CLA-2 RR:CR:GC 960873 DWS
Mr. A.J. Spatarella
Kanematsu USA Inc.
114 West 47th Street
New York, NY 10036
RE: Reconsideration of NY B84243; LCD Indicator Modules; Section
XVI, Notes 2
and 3; General Explanatory Note (VI) to Section XVI; HQ
955447; Kores Manufacturing Inc. v. U.S.; 9013; 8537.10.90;
8531.20.00
Dear Mr. Spatarella:
This is in response to your letters of June 27, 1997, to the
Director, National Commodity Specialist Division of Customs, New
York, and August 29, 1997, to this office, concerning NY B84243,
issued to you on May 9, 1997, relating to the classification of
liquid crystal display (LCD) indicator modules under the
Harmonized Tariff Schedule of the United States (HTSUS).
Pursuant to 625(c)(1), Tariff Act of 1930 [19 U.S.C.
1625(c)(1)], as amended by section 623 of Title VI (Customs
Modernization) of the North American Free Trade Agreement
Implementation Act, Pub.L. 103-82, 107 Stat. 2057, 2186 (1993),
notice of the proposed revocation of NY B84243 was published on
October 1, 1997, in the CUSTOMS BULLETIN, Volume 31, Number 40.
No comments were received in response to the notice.
FACTS:
The merchandise consists of LCD indicator modules which are
designed for and dedicated to mobile cellular phones. Each
module consists of an LCD glass sandwich connected by a ribbon
connector to a printed circuit board (PCB) on which numerous
depression switches are mounted. The glass sandwich consists of
a liquid crystal layer sandwiched between two plates of glass. The row and column
drivers for the LCD are contained within the PCB, as are the
keypad controls for the operation of a cellular telephone.
ISSUE:
Whether the LCD indicator modules are classifiable under
subheading 8529.90.99, HTSUS, as other parts suitable for use
solely or principally with the apparatus of headings 8525 to
8528, HTSUS; under subheading 8531.20.00, HTSUS, as indicator
panels incorporating LCDs; or under subheading 8537.10.90, HTSUS,
as other boards for electric control or the distribution of
electricity.
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 is determined according to the
terms of the headings and any relative section or chapter notes.
8529.90.99: [p]arts suitable for use solely or principally
with the apparatus of
headings 8525 to 8528: [o]ther: [o]ther:
[o]ther.
Goods classifiable under this provision receive duty-free
treatment.
8531.20.00: [e]lectric 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:
[i]ndicator panels
incorporating liquid crystal devices (LCD's)
or light emitting diodes
(LED's).
The general, column one rate of duty for goods classifiable
under this provision
is 1.4 percent ad valorem.
8537.10.90: [b]oards, panels, consoles, desks, cabinets and
other bases,
equipped with two or more apparatus of
heading 8535 or 8536, for
electric control or the distribution of
electricity, including those
incorporating instruments or apparatus of
chapter 90, and
numerical control apparatus, other than
switching apparatus of
heading 8517: [f]or a voltage not exceeding
1,000 V: [o]ther.
The general, column one rate of duty for goods classifiable
under this provision
is 3.7 percent ad valorem.
Section XVI, note 3, HTSUS, 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.
In NY B84243, Customs held that the indicator modules, each
consisting of a LCD glass sandwich and a PCB fitted together by
the ribbon connector, constituted a composite machine as defined
in section XVI, note 3, HTSUS, with the functions of the
indicator modules described by subheadings 8531.20.00, HTSUS, and
8537.10.90, HTSUS. Because a principal function could not be
ascertained, Customs classified the indicator modules under
subheading 8537.10.90, HTSUS, the provision describing a function
of the indicator modules which appears last in order in the
HTSUS. See General Explanatory Note (VI) to section XVI (p.
1227). You continue to claim that the indicator modules are
properly classifiable under subheading 8531.20.00, HTSUS.
