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HQ W967537

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November 8, 2006

CLA-2-RR:CTF:TCM W967537 IOR

CATEGORY: CLASSIFICATION

TARIFF NO: 8528.21.70, HTSUS

Port Director
Customs and Border Protection
301 E. Ocean Blvd.
Long Beach, CA 90802
Attn: Angelina Cano, SIS

RE: Protest Application for Further Review 2720-04-100491; 42, 50 and 61 inch plasma displays

Dear Port Director:

This is our decision on Protest 2720-04-100491, filed on behalf of the importer, NEC Solutions (America), Inc. (NEC), against your classification of several plasma display units, under the Harmonized Tariff Schedule of the United States (HTSUS).

FACTS:

The protest covers 141 entries of NEC’s plasma display units. The merchandise was entered from October 17, 2003 through January 5, 2004 under subheading 8471.60.45, HTSUS, as display units of automatic data processing (ADP) machines. On August 6, 2004, Customs and Border Protection ("CBP") liquidated the subject entries under subheading 8528.21.70, HTSUS, as flat panel screen video monitors, with a video diagonal exceeding 34.29 cm. This protest was timely filed on November 3, 2004.

The display units at issue are NEC models PX42VP4A, PX-42VP4DA, PX-50XM2A, PX-50XM3A, PX-61XM2A and PX-61XM2A/S. They are plasma display units ranging from 42 to 61 inches in size. The protestant has provided product brochures with specifications for the PX-42VP4A and PX-42VP4DA (the brochures describe the models as “Plasma Sync 42VP4 and 42VP4D”), and the Plasma Sync 50XM3 and 61XM2. According to the specifications, the 42 inch VP4 models have an aspect ratio of 16:9, a pixel pitch of 1.08 mm, viewing angle of 160 degrees, horizontal frequency range of 15.5 to 119.0 kHz, and a vertical frequency range of 50 to 120 Hz. The specifications identify PC compatibility with VGA, SVGA, XGA, SXGA, UXGA, Wide VGA, and Wide XGA, video signal compatibility with PAL, SECAM, and NTSC, and HD video signal compatibility with 480p, 480i, 525p, 525i, 540p, 625p, 625i, 720p, 1035i, and 1080i. The monitors have three RGB connectors (15-pin mini D-sub, 5 BNC, and 29-pin DVI), 3 video connectors (composite BNC, composite RCA, and S-video), and 2 HD connectors (RCA component and BNC component). The brochure refers to the monitors as “NEC’s new 42” Public Display Series PlasmaSync monitors” and states their “sleek new design with cable management system, programmable timer and portrait capability make them the perfect choice for any public environment.”

The specifications for the PlasmaSync models 50XM3and 61XM2 have diagonal screens of 50 and 61” respectively, a pixel pitch of .81 mm and .99 mm respectively, a horizontal frequency range of 15.5 to 110.0 kHz, and the remaining specifications are the same as those described for the 42 inch VP4 models.

Literature submitted, referring to the PlasmaSync monitors in general, states they “offer outstanding picture quality, high resolution support, computer, video and HDTV source compatibility for conference room presentations, broadcast production and other multimedia applications.” On a PlasmaSync website, www.plasmasync.com, with respect to the application of the PlasmaSync line of monitors, which include the subject models, it is stated “around the world, NEC’s PlasmaSync monitors are serving important roles for public display and multimedia presentation display.” The examples of applications given are retail, public institutions, transportation, tradeshow, medical institution, showrooms, educational institution and “others.” As examples of these applications, the image shown was of a monitor depicting an image for viewing by passerby, such as signs in bookstores, advertising, and timetable and flight information. One image portrayed use of the monitors as electronic scoreboards in a bowling alley. The application depicted as “others” shows many monitors depicting different images in a broadcast control room.

The protestant has submitted letters from 34 of its distributors/customers. Each letter describes the use to which the majority of the subject monitors it sells are put. The letters indicate that the use of the monitors is as digital signage and public display applications, and for boardrooms, training rooms and classrooms.

All of the monitors are certified as FCC Class A. A system that meets FCC Class A requirements may be marketed for use in an industrial or commercial area, whereas a system meeting FCC Class B requirements may be marketed for use in a residential area in addition to use in an industrial or commercial area.

The protestant has submitted literature on thin form factor drive systems (or personal computers). They are capable of being mounted directly behind large screen liquid crystal device (LCD) and plasma monitors, and “have been specifically designed to simplify the installation and maximize the performance of large screen LCD and plasma displays utilized in Digital Signage applications”. The literature submitted for a particular thin form factor drive system states that it is “designed specifically for driving plasma and wide-screen LCD displays, 24 hours a day, 7 days a week.” The protestant asserts that the thin form factor drive systems can be mounted upon the monitors at issue. The protestant asserts that such capability indicates principal use with an ADP system because the monitors do not have a similar capability with video cassette recorders. The protestant asserts that the subject monitors do not have television tuners and that they cannot be attached to a cable television system.

The protestant takes the position that the principal and actual use of the subject monitors in the U.S. is as ADP monitors, and therefore they are classifiable as ADP monitors. As evidence of the principal use of the monitors the protestant refers to the physical characteristics of the monitors, their use in boardrooms, conference rooms, classrooms, airports, retail and museum environments, and high cost compared to that of a $500 all purpose monitor/TV tuner unit, and recognition in the trade as evidenced by the letters from the distributors.

