CLA-2 RR:CR:GC 960354 RFA
Port Director
U.S. Customs Service
300 S. Ferry Street
Terminal Island, CA 90731
RE: Internal Advice 6/1997; Data Monitor and Vision Boxes;
Automatic Data Processing (ADP) Display Units; Television
Receivers; Constructive Segregation; Composite Machine;
Principal Use; Headings 8471 and 8528; GRI 1; Legal Note 3
to Section XVI; GRI 3; EN 84.71(I)(D)
Dear Port Director:
The following is our response to your memorandum (CLA-1-LA:S:T:1:5 FM/kp), dated February 10, 1997, which forwarded the
request for Internal Advice (IA) 6/1997. IA 6/1997 was filed on
behalf of USA Megapower Technology Inc., and concerns the
classification of 29" data monitors and vision boxes under the
Harmonized Tariff Schedule of the United States (HTSUS). In
preparing this ruling, we also considered the information
provided in our meeting with counsel for the internal advice
requestant on September 17, 1998, as well as the information
submitted on August 13, 1997 and October 12, 1998. We regret the
delay.
FACTS:
The merchandise, a 29" SVGA Monitor/TV Two in One, is
described as being a model number DM-5938V data monitor and a
model number CT-1860 visionbox. The data monitor contains a
cathode-ray tube display with a 0.75mm dot pitch and has SVGA
(1024 x 768 pixel configuration) and NTSC/PAL display
capabilities. It also has a 48 MHZ bandwidth with horizontal
scanning frequencies of 15/31.5-38KHz and vertical scanning
frequencies of 50-100 Hz. The visionbox contains an NTSC/PAL
television tuner and provides the signal to the video monitor.
The visionbox can be used with a remote control. According to
the entry documents, an equal number of data monitors and
visionboxes were imported. The merchandise is capable of being
used as both a computer monitor and as a television receiver.
ISSUE:
Are the 29" Data Monitors entered with an equal number of
visionboxes, classifiable as separate goods, or together under
the HTSUS? If classifiable together, is the merchandise
classifiable as an automatic data processing (ADP) display unit
or as a television receiver under the HTSUS?
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.
The 1996 subheadings under consideration are as follows:
8471.60.35: Automatic data processing machines and units
thereof; . . .: [i]nput or output units,
whether or not containing storage units in
the same housing: [o]ther: [d]isplay units:
[o]ther: [w]ith color cathode-ray tube (CRT).
. . . .
Goods classifiable under this provision have
a column one, general rate of duty of 2.2
percent ad valorem.
8525.10.20: Transmission apparatus for radiotelephony,
radiotelegraphy, radiobroadcasting or
television, whether or not incorporating reception apparatus or sound recording or
reproducing apparatus. . .: [t]ransmission
apparatus: [t]elevision. . . .
Goods classifiable under this provision have
a column one, general rate of duty of 2.9
percent ad valorem.
8528.12.32: Reception apparatus for television, whether
or not incorporating radiobroadcast receivers
or sound or video recording or reproducing
apparatus; video monitors and video
projectors: [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 exceeding 35.56 cm: [o]ther. . . .
Goods classifiable under this provision have
a column one, general rate of duty of 5
percent ad valorem.
Counsel for the internal advice requestant states that the
goods, even though imported together, should be classified
separately under their eo nomine provisions. As support for this
claim, the requestant states as support the fact that the
invoices and packing lists shows separate listings for an equal
number of both articles. This concept is also known as
"constructive segregation". In narrow circumstances, the
doctrine of "constructive segregation" has been used to grant
preferential duty treatment to articles of commerce consisting of
U.S. components assembled into articles abroad. The test was
whether the U.S. components could be removed from the imported
article "without injury" to the components or to the article, or
whether the components had not been advanced in value or
otherwise changed by incorporation into the articles as imported.
Superscope, Inc. v. United States, 13 CIT 997, 1004, 727 F.Supp.
629, 634 (1989); Nassau Smelting and Refining Co. v. United
States, 13 CIT 941, 945, 725 F.Supp. 544, 548 (1989); United
States v. Baylis Brothers Co., 59 CCPA 9, C.A.D. 1026, 451 F.2d
643 (1971).
In all previous uses of this doctrine, the issue was not how
the finished good imported into the U.S. should be classified for
tariff purposes, but whether preferential duty treatment should
be given for the merchandise which contained U.S. goods.
