CLA-2 CO:R:C:M 956830 KCC
Ms. Betty Bell
Critikon, Inc.
4110 George Road
P.O. Box 31800
Tampa, Florida 33631-3800
RE: Display Panels for blood pressure monitors; substantial
transformation; Texas Instruments; HRL 555706; C.S.D. 85-25;
signaling apparatus; Additional U.S. Rule of Interpretation
1(a); principal use; EN 85.31; HRLs 954788, 953155, 952505,
951868, 952360, 951288, 955062, 954638; 8471.92.30; other
display units without cathode-ray tube, having a visual
display diagonal not exceeding 30.5 cm; 9813.00.05;
temporary duty-free entry under bond
Dear Ms. Bell:
This is in response to your letter dated August 2, 1994,
concerning the tariff classification of display panels under the
Harmonized Tariff Schedule of the United States (HTSUS), and
whether the display panels are substantially transformed into a
product of the U.S. when incorporated into blood pressure
monitors. Additional information obtained by telephone was
considered in rendering this decision.
FACTS:
Your letter indicates that Critikon Inc. purchases foreign-origin electroluminescent display panels (display panels),
320X256 PART NUM 614165 and PART NUM 614186, from a U.S. company,
Planar Systems, Inc. The display panels weigh two pounds and
cost $360. These display panels are used in the manufacture of
Critikon's "electronic blood pressure monitors" in the U.S. In a
telephone conversation we were advised that the display panel is
plugged into the blood pressure monitor with a connector.
Additional information obtained indicates that the display
panels are used with apparatus which monitors more than blood
pressure. The simplest apparatus monitors blood pressure and
temperature, while the most sophisticated apparatus monitors
blood pressure invasively and non-invasively, temperature and
electrocardiogram (ECG).
Additionally, you state that the "electronic blood pressure
monitors" are sold and exported abroad. If a display panel in an
"electronic blood pressure monitor" does not function properly,
it is removed from the monitor and returned to the U.S. for
replacement. The defective panel is either destroyed or repaired
and returned to stock. The display panels may or may not be
under the manufacturer's warranty when they are returned to the
U.S.
You claim that Planar Systems originally imports the display
panels into the U.S. under subheading 8471.92.30, HTSUS, as other
display units without cathode-ray tube, having a visual display
diagonal not exceeding 30.5 cm.
ISSUE:
I. Is the display panel substantially transformed into a
product of the U.S. when it is plugged into the blood pressure
monitor?
II. What is the tariff classification of the display panel under
the HTSUS when imported into the U.S.?
LAW AND ANALYSIS:
I. Substantial Transformation
Subheading 9801.00.10, HTSUS, provides for the free entry of
products of the U.S. that have been exported and returned without
having been advanced in value or improved in condition by any
process of manufacture or other means while abroad, provided the
documentary requirements of section 10.1, Customs Regulations (19
CFR 10.1), are satisfied. See 59 Fed. Reg. 25563 (May 17, 1994),
for recent amendments to 19 CFR 10.1. While some change in the
condition of the product while it is abroad is permissible,
operations which either advance the value or improve the
condition of the exported product render it ineligible for duty-free entry upon return to the U.S. Border Brokerage Company,
Inc. v. United States, 314 F. Supp. 788 (1970), appeal dismissed,
58 CCPA 165 (1970).
For a foreign-origin product imported into the U.S. to be
considered a product of the U.S., it must be substantially
transformed in the U.S. A substantial transformation occurs
when, as a result of manufacturing processes, a new and different
article emerges, having a distinctive name, character, or use,
which is different from that originally possessed by the article
or material before being subjected to the manufacturing process.
See, Texas Instruments v. United States, 681 F.2d 778, 782 (CCPA
1982).
In Headquarters Ruling Letter (HRL) 555706 dated May 3,
1991, it was held that light emitting diodes ("LEDs") imported
from Mexico did not become products of the U.S. when they were
combined with lamp strip assemblies. The processes performed in
the U.S. to produce the lamp strip assemblies included the
creation of a base which provided the electrical contacts to the
LEDs. The base consisted of a series of metal electrical
connections on a molded plastic structure. The LEDs were then
extracted from magazines and connected to the base by bending and
trimming the wires to fit the configurations of the base.
