suitable for use as reception apparatus for television.

We address the additional physical characteristics (of those set forth as determinative by SEA) separately:

Brightness: SEA asserts that the maximum brightness levels determine the distance from which the monitor is intended to be viewed by the end user, with the lower levels being consistent with predominantly close viewing, and the higher levels indicating more distant viewing. SEA asserts that the brightness of the monitors, which ranges from 230 cd/m2 to 270 cd/m2, is lower than on LCD televisions, and is similar to computer-only monitors. SEA provided in Attachment 6 to it’s initial submission a chart comparing the brightness of the subject monitors to the brightness of computer-only monitors and LCD televisions with ADP capability. The brightness of the computer-only monitors ranged from 250 to 270 cd/m2, and the brightness of the LCD televisions with the limited ADP capability ranged from 350 to 450 cd/m2.

With respect to LCD ADP monitors, in an April 6, 2004 internet article, LCD Specs: Useless?
http://www.pcworld.com/news/article/0,aid,110483,pg4,00.asp , it was stated that “for multimedia images in a well-lit room, brighter screens are better – say, 300 to 400 cd/m2compared with the 200 cd/m2 (or so) of most mainstream LCDs.” Another internet site states:

LCD monitors are brighter than CRTs and therefore there’s little reason to hunt for an especially bright model. Anywhere from 250-300 [cd/m2] is standard. If the [cd/m2] are much higher you’ll likely end up adjusting the brightness control way down. What is a LCD Monitor? http://wisegeek.com/what-is-a-lcd-monitor.htm (copyright 2006).

Attachment 2(B) to SEA’s February 3, 2006 submission, is an April, 2005 internet article entitled An LCD on Every Desk by Mark Clarkson. The article states that at between 250 and 300 cd/m2, all LCD monitors from major manufacturers “provide adequate brightness,” “anything over 300 [cd/m2] is probably too bright for desktop use,” and that “unless you’re watching TV on your LCD monitor, or working outside in the sunlight, brightness is no longer an issue.”

With respect to LCD televisions, in one guide to LCD televisions, it was stated that LCD-TVs typically have a brightness of 450 to 800 cd/m2. Geek Candy Flat Screen Envy, http://www.microcenter.com/random_access/newsletters/05_newsletters/0305/geek_candy One internet website, copyrighted from 1997 – 2004, describes the benefits of LCD televisions, and states that the majority of LCDs produce 150-200 cd/m2, “which is fine for most users.” http://www.dtvexpress.com/learn/lcd_television_benefits.html In Cnet.com’s Monitor Buying Guide, it is stated that “a measurement of 200-250 [cd/m2] is OK for most productivity tasks; 500 [cd/m2] is better for TV and movies.”

We have also researched the brightness of various products on the market. The Legend website www.legendmicro.com, on October 28, 2005, was showing a Tatung 27” LCD TV, with ADP capability. The monitor had a built-in tuner and had a brightness of 270 cd/m2. In December, 2005, a Samsung website was showing a 21” monitor described as an “analog/digital LCD monitor” (model 214T) and a 19” “multifunction LCD tv/monitor” with a built-in television tuner (940MW), both having brightness of 300 cd/m2. Therefore, there are televisions with ADP capability (the Tatung and the Samsung 940MW) that have a brightness that is the same or lower than the brightness of monitors which are not advertised as video monitors (Samsung 214T).

No mention has been made, nor have we found any correlation between the brightness and size of a monitor. Based on SEA’s submission, it would appear that a larger monitor which would be more likely viewed from a distance, would have a significantly higher brightness, however, this office has classified a 42” monitor with a brightness of 350 cd/m2 in heading 8528. HQ 963314, dated July 30, 2001. At the December meeting, SEA informed us that some ADP only monitors have a brightness of 800 cd/m2, and stated that maximum brightness is increasing.