Expanding the doctrine of "constructive segregation" to allow for
separate tariff treatment of individual goods which were imported
together would violate a long-standing classification principle
enunciated by the Supreme Court in United States v. Citroen, 223
U.S. 407, 414-415, 32 S.Ct. 259, 56 L.Ed. 486 (1911), which
stated that:
The rule is well established that "in order to produce
uniformity in the imposition of duties, the dutiable
classification of articles must be ascertained by an
examination of the imported article itself, in the condition in which it is imported." (cites omitted)
This, of course, does not mean that a prescribed rate
of duty can be escaped by resort to disguise or
artifice. When it is found that the article imported
is in fact the article described in a particular
paragraph of the tariff act, an effort to make it
appear otherwise is simply a fraud on the revenue and
cannot be permitted to succeed. (cite omitted)
Accordingly, Customs cannot apply the constructive
segregation doctrine to the goods under current law. Based upon
the long-standing principle set forth in Citroen, Customs must
examine articles of commerce in their condition as imported and
classify them under the HTSUS in accordance with the GRI's. GRI
1 provides that for legal purposes, classification shall be
determined according to the terms of the headings and any
relative section or chapter notes. Legal Note 3 to Section XVI,
HTSUS, which covers the goods in chapters 84 and 85, states that:
"[u]nless the context otherwise requires, composite machines
consisting of two or more machines fitted together to form a
whole and other machines adapted 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."
The Harmonized Commodity Description and Coding System
Explanatory Notes (EN) constitute the official interpretation of
the HTSUS. While not legally binding or dispositive, the ENs
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 FR 35127, 35128 (August 23,
1989). General EN (VI) to Section XVI, states the following
guidelines in determining whether merchandise is a multi-function
machine and/or a composite machine:
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 Interpretative Rule 3
(c); such is the case, for example, in respect of
multi-function machines potentially classifiable in
several of the headings 84.25 to 84.30, in several of
the headings 84.58 to 84.63 or in several of the
headings 84.69 to 84.72.
Composite machines consisting of two or more
machines or appliances of different kinds, fitted
together to form a whole, consecutively or
simultaneously performing separate functions which are
generally complementary and are described in different
headings of Section XVI, are also classified according
to the principal function of the composite machine.
The subject merchandise meets the definition of "composite
machines" because it consists of two or more machines (e.g., the
monitor and the visionbox) which when fitted together perform two
complementary or alternative functions (e.g., displaying computer
images and television images). Therefore, the subject
merchandise must be classified as if consisting only of that
component or as being that machine which performs the principal
function.
The courts have provided factors, which are indicative but
not conclusive, to apply when determining the principal function
of the merchandise. The factors include such things as general
physical characteristics, expectation of the ultimate purchaser,
channels of trade, environment of sale (accompanying accessories,
manner of advertisement and display), use in the same manner as
merchandise which defines the class, economic practicality of so
using the import, and recognition in the trade of this use. See
Lenox Collections v. United States, 19 CIT 345, 347 (1995);
Kraft, Inc. v. United States, 16 CIT 483 (1992); G. Heileman
Brewing Co. v. United States, 14 CIT 614 (1990); and United
States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F.2d
373 (1976), cert.denied, 429 U.S. 979 (1976).
Counsel for the internal advice requestant states that the
monitor has the general physical characteristics of ADP display
units under heading 8471. EN 84.71(D) for heading 8471 states
that:
Among the constituent units included are display
units of automatic data processing machines which
provide a graphical presentation of the data processed.
They differ from the video monitors and television
receivers of heading 85.28 in several ways, including
the following:
(1) Display units of automatic data processing
machines are capable of accepting a signal only from
the central processing unit of an automatic data
processing machine and are therefore not able to
reproduce a colour image from a composite video signal
whose waveform conforms to a broadcast standard (NTSC,
SECAM, PAL, D-MAC, etc.). They are fitted with
connectors characteristic of data processing systems
(e.g., RS-232C interface, DIN or SUB-D connectors) and
do not have an audio circuit. They are controlled by
special adaptors (e.g., monochrome or graphics
adaptors) which are integrated in the central
processing unit of the automatic data processing
machine.
(2) These display units are characterized by low
electromagnetic field emissions. Their display pitch
size starts at 0.41 mm for medium resolution and gets
smaller as the resolution increases.
(3) In order to accommodate the presentation of
small yet well-defined images, display units of this
heading utilize smaller dot (pixel) sizes and greater
convergence standards than those applicable to video
monitors and television receivers of heading 85.28.
(Convergence is the ability of the electron gun(s) to
excite a single spot on the face of the cathode-ray
tube without disturbing any of the adjoining spots).
(4) In these display units, the video frequency
(bandwidth), which is the measurement determining how
many dots can be transmitted per second to form the
image, is generally 15 MHZ or greater. Whereas, in the
case of video monitors of heading 85.28, the bandwidth
is generally no greater than 6 MHZ. The horizontal
scanning frequency of these display units varies
according to the standards for various display modes,
generally from 15 kHz to over 155 kHz. Many are
capable of multiple horizontal scanning frequencies.