Referring to C.S.D. 85-25, 19 Cust.Bull. 544 (1985) (HRL
071827 of September 25, 1984), it was determined that there was
no substantial transformation of the LEDs in the U.S. In C.S.D.
85-25, Customs held that an assembly process will not constitute
a substantial transformation unless the operation is "complex and
meaningful", which depends on the nature of the operation,
including the number of components assembled, number of different
operations involved, and whether a significant period of time,
skill, detail and quality control are necessary for the assembly
operation. In HRL 555706, it was held that the assembly
operations were not complex in nature and did not require a
significant period of time and skill to assemble the LEDs into
the finished products. Moreover, the LEDs did not become new
articles of commerce, with a new name, character or use, and the
essential character and use of the imported LEDs was to function
as signaling devices. After the lead wires of the LEDs were bent
and trimmed and attached to the base, the essential character and
use of the LEDs remained the same-- they were signaling devices.
Accordingly, since the LEDs were not substantially transformed
into products of the U.S., but rather remained products of
Mexico, when they were subsequently shipped to Mexico for
assembly into telecommunication products, the LEDs were not
eligible for item 807.00, Tariff Schedules of the United States
(TSUS) (the precursor tariff provision to subheading 9801.00.10,
HTSUS), treatment, when the telecommunication products were
imported into the U.S.
Similarly, in this case, we find that the display panel is
not substantially transformed into a product of the U.S. when it
is plugged into the blood pressure monitor. The display panel is
only plugged into the blood pressure monitor with the use of a
connector which is not a complex and meaningful assembly
operation. This is especially evident from the fact that it can
be easily unplugged if it is defective. Consequently, we find
that when a defective display is returned to the U.S. for repair,
it is not eligible for duty-free treatment under subheading
9801.00.10, HTSUS. However, we note that the display panels may
be entered under subheading 9813.00.05, HTSUS, which provides for
the temporary duty-free entry, under bond (TIB), for merchandise
imported into the U.S. for the purpose of repair, alteration or
processing. This provision requires that the imported
merchandise be exported or destroyed within one year of the date
of importation, and when the components are exported in
accordance with subheading 9813.00.05, HTSUS, the bond will be
canceled.
II. Tariff Classification
The classification of merchandise under the HTSUS is
governed by the General Rules of Interpretation (GRI's). GRI 1,
HTSUS, states, in part, that "for legal purposes, classification
shall be determined according to terms of the headings and any
relative section or chapter notes...." The competing subheadings
are:
8471.92.30 Automatic data processing machines and units
thereof; magnetic or optical readers, machines for
transcribing data onto data media in coded form
and machines for processing such data, not
elsewhere specified or included...Other...Input or
output units, whether or not entered with the rest
of a system and whether or not containing storage
units in the same housing...Other...Display
units...Without cathode-ray tube (CRT), having a
visual display diagonal not exceeding 30.5 cm.
8531.20.00 Electric sound or visual signaling apparatus (for
example, bells, sirens, indicator panels, burglar
or fire alarms), other than those of heading 8512
or 8530; parts thereof...Indicator panels
incorporating liquid crystal devices (LCD's) or
light emitting diodes (LED's)....
We are of the opinion that the display panel is classified
under subheading 8531.20.00, HTSUS, as indicator panels
incorporating liquid crystal devices. Heading 8531, HTSUS, has
been held to be a use provision. See, HRL 951288 dated July 7,
1992. Additional U.S. Rule of Interpretation 1(a), HTSUS, states
that:
[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.
Therefore, to be classified in this heading, the apparatus must
be principally used for "signaling."
In understanding the language of the HTSUS, the Harmonized
Commodity Description and Coding System Explanatory Notes (ENs)
may be consulted. The ENs, although not dispositive nor legally
binding, provide a commentary on the scope of each heading of the
HTSUS and are generally indicative of the proper interpretation
of these headings. See, T.D. 89-80, 54 Fed. Reg. 35127, 35128,
(August 23, 1989). EN 85.31 (pg. 1381) is fairly descriptive and
restrictive as to the types of "signaling" indicator panels and
the function they must perform in order to be classifiable in
heading 8531, HTSUS. EN 85.31 states indicator panels and the
like: "[a]re used (e.g., in offices, hotels and factories) for
calling personnel, indicating where a certain person or service
is required, indicating whether a room is free or not. They
include:
(1) Room indicators. There are large panels with numbers
corresponding to a number of rooms. When a button is
pressed in the room concerned the corresponding number
is either lit up or exposed by the falling away of a
shutter or flap.