We have been provided with Attachment 1 to SEA’s January 27, 2006 submission, a “Samsung MFM Consulting Project” study (“MFM Study”), performed by IDC, a “global market intelligence firm.” According to SEA, the MFM Study was conducted in August, 2004. The subject of the study was four of the subject monitors, which are referred to as ‘Multi-Function Monitors” in the study. The study included online interviews with 611 consumers in targeted demographics, online interviews with 247 business users in five specific industries, in-person interviews with 52 consumers, and phone-based interviews with four channel partners. With respect to brightness, in the market overview section, on page 6, it was stated that the “early products were plagued with sub-standard video quality” and the examples given are slow response time and limited brightness. The MFM Study concluded, on page 22, that in a continued evolution of the product, there would be improved brightness levels. These observations tend to support a determination that the monitors with a lower brightness were less suitable for use as televisions or video monitors. In both the current LCD monitor characteristics summary and the current LCD TV characteristics summary, brightness ranked third in importance of features. This would indicate that as brightness is equally important for LCD television as LCD monitors, a monitor having a lower brightness would not be desirable for watching television.

We find that the ADP monitors require a lower brightness than LCD video monitors or televisions, and therefore the lower brightness of the subject monitors may be indicative that the subject monitors belong to the class or kind of good which is used principally as ADP monitors. However, in light of the existence of ADP monitors having a brightness of 800 cd/m2, and monitors advertised as televisions with ADP capability having a brightness of 270 cd/m2, the brightness does not help us determine whether the physical characteristics of the monitors are of an ADP monitor or video monitor or television receiver.

Synchronization Configuration: SEA asserts that the multiple synchronization configurations, separate sync H/V, composite sync (“c-sync”) and synchronization on green (“SOG”), allow the monitors to be used in personal, commercial and industrial computer applications. According to SEA, separate sync H/V is the most common and widely used configuration in the personal computer industry, and conversely c-sync and SOG are used in industrial or commercial computer applications. We were able to find some documentation that would confirm that c-sync and SOG are limited to ADP use. For example the specifications for a Sharp LCD TV monitor, IT-23M1U, refer to c-sync, SOG and separate H/V in the context of PC inputs as opposed to video inputs, and a block diagram for an Inrevium sync separation integrated circuit, also refers to c-sync and SOG with respect to a “pc” line as opposed to “video” line. However, in other contexts, composite sync is referred to as a “video signal”
http://zone.ni.com/devzone/nidzgloss.nsf/webmain/C172F573EEBAB4EE8625686A007 and with respect to component video, the embedding of the sync signal in the green component is referred to as sync-on-green http://en.wikipedia.org/wiki/Component_Video.

At the December meeting, SEA was asked specifically to clarify for CBP the synchronization configurations, and establish in particular that they pertain only to ADP use. In its February 3, 2006 submission, SEA explained that despite a diligent search for publicly-available sources, it was unable to locate any additional information on the applicability of certain synchronizaton configurations to various applications. SEA indicated that if critical to the instant decision, it could obtain an affidavit from Samsung and/or independent engineers, and a commissioned report or letter from an industry analyst or consultant, on this characteristic. We believe the conflicting information and lack of readily available clarifying information on this point tends to indicate that the synchronization characteristics are not indicative of the class or kind of good to which the subject monitors belong.

VESA Compliant Mounting Features: According to it’s website, the Video Electronics Standards Association (“VESA”) is an international non-profit corporation which supports and sets industry-wide interface standards for the PC, workstation, and consumer electronics industries. All but two of the subject monitors have “VESA-compliant” mounting. SEA asserts that VESA-compliant mounting ensures that the monitors are compatible with various types of wall brackets, arms, and pivots used in personal computer and industrial applications. SEA asserts that the mounting choices for LCD televisions with limited ADP capability are not constructed with VESA-compliant mounting because unlike ADP monitors, those televisions are not intended to be used in a wide variety of ADP applications and are designed for placement on flat surfaces such as desktops, shelves or countertops, or on household walls. Given that VESA sets standards for the PC, workstation as well as consumer electronics industries, we do not believe that a VESA-compliant mounting gives any indication that an article belongs more to one industry than the others.

SEA has provided, as Attachment 17 to it’s initial submission, a portion of the “VESA Flat Display Mounting Interface Standard (for Flat Panel Monitors/Displays/Flat TVs)”. Specifically, SEA refers to paragraph 1.9 of the standard, which illustrates various mounting methods including overhead mounts as well as mounts on poles, arms and pivots, as supporting it’s position that the various mounting options make the subject monitors more suitable for ADP use than as televisions or video monitors. However, according to the title of the standard, clearly the standards apply equally to ADP monitors and televisions.