The horizontal scanning frequency of the video monitors
of heading 85.28 is fixed, usually 15.6 or 15.7 kHz
depending on the applicable television standard.
Moreover, the display units of automatic data
processing machines do not operate in conformity with
national or international broadcast frequency standards
for public broadcasting or with frequency standards for
closed-circuit television.
(5) Display units covered by this heading
frequently incorporate tilt and swivel adjusting
mechanisms, glare-free surfaces, flicker-free display,
and other ergonomic design characteristics to
facilitate prolonged periods of viewing at close
proximity to the unit.
The subject merchandise is capable of displaying a CPU
signal and a composite video signal whose waveform conforms to a
broadcast standard. While the data monitor can be fitted with
ADP connectors, its display pitch size exceeds the 0.41mm
standard cited in the EN. We further note that the video
frequency and horizontal frequency do not indicate a firm
conclusion as to whether it is a good of heading 8471 or heading
8528. The expectation of the ultimate purchaser is for use in
both the home and office for displaying both ADP and television
signals.
According to the information presented, the subject
merchandise moves in channels of trade in both the audio-visual
and computer distributors. The environment of sale and manner in
which the merchandise is advertised and displayed as well as the
use is that the subject merchandise is displayed, sold and used
as a large screen multimedia monitor. All of these factors
indicate classification in both headings. Regarding the economic
practicality of using the product as an ADP display unit or as a
television/video monitor, it is noted that the television quality
of the image is the same as that of a normal television while the
computer image is not as clear as a regular ADP monitor.
Because the subject merchandise can be used for displaying both
computer and television images, we find that no principal
function can be determined. By application of Legal Note 3 to
Section XVI, we must apply the principles of GRI 3(c) and
classify the merchandise under the heading which occurs last in
numerical order among those which equally merit consideration.
Therefore, the subject merchandise is classifiable under heading
8528, as a television receiver. They are provided for under
subheading 8528.12.32, HTSUS, as other television receivers with
a video display diagonal exceeding 35.56 cm.
As support of its claim for separate classification of the
goods, the internal advice requestant cites the following
rulings: HQ 089317 (September 4, 1991), in which Customs
classified personal computers, keyboard, CRT monitor, and a mouse
separately; HQ 960046 (August 5, 1997), in which Customs
classified an alarm device and a carrying case separately; NY
810798 (June 14, 1995), in which Customs classified a shoe upper
and shoelaces separately; and, HQ 544824 (May 4, 1993), in which
Customs classified printed circuit boards, joystick controllers
and wiring harnesses for video arcade games separately under the
Tariff Schedules of the United States (TSUS), the precursor to
the HTSUS. We have reviewed each of these rulings and find that
they are not dispositive to the classification of the merchandise
in the present case.
In HQ 089317, Customs classified the goods in separate
provisions in accordance with GRI 1 because no one provision
provided for the imported goods. In the present situation, the
imported goods are classified in accordance with GRI 1 and Legal
Note 3 to Section XVI as a composite machine. HQ 960046 and NY
810798 are not dispositive, because in these rulings Customs
determined that the two components were not mutually
complementary nor specially adapted to be used together and
therefore did not meet the terms of a composite good or a set in
accordance with GRI 3. However, in the present situation, the
vision boxes are specially designed for use only with the DM-5938V monitor and cannot be operated alone or be used with other
similar monitors. Therefore, we find that the goods are adapted
to be used together to provide the end-users with the abilitiy of
viewing both computer and television images. HQ 544824 is also
not dispositive to the present situation, because unlike the
equal number of data monitors and visionboxes which meet the
terms of composite machines, the merchandise in HQ 544824 did not
meet the requirements to be classified as if they were unfinished
articles or complete articles of commerce under the "entireties"
doctrine and were therefore classified as separate goods.
Finally, we note that, in the alternative, the internal
advice requestant argues that the goods should be considered a
composite good in accordance with GRI 3(b). However, because the
goods can be classified in accordance with GRI 1 and Legal Note 3
to Section XVI, we find that there is no basis to apply the other
GRI's.
HOLDING:
In accordance with GRI 1 and Legal Note 3 to Section XVI,
the subject merchandise are classifiable under subheading
8528.12.32, HTSUS, which provides for: "[r]eception apparatus for
television, whether or not incorporating radiobroadcast receivers
or sound or video recording or reproducing apparatus; video
monitors and video projectors: [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 exceeding 35.56 cm: [o]ther. . . ." Goods classifiable
under this provision have a column one, general rate of duty of 5
percent ad valorem.
Please advise the internal advice requestant of this
decision. Sixty days from the date of the decision the Office of
Regulations and Rulings will take steps to make the decision
available to Customs personnel via the Customs Rulings Module in
ACS and the public via the Diskette Subscription Service, Freedom
of Information Act and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division