ISSUE:

Whether the NEC 42, 50 and 61 inch plasma monitors are classified as automatic data processing units under Heading 8471, HTSUS, or as 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:

Video monitors:
8528.21 Color:
With a flat panel screen:
Other:
8528.21.70 Other.

Heading 8471, HTSUS, is governed by the terms of Legal Note 5 to Chapter 84, HTSUS, which provides, in relevant part:

(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:

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. .

(E) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.

With respect to the application of Note 5(E) to Chapter 84, HTSUS, in EN 84.71(D), it is explained that:

An apparatus can only be classified in this heading as a unit of an automatic data processing system if it:

(i) Performs a data processing function; (ii) Meets the criteria set out in Note 5 (B) to this Chapter, including the introductory paragraph of that Note; and (iii) Is not excluded by the provisions of Note 5 (E) to this Chapter.

Therefore, an apparatus can meet all of the criteria of Note 5 (B), yet may still be precluded from classification as a unit of an ADP system by Note 5(E), if it performs a specific function other than data processing.

In prior rulings, CBP has determined that monitors with characteristics similar to those of the monitors at issue, perform a specific function other than data processing. In HQ 964848, dated May 2, 2001, LCD displays used in applications such as digital point-of-purchase displays, electronic menu boards, and electronic banners, were held to be classified as liquid crystal devices in Heading 9013, HTSUS. They were not classified as television reception apparatus or video monitors in heading 8528, HTSUS, because they did not have the ability to accept video signals and had no video connectors or television tuners. Similarly, in HQ 966487, dated August 27, 2003, 29, 39.6 and 40 inch LCD displays with no television or video capability, intended for use as interactive advertising displays in various retail centers, banks, theatres, and public buildings, were held to be liquid crystal devices in heading 9013, HTSUS. In HQ 966481, dated August 19, 2003, 42 inch gas plasma monitors with no video or television capability, designed and targeted for use as display terminals for commercial advertising, and certified as FCC A Class, were held to be classified as electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter, under heading 8543, HTSUS.

Digital signage can generally be described as the display of video or multimedia content in public places for informational or advertising purposes, used in department stores, schools, libraries, office buildings, medical facilities, airports, train and bus stations, banks, auto dealerships and other public venues, and usually consists of a computer or playback device connected to a large, bright digital screen such as an LCD or plasma display. http://searchcrm.techtarget.com/sDefinition/0,2906600,sid11_gci1197791,00.html

We find that the monitors at issue are like the ones in HQ 964848, 966487, and HQ 966481, in that they are used for digital signage, a function other than data processing, and therefore are precluded from classification in heading 8471 by note 5(E) to Chapter 84, HTSUS. Our conclusion is based on the NEC literature indicating the use of the monitors for digital signage, the advertising of the PlasmaSync line of monitors as being for digital signage, and the assertion that the monitors can be used with the thin form factor drive system. In addition, EN 84.71(I)(D) states with respect to ADP display units, that they often incorporate certain ergonomic design characteristics to facilitate prolonged periods of viewing at close proximity to the unit. This would indicate that monitors of the size of the subject monitors are not generally considered to be display units covered by heading 8471, HTSUS. Given the FCC A Class certification, the monitors are not intended for residential use.

For purposes of distinguishing monitors for digital signage from ADP monitors, the above factors, and similar factors can be used. In addition, we note that monitors for digital signage are viewed by numerous people, with little or no control of what they are viewing. The information viewed is pre-set, and not the immediate result of data processing. Whereas ADP monitors, are in fact used for data processing, in that generally one user manipulates an ADP machine and immediately views the results on a display unit. The subject monitors are for digital signage as opposed to ADP monitors.

In light of the application of Chapter 84 Note 5(E), HTSUS, a principal use analysis would not be dispositive with the facts presented. With regard to the letters submitted from NEC’s distributors and customers, we find the letters are inadmissible hearsay. Under evidentiary rules, hearsay testimony is not admissible. The Federal Rules of Evidence define hearsay as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Fed. R. Evid. 801(c). Under Fed. R. Evid. 801(a), a statement includes a written assertion. An exception to the hearsay rule is in 803(6) which provides that:

A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness.

The submitted documents are not of the kind kept or made in the course of a regularly conducted business activity. We do note that they support the finding that the subject monitors are for digital signage. The protestant also refers to the actual use of the monitors. We do not find an actual use analysis to be applicable in this analysis, as the applicable tariff provisions are not actual use provisions.

The subject monitors have video capability and as such are described in heading 8528, HTSUS. The subject monitors are described in heading 8528, HTSUS as “video monitors” and are classified in subheading 8528.21.70, 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: Video monitors: Color: With a flat panel screen: Other: Other.” As the subject monitors have video capability and are described in heading 8528, classification under headings 8543 and 9013, HTSUS is precluded (cf. HQ 966481, HQ 964848, and HQ 966487).

HOLDING:

By application of GRI 1, the NEC plasma monitor models PX42VP4A, PX-42VP4DA, PX-50XM3A, PX-61XM2A and PX-61XM2A/S are classified in heading 8528, specifically in subheading 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.usitc.gov/tata/hts/.

The protest should be DENIED in full. In accordance with the Protest/Petition Processing Handbook (CIS HB, June 2002, pp. 18 and 21), 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 in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division

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See also:

• Tariff No.: 8471.60.45 - Display units for ADP machines, with a non-color cathode-ray tube or non-CRT display type nesoi, not entered with the rest of a system
• Tariff No.: 8528.21.70 - Color video monitors w/flat panel screen, video display diagonal over 34.29 cm, not incorporate VCR or player