In understanding the language of the HTSUS, the Harmonized
Commodity Description and Coding System Explanatory Notes may be
utilized. The Explanatory Notes, although not dispositive or
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). In part, Explanatory Note 90.13
(p. 1600) states that:
[t]his heading includes:
(1) Liquid crystal devices consisting of a liquid crystal
layer sandwiched
between two sheets or plates of glass or plastics,
whether or not fitted with
electrical connections, presented in the piece or cut
to special shapes and
not constituting articles described more specifically
in other headings of the
Nomenclature.
Because LCD glass sandwiches are properly classifiable under
heading 9013, HTSUS, we disagree with the holding in NY B84243
that the indicator modules constitute composite machines as
defined in section XVI, note 3, HTSUS. For a good to qualify for
consideration as a section XVI, note 3, HTSUS, composite machine,
the separate functions it performs must be described under
different headings in section XVI, HTSUS. See General
Explanatory Note (VI) to section XVI (p. 1227). As the LCD
sandwiches are classifiable in chapter 90, HTSUS, section XVI,
note 3, HTSUS, is inapplicable. We note that there is not a
similar "composite machine" note to chapter 90, HTSUS, as there
is with functional units.
You cite HQ 955447, dated February 9, 1994, as precedence
for classifying the indicator modules under subheading
8531.20.00, HTSUS. In that ruling we held LCD indicator panel
modules with row and column drivers to be classifiable under
subheading 8531.20.00, HTSUS. However, the subject indicator
modules are distinguishable from those in HQ 955447, because the
PCB part of the subject modules incorporates the LCD drivers and
keypad controls for the operation of a cellular telephone. The
PCB in each of the indicator modules in HQ 955447 incorporated
the LCD drivers only. Therefore, it is our position that the
subject indicator modules are beyond the scope of articles
classifiable under heading 8531, HTSUS.
Whether an article is a part of another article depends on
the nature of the so-called "part" and its usefulness, function
and purpose in relation to the article in which it is designed to
serve. Kores Manufacturing Inc. v. U.S., 3 CIT 178, 179 (1982),
aff'd appeal No. 82-83 (C.A.F.C. 1983). It is our position that
the indicator modules are parts of cellular telephones, in that
their function is essential to the operation of cellular
telephones.
Section XVI, note 2, HTSUS, states:
[s]ubject to note 1 to this section, note 1 to chapter 84
and to note 1 to chapter 85, parts of machines (not being
parts of the articles of heading 8484, 8544, 8545, 8546 or
8547) are to be classified according to the following rules:
(a) Parts which are goods included in any of the headings of
chapters 84 and 85
(other than headings 8485 and 8548) are in all cases
to be classified in
their respective headings;
(b) Other parts, if suitable for use solely or principally
with a particular kind of
machine, or with a number of machines of the same
heading (including a
machine of heading 8479 or 8543) are to be
classified with the machines of
that kind. However, parts which are equally
suitable for use principally with
the goods of headings 8517 and 8525 to 8528 are
to be classified in heading
8517;
(c) All other parts are to be classified in heading 8485 or
8548.
Because the indicator modules are not goods described under
any of the headings of chapters 84 and 85, HTSUS, section XVI,
note 2(a), HTSUS, is inapplicable. However, based upon section
XVI, note 2(b), HTSUS, because the indicator modules are parts
dedicated for use with mobile cellular telephones classifiable
under heading 8525, HTSUS, they are classifiable under subheading
8529.90.99, HTSUS.
HOLDING:
The LCD indicator modules are classifiable under subheading
8529.90.99, as other parts suitable for use solely or principally
with the apparatus of headings 8525 to 8528, HTSUS.
NY B84243 is revoked in full. In accordance with 19 U.S.C.
1625(c)(1), this ruling will become effective 60 days after its
publication in the CUSTOMS BULLETIN. Publication of rulings or
decisions pursuant to 19 U.S.C. 1625(c)(1) does not constitute a
change of practice or position in accordance with section
177.10(c)(1), Customs regulations [19 CFR 177.10(c)(1)
Sincerely,
John Durant, Director
Tariff Classification Appeals
Division