We have found a Samsung 23” LCD television, LN-R237W, which was available on Samsung’s website in October 2005, and was described as an “LCD Flat Panel TV,” with specifications indicating the LN-R237W was VESA compatible. Also available in October, 2005, on the Sony Style website was a 23” LCD television, described as a “Flat Panel Television”, which was described as “VESA Compliant.” These examples indicate that LCD televisions as well as any monitors may have VESA compliant or VESA compatible mounting features. We find such specification is not indicative that a monitor is of the class or kind of good principally used as an ADP monitor.

Scalers: SEA asserts that the subject monitors have more sophisticated scalers, enabling personal, commercial and industrial ADP applications. SEA describes the scaler as the software-based algorithm used to adjust to various output resolutions, such as 640x480, 1024x768, and 1280x1024. According to SEA, the scalers cannot make the same adjustments for televisions that they can for ADP monitors and multifunction monitors. SEA was requested to provide additional information supporting the assertions regarding the scalers.

In its February 3, 2006 submission, SEA explained that despite a diligent search for publicly-available sources, it was unable to locate any additional information on the differences regarding scalers used in LCD monitors used as televisions, and those used in ADP applications. SEA indicated that if critical to the instant decision, it could obtain an affidavit from Samsung and/or independent engineers, and a commissioned report or letter from an industry analyst or consultant on this characteristic.

Given that SEA was not able to point to any specification or particular feature of the subject monitors that would identify the presence of these sophisticated scalers, CBP cannot discern the presence or absence of such scalers. Therefore, even if we had additional information regarding the scalers at issue, we could not find that scalers are a distinct physical characteristic of monitors. Therefore, we do not find scalers to be indicative of the class or kind of good to which the subject monitors belong.

Response Time: SEA asserts that LCD computer monitors have slower response times compared to LCD televisions. According to SEA, the response time is a measurement of how fast a pixel can change its state, and that slower response times create “video smear.” SEA asserts that the subject monitors have response times comparable to computer-only monitors, and that response times for LCD televisions could be between 2 and 12 ms. The subject monitors for which response times are provided, have response times of 25 ms.

In WiseGeek’s, What is a LCD Monitor, supra, with respect to response time it was stated that smaller values represent a faster response time and are more desirable for gaming or viewing video. In Cnet.com’s Monitor Buying Guide, with respect to response time it is stated that “a maximum of a 12ms-to-15ms response time across the spectrum is required for gaming or viewing television and movies without ghosting or streaking.”

In its initial submission SEA has provided specifications for seven “computer-only monitors” (Attachment 10), which range in size from 15” to 21”, and specifications for three “LCD televisions with limited ADP capability” (Attachment 11), which range in size from 15” to 22”. The specifications provided response times for five of the seven “computer-only monitors”, and for those five, the response time was 25ms. The response time for two of the three monitors with “limited ADP capability” was 25ms, and 16ms for the 22” monitor. The two Samsung monitors discussed, infra with regard to brightness (the 214T and 940MW) also had equal response times of 8ms. Both of those monitors were listed under “Computers & Related Products” and the 214T was listed as both a “multi-function” monitor and just a monitor.

While a faster response time may be more desirable for watching video and television, we do not find that in this case there is a significant distinction between the subject monitors and the monitors asserted to have limited ADP capability on which we can base the conclusion that the subject monitors are of a class or kind principally used in ADP systems. This is further confirmed by the availability of monitors listed under “Computers & Related Products” that have a response rate lower than that which is stated as being the minimum for viewing television and movies.

Size: The sizes of the monitors which are the subject of the internal advice request range from 15” to 24”. In its February 3 submission, SEA provided documentation to substantiate that the subject monitor screen sizes are consistent with the screen sizes in the LCD computer market, and that screen size is a factor in distinguishing LCD ADP monitors from LCD televisions. In its submission, SEA relies on the MFM Study and several other publications including some by Display Search, a company which provides market research on flat panel displays.