(2) Number indicators. The signals appear to illuminated
figures on the face of a small box; in some apparatus
of this kind the calling mechanism is operated by the
dial of a telephone. Also clock type indicators in
which the numbers are indicated by a hand moving round
a dial.
(3) Office indicators, for example, those used to indicate
whether the occupant of a particular office is free or
not. Some types are merely a simple "come in" or
"engaged" sign illuminated at will by the occupant of
the office.
(4) Lift indicators. These indicate, on an illuminated
board, where the lift is and whether it is going up or
down.
(5) Engine room telegraph apparatus for ships.
(6) Station indicating panels for showing the times and
platforms of trains.
(7) Indicators for race course, football stadiums, bowling
alleys, etc.
Certain of these indicator panels, etc., also
incorporate bells or other sound signalling devices
(emphasis in original).
Therefore, only those display panels which are principally
used and/or limited by design to "signaling" are classifiable
under subheading 8531.20.00, HTSUS. See, HRL 954788 dated
December 1, 1993, HRL 953115 dated May 10, 1993, HRL 952502 dated
March 18, 1993, HRL 951868 dated October 31, 1992, HRL 952360
dated October 15, 1992, and HRL 951288.
The display panels at issue provide limited indication
information to a user, i.e., blood pressure, temperature, and
electrocardiogram. The display panels provide similar indication
information as those types of limited indication functions
enumerated in EN 85.31. See also, HRL 955062 dated March 21,
1994 (global positioning, traffic signal controller, portable
data collector, lottery system, pipeline monitoring, gasoline
pump indicator, and medical, measurement and industrial
instruments), and HRL 954638 dated December 2, 1993 (electronic
price tags, medical instrumentation, diving equipment, camera
controls, and industrial controls), in which liquid crystal
displays with limited operational capabilities for signaling
functions were classified under subheading 8531.20.00, HTSUS, as
signaling apparatus. Therefore, we are of the opinion that the
instant display panels are principally used for visual signaling.
Subheading 8471.92.30, HTSUS, provides for other display
units without cathode-ray tube, having a visual display diagonal
not exceeding 30.5 cm which are principally used for automatic
data processing machines. Automatic data processing machine
liquid crystal panel displays (laptop and notebook computer
displays) typically exhibit the following characteristics: pixel
configuration (640 x 480), dot pitch 9.27 to .30mm), thin
profile, light weight, liquid crystal material mix 9150 to 200
milliseconds response time signal to signal), and low power
consumption (5V). Based on the information available, the
display panels at issue are not principally used for automatic
data processing machines, but are principally used, as described
above, as signaling apparatus for blood pressure monitors.
Therefore, the display panels are not classifiable under
subheading 8471.92.30, HTSUS, as other display units without
cathode-ray tube, having a visual display diagonal not exceeding
30.5 cm.
HOLDING:
On the basis of the information presented, it is our opinion
that the display panel is not substantially transformed into a
product of the U.S. when it is plugged into the blood pressure
monitor. Accordingly, it is not eligible for duty-free treatment
under subheading 9801.00.10, HTSUS, when it is subsequently
returned to the U.S. for repair.
The display panels are classified under subheading
8531.20.00, HTSUS, as "[e]lectric sound or visual signaling
apparatus...[i]ndicator panels incorporating liquid crystal
devices (LCD's)...." The corresponding duty rate for articles of
this subheading is 2.7 percent ad valorem.
The display panels may be entered under subheading
9813.00.05, HTSUS, which provides for the temporary duty-free
entry, under bond (TIB), for merchandise imported into the U.S.
for the purpose of repair, alteration or processing, provided the
applicable requirements are met.
Sincerely,
John Durant, Director
Commercial Rulings Division