CLA-2 RR:CR:GC 958954 RFA
Mr. S. Richard Shostak
Stein Shostak Shostak & O'Hara
515 South Figueroa Street
Los Angeles, CA 90071-3329
RE: 13 Inch Televisions Combined with Video Cassette Recorders
(TV/VCR); Additional U.S. Note 9 to chapter 85; NAFTA;
General Notes 12(b)(i) and (ii)(A), and 12(t)/85.84; Change
in Tariff Classification
Dear Mr. Shostak:
This is in reference to a request by Bill J. Polkinhorn,
Inc., of December 18, 1995, on behalf of L.G. Electronics, Inc.,
concerning the tariff classification of 13 inch televisions
combined with video cassette recorders under the Harmonized
Tariff Schedule of the United States (HTSUS), and the eligibility
under the North American Free Trade Agreement (NAFTA).
Subsequent to our request for additional information concerning
this matter, you have responded on behalf of L.G. Electronics.
In preparing this ruling, we considered the information provided
with your letters of April 19, July 12 and 18, October 18 and 24,
1996, and December 18, 1997.
FACTS:
The articles are labeled as 13 inch televisions combined
with video cassette recorders ( hereinafter referred to as
"TV/VCRs"), models GCV-1324M, GCV-1324MW, TVR-1340S, KV-13VM20,
KV-13VM21, 685-1208, and 16-415. According to the information
you provided, the TV/VCRs have a visible video diagonal that does
not exceed 33.02 cm. They are manufactured in Mexico from 3 main
subassemblies or blocks: (1) a TV block; (2) a VCR block; and (3)
a cathode ray tube (CRT).
The TV block is the chassis of the television receiver
portion which contains all the printed circuit board assemblies
(PCBAs) necessary for the television to function. All of the
PCBAs in the TV block are mounted or "stuffed" with capacitors,
diodes, resistors, transistors, eyelets, tape, and wire by L.G.
Electronics in Mexico. As a result of this process the TV block
will contain the Main SMPS (Switching Mode Power Supply) PCBA
which produces the power, sound, deflection and picture and the
CPT (Color Picture Tube) PCBA which sends sound, deflection and
picture signals to the picture tube. The VCR block contains all
of the VCR functions and also contains the tuner for the
combination TV/VCR. The VCR block is manufactured by L.G.
Electronics in Korea. The CRT is manufactured in Singapore.
ISSUE:
What is the tariff classification of a combination TV/VCR
under the HTSUS?
Whether the TV/VCRs are eligible for preferential tariff
treatment under the NAFTA?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is in
accordance with the General Rules of Interpretation (GRI's). GRI
1 provides that classification shall be determined according to
the terms of the headings and any relative section or chapter
notes.
Heading 8528, which is within chapter 85, HTSUS, provides
for, among other articles, reception apparatus for television
whether or not incorporating video recording or reproducing
apparatus. Within heading 8528, a distinction is made between
subheadings based on the size of the video display. To
accurately determine the size of a video display, Customs must
apply Additional U.S. Note 9 to chapter 85, HTSUS, which provides
that: "[f]or the purposes of this chapter, the video display
diagonal is determined by measuring the maximum straight line
dimension across the visible portion of the faceplate used for
displaying video."
According to the information you provided, the subject
TV/VCRs have a visible video diagonal of less than 33.02 cm based
upon the application of Additional U.S. Note 9 to chapter 85.
Therefore, the TV/VCRs when imported into the United States are
classifiable under subheading 8528.12.12, HTSUS, which provides
for reception apparatus for color television, incorporating video
recording or reproducing apparatus with a video display diagonal
not exceeding 33.02 cm.
To be eligible for tariff preferences under the NAFTA, goods
must be "originating goods" within the rules of origin in General
Note 12(b), HTSUS. General Notes 12(b)(i) and (ii)(A) state
that:
[f]or the purposes of this note, goods imported into
the customs territory of the United States are eligible
for the tariff treatment and quantitative limitations
set forth in the tariff schedule as "goods originating
in the territory of a NAFTA party" only if--
(i) they are goods wholly obtained or produced
entirely in the territory of Canada, Mexico and/or
the United States; or
(ii) they have been transformed in the territory
of Canada, Mexico and/or the United States so
that--
(A) except as provided in subdivision (f) of
this note, each of the non-originating
materials used in the production of such
goods undergoes a change in tariff
classification described in subdivisions (r),
(s) and (t) of this note or the rules set
forth therein. . . .
Because the TV/VCRs contain parts from countries other than
a NAFTA party, General Note 12 (b)(i), HTSUS, does not apply.
Therefore, we must apply General Note 12(b)(ii)(A), HTSUS.
General Note 12(t)/85.84, HTSUS, states that: "[a] change to
tariff items 8528.12.12, 8528.12.16, 8528.12.20 or 8528.12.24
from any other heading, except from tariff items 8529.90.01,
8529.90.03, 8529.90.06, 8529.90.09, 8529.90.13, 8529.90.16,
8529.90.19, 8529.90.22, 8529.90.24, 8529.90.29, 8529.90.33,
8529.90.36, 8529.90.39, 8529.90.43, 8529.90.46 or 8529.90.49."
According to General Note 12(t)/85.84, any non-originating
materials of the TV/VCRs must come from tariff items other than
the ones listed above. The tariff items listed are PCBAs and
other subassemblies for televisions as defined by Additional U.S.
Notes 4 and 10 to chapter 85. Because the PCBAs in the TV block
are populated in Mexico, and the VCR block and the CRT are not
classifiable in the excepted tariff items, we find that each of
the non-originating parts used in the subject TV/VCRs undergo a
change in tariff classification and meet the terms of General
Note 12(t)/85.84, HTSUS. Therefore, the subject merchandise
incorporating non-originating components is eligible for
preferential tariff treatment under the NAFTA.
HOLDING:
The TV/VCRs are classifiable under subheading 8528.12.12,
HTSUS, which provides for: "[r]eception apparatus for television,
whether or not incorporating radiobroadcast receivers or sound or
video recording or reproducing apparatus. . . : [r]eception
apparatus for television, whether or not incorporating
radiobroadcast receivers or sound or video recording or
reproducing apparatus: [c]olor: [n]on-high definition, having a
single picture tube intended for direct viewing (non-projection
type), with a video display diagonal not exceeding 35.56 cm:
[i]ncorporating video recording or reproducing apparatus: [w]ith
a video display diagonal not exceeding 33.02 cm. . . ." The
general, column one rate of duty is 1.6 percent ad valorem.
The TV/VCRs are eligible for preferential tariff treatment
under the NAFTA.
Sincerely,
John Durant, Director
Commercial Rulings Division