SEA points out a finding in the MFM Study that “as televisions, the subject monitor ‘screens are too small’.” MFM Study, p. 8. Other observations of the study are that “many [respondents] say larger model is too big for computer monitor and too small for TV”, and other respondents say they would not want to watch a 2 hour DVD or television program on the small screen. MFM Study p. 93. The MFM Study also finds that size is the second most important factor, after price, when purchasing flat panel MFM. MFM Study, p. 77. The MFM Study indicates a preference for 17” to 19” screens among consumers and a preference for 17” among businesses. MFM Study, pp. 77, 90.

SEA has submitted several Display Search market analyses. We do not find the Display Search information probative for several reasons. First, Display Search does not define what is considered an LCD Monitor. There is no indication of whether it has video capability. There is also no indication of whether the LCD TV category includes televisions with ADP inputs. Thus, we do not know what types of monitors are included in each market share analysis. Second, the Display Search website indicates that the quarterly reports are based on the global market as opposed to any single region. The tariff classification is to be determined in accordance with the use in the U.S. of goods of the class or kind to which the imported goods belong. Therefore, analyses of competing classes or kinds of merchandise must be limited to those in the U.S. and the global market analyses are not relevant and will not be considered.

SEA has also submitted an article from www.reed-electronics.com, dated July 21, 2004, which gives the opinion that at the time 24” was the size limit for desktop displays.

We find that the information provided with regard to the size demonstrates some preferences for certain screen sizes for the subject monitors. The preferences for monitors of a certain size does not indicate that the subject monitors are of the class or kind of goods which principally function as ADP monitors. It simply confirms that they are consistent with the sizes preferred for monitors. Nothing submitted indicates that the subject monitors are less likely to be used as televisions or video monitors because of their size, with the exception of the comments that the screens are too small for televisions or that it would not be desirable to watch a two hour DVD or television program. However, we do not find those comments reflect the manner in which the subject monitors are used, but instead reflect preferences for televisions or video monitors.

Other: In addition to those physical characteristics set forth by SEA as indicative of the principal use of the subject monitors, we believe an additional important physical characteristic is the presence of a television tuner. The presence of the tuner in the ten monitors weighs heavily against the principal use of the monitor being that of an ADP monitor. The ease of simply turning the monitor on and off without requiring any connections other than to an electrical outlet indicates that the monitors with a built-in TV tuner belong to the class or kind of goods which are principally used as television receivers.

With regard to overall image quality, which is a characteristic in which all the previously mentioned characteristics have an impact, the MFM Study listed as highlights the observations that “image quality of TV generally as good or better than home TVs” and “high marks for monitor picture quality.” MFM Study, p. 93. The MFM Study lists an observation that “as TVs, MFM video quality is inferior to LCD TVs” (p.8) as a weakness of the MFM which are the subject of the study. These observations tend to cancel out one another, in that some find the monitors to have inferior video quality while others find them to have a quality superior to other televisions. These conflicting observations support a conclusion that the physical characteristics do not support a finding of a principal function of the subject monitors.

Overall, of the foregoing physical characteristics, brightness and response time were the only factors indicative of the class or kind of good to which the monitors belong. These characteristics however do not help us determine whether the physical characteristics of the monitors are of an ADP monitor or video monitor or television receiver, for the reasons stated above. Moreover, the presence of the tuner is indicative that the monitors do not belong to the class or kind of good which are principally used as ADP monitors.

Expectation of the Ultimate Purchaser

SEA states in its initial submission that the subject monitors were specifically developed and designed to target consumers that use ADP systems and would use these monitors primarily with those systems. As support, SEA asserts that the price differential between the subject monitors and the monitors with limited ADP capability indicates different expectations of the consumers. According to the information submitted with regard to specified 17” monitors, the “ADP only” monitors cost the least, and the television monitors with limited ADP capability cost the most, and in the middle are the subject monitors. SEA asserts that because the subject monitors are not suited for viewing at distances of more than a few feet, it is unlikely that a consumer who intends to use the monitor primarily as a television will purchase the subject monitor in order to achieve a cost savings.

Given the analysis of the physical characteristics above, we do not find that the evidence supports a conclusion that the video capability of the monitor is so diminished that it would preclude significant use of the monitor for television or video purposes. The subject monitor sizes are the same sizes available in televisions with “limited ADP capability”, and it has not been established that the subject monitors cannot be used in the same manner. If the video capability were so limited one could use the same argument, that a consumer would not pay the higher price for the subject monitors when they could have an “ADP only” monitor for less. The higher price of the subject monitors clearly indicates the purchaser expects to use the monitor for both functions.

We also note the comments of the people surveyed in the MFM Study. The highlights included the following statements: “liked convenience of combining two devices into one”, “image quality of TV generally as good or better than home TVs”, “many say larger model is too big for computer monitor and too small for TV”, and “would not want to watch 2 hour DVD or TV program on small screen”. MFM Study, p. 93. These comments do not support a finding of a principal use as an ADP monitor, as they express both positives and negatives with respect to use as both the ADP and television/video monitors.

Channels of Trade

SEA asserts that the subject monitors are primarily sold by computer retailers and in the computer sections of consumer electronics stores as opposed to the monitors with limited ADP capability which are sold in the television sections of audio/visual and consumer electronics stores. To substantiate this, in Attachment 13 to the initial submission, SEA has provided documentation of customers and quantity sold for each of the subject monitors for a one month period which is asserted to be representative of SEA overall sales for those products. In addition SEA has provided similar customer and sales information for all LCD computer monitors and LCD televisions for the same period.

From this information we can ascertain that most of the subject monitors were not sold to the well known large consumer electronics retailers. One monitor, the 170MP was sold substantially only to the large consumer electronics retailers, and another monitor, the 150 MP, was sold essentially only to one large department store retailer. With respect to the other monitors, 36% (1501MP) to 75% (152MP) of the monitors were sold to four companies that refer to themselves as distributors of information technology (IT) products. The remaining companies either couldn’t be identified, or were not so clearly identified as being limited to information technology. For example, one company to which a significant percentage of the monitors were sold indicated on its website that it is a specialty distributor focusing on pro AV and home theatre, LCD displays, LCD TVs, touchscreens, plasma displays, projectors, digital cameras, optical storage, and printers. It also stated that it sells only to computer resellers, vertical manufacturers and system integrators. Another company to which a significant number of the monitors were sold, promotes itself as able to put its resellers in touch with multiple product categories, including home computer, consumer electronics and video game retailers. Numerous purchasers of the monitors were companies that sold televisions as well as ADP systems.

SEA has also provided another document, Attachment 14, which shows the customers and quantity for the sale of all LCD computer monitors including the subject monitors and the customers and quantity for the sale of LCD televisions. We note that other than some of the larger retailers of consumer electronics, the LCD television consumers were not the same as the LCD computer monitor customers.

It does appear that a majority of the monitors are sold to IT and electronics distributors, and not consumer electronics retailers, and to customers other than the customers of the LCD televisions. This factor indicates that the monitors, except for the 150MP and 170MP, belong to the class or kind of good principally used as an ADP monitor.

Environment of Sale

Next, we consider the environment in which the merchandise is advertised and displayed. SEA has asserted in its initial submission that its marketing functions are divided between the Digital Consumer Electronics Division (DECD) which handles televisions and other consumer electronics products, and the Digital Information Technology Division (DITD) which handles ADP monitors, printers and peripherals. SEA asserts that DITD markets the subject monitors as well as computer only monitors, and that DECD markets the LCD television monitors with limited ADP capability.

SEA asserts that DITD and DECD do not advertise in the same publications and has provided the list of publications in which DITD advertises. The list of publications consists of mainly computer and technology related publications with the exception of a few business magazines with a broader market.

On the specification sheets on the monitors printed out from the SEA website and submitted with the initial submission, the subject monitors appear under the category of “Computers and Related Products,” and the LCD monitors with “limited ADP capability” appear under the category of “TV, Video & Audio.” The LCD “Computer only monitors” in Attachment 10 also appear under the “Computers and Related Products” category.

The promotional descriptions of four of the subject monitors were set forth in the FACTS section above. Clearly the description of the 1501MP and the 172MP emphasize the video capabilities of the monitor. The descriptions of the 211MP and the 240T emphasize the multimedia capability of the monitors. The remaining monitors are described in similar variations. Certain of the monitors are referred to as “Multi-Function LCD” (150MP, 1501MP, 151MP, 170MP, 1701MP, 171MP, and 172MP), while others are referred to as “Digital LCD” (210T), and “Commercial LCD” (211MP, 240T, and 241MP) (we do not have the Samsung website description for the 152MP).

We find that in general, the environment of sale in terms of the DITD marketing and website locations described above is indicative that the principal use of the monitors is as ADP monitors. However, the product descriptions for the monitors emphasize use as televisions or video monitors or multifunction monitors, which indicate the principal use is not as an ADP monitor or is indeterminable. As such, this factor is not conclusive as to the class or kind of monitors to which these belong.

Usage of the Merchandise

In the Expectations of the Ultimate Purchaser section above, comments noted in the survey as “highlights” were set forth. These comments are provided as observations and preferences, and they do not provide any information as to how purchasers use the subject monitors. SEA also asserts that the MFM Study supports certain uses of the subject monitors, including 1) “niche markets” for places where space-savings is essential such as college dorm rooms, small apartments or bedrooms; 2) survey respondents statements that most likely placement at home would be in study/den/home office; and 3) survey responses indicating business opportunities in trading, education, security and film and video production sectors. February 3, 2006 submission, Attachment 3. The foregoing three opportunities do not indicate use but potential use. Secondly, placement in dorm rooms and small apartments do not indicate a principal function as they would clearly be used for both; similarly use in the study/den/home office does not clearly support one use over the other. We note that placement in the bedroom was the second choice among the survey respondents. MFM Study, p. 94. This placement also does not support one use over the other. The MFM Study also states that currently the trading, school classrooms, security and film and video production sectors use computers and televisions in the same environment. MFM Study, p. 9. We do not find that any of the foregoing indicates the class or kind to which these monitors belong.

Economic Practicality of So Using the Product

As discussed with respect to the “Expectation of the Ultimate Purchaser” factor, the subject monitors cost more than the “ADP only” monitors and less than the television monitors with limited ADP capability. The higher price of the subject monitor than the “ADP only” monitor indicates that it would not be economically practical to purchase the subject monitors unless they were intended to be used as both ADP monitors and television receivers and/or video monitors. This factor does not help us determine the principal use of the subject monitors.

Recognition in Trade of this Use

There is no evidence regarding the recognition in trade of the use of the subject types of monitors for one use over another, and this factor does not help us determine the principal use of the subject monitors.

Based on the above factors, we must determine the principal use and function of the subject monitors or whether such a determination can be made. We will also consider CBP prior rulings on LCD monitors that are capable of use both as ADP monitors and television receivers and/or video monitors.

CBP has issued numerous decisions concerning monitors that function as both ADP monitors and video monitors or television receivers, and generally has not found a principal use of these types of monitors. E.g. HQ 966270, dated June 3, 2003, HQ 963314, dated July 30, 2001, HQ 962557, dated October 12, 2000, and HQ 960282, dated October 22, 1998. SEA asserts that the subject monitors are distinguishable from that in HQ 966270, dated June 3, 2003 with respect to three facts, brightness, method of advertising and channels of trade. HQ 966270 pertained to a 17.1” wide LCD monitor, for which the principal function could not be determined. The ruling resulted in classification on the basis of GRI 3(c), according to which merchandise is classified under the heading which occurs last in numerical order among those which equally merit consideration. The monitor in HQ 966270 was classified under heading 8528, HTSUS, as a video monitor.

Brightness is only one of numerous general physical characteristics, and in turn, the general physical characteristics are only one of several factors considered in determining the principal use of imported merchandise. As acknowledged in SEA’s submission, brightness was not addressed in HQ 966270. Another significant fact distinguishing ten of the twelve subject monitors from that in HQ 966270 is the presence of built-in tuners. The presence of tuners weighs more heavily against principal use as ADP monitors than a higher brightness, in light of the variety of brightness found in similar types of monitors. Subsequent review of the specifications of the monitor in HQ 966270 shows that the monitor at issue had a brightness of 450 cd/m2 and a response rate of 22 ms. In HQ 966270, it was acknowledged that for the monitor at issue in HQ 966270, the entertainment factor appeared secondary to use as an ADP monitor, with respect to the purchaser expectations factor. In HQ 966270, the Expectations of Purchasers factor was the only one that indicated principal use of the monitor as an ADP monitor. With respect to the subject monitors, for certain monitors, only the Channels of Trade factor indicates the principal use of the subject monitors is as ADP monitors.

In HQ 960354, dated October 22, 1998, CBP classified a 29” cathode-ray tube (CRT) monitor combined with a vision box, under heading 8528, HTSUS, as reception apparatus for television. In that case, the vision box contained a television tuner, and it was acknowledged that the computer image was not as clear as that on a standard ADP monitor. None of the factors addressed indicated a principal function of the article. With respect to the subject monitors, while television tuners are present, the functioning of the ADP monitor is not diminished. In HQ 960282, dated October 22, 1998, CBP classified a 36” CRT monitor without a tuner, as a video monitor under heading 8528, HTSUS. In that case also it was acknowledged that the computer image was not as clear as that on a standard ADP monitor, and none of the factors addressed indicated a principal function of the article.

Other decisions addressing the classification of monitors are not entirely on point as they pertain to larger sized monitors, and in those cases little or no information was provided of the principal use or function of the monitors. See, e.g. HQ 962677, dated September 23, 1999, HQ 963314, dated July 30, 2001, HQ 961466, dated April 6, 1999, and HQ 962557, dated October 12, 2000.

The factors pertaining to the subject monitors discussed above are generally inconclusive, and as such, consistent with prior CBP decisions, they do not support finding that the principal use of the subject monitors is as ADP monitors. Only the Channels of Trade factor indicates that any of the monitors may be principally used as ADP monitors. When some or all of the factors applied here have been analyzed in the courts, a determination of principal use has been based on all or most of the factors addressed being determinative. See e.g., Essex Manufacturing, Inc. v. United States, supra, St. Eve International v. United States, 267 F.Supp.2d 1371 (Ct. Int’l Trade, 2003), G. Heileman Brewing Co. v. United States, supra, Lenox Collections v. United States, supra, and United States v. Carborundum Co., supra. In this case, given that only one factor helps us determine the principal use of the subject monitors, we must conclude that the evidence does not support a finding that the subject monitors are of a class or kind of merchandise principally used as ADP monitors. Therefore, the principal function of the monitors cannot be determined in accordance with Note 3 to section XVI of the HTSUS. The General ENs to Section XVI that deal with multi-function machines reads, in pertinent part, as follows:

Multi-Function Machines and Composite Machines (Section Note 3) In general, multi-function machines are classified according to the principal function of the machine.

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)

Having been unable to determine the principal function of the subject monitors, we apply GRI 3(c), as per the EN above, and classify the merchandise under the heading which occurs last in numerical order among those which equally merit consideration. Therefore the subject monitors with television tuners, models 150MP, 1501MP, 151MP, 152MP, 170MP, 1701MP, 171MP, 172MP, 211MP, and 241MP, fall to be classified under heading 8528, HTSUS, specifically 8528.12.72, HTSUS, as: “[r]eception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus: Color: With a flat panel screen: Other: Other.” The subject monitors without television tuners, models 210T and 240T, fall to be classified under heading 8528, HTSUS, specifically 8528.21.70, as “[r]eception 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.”

HOLDING:

By application of Note 3 to Section XVI, and GRI 3(c), the models 150MP, 1501MP, 151MP, 152MP, 170MP, 1701MP, 171MP, 172MP, 211MP and 241MP are classified in heading 8528, specifically 8528.12.7201, HTSUSA, as: “[r]eception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus: Color: With a flat panel screen: Other: Other,” with a column one, general duty rate of 5% ad valorem.

By application of Note 3 to Section XVI, and GRI 3(c), the models 210T, and 240T are classified in heading 8528, specifically 8528.21.7001, HTSUSA, as: “[r]eception 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,” with a column one, general duty rate of 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 internet at www.usits.gov/tata/hts/.

Sincerely,

Myles B. Harmon, Director

Previous Ruling Next Ruling

See also: