CLA-2 CO:R:C:G 085328 MBR
Mr. William D. Outman
Baker & McKenzie
Suite 1100
815 Connecticut Ave., N.W.
Washington, D.C. 20006-4078
RE: Display Unit with cathode-ray tube, for incorporation into
an IBM PS/2 Model 25 System Unit ("Display Unit"), and Display
Subassembly with cathode-ray tube, for incorporation into Model
3180 Display Station ("Display Subassembly")
Dear Mr. Outman:
This is in reply to your letter of April 12, 1990, on behalf
of International Business Machines Corporation ("IBM"),
requesting classification of; 1) Display Unit for incorporation
into an IBM PS/2 Model 25 System Unit ("Display Unit"); and 2)
Display Subassembly for incorporation into Model 3180 Display
Station ("Display Subassembly"), under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA).
FACTS:
The IBM PS/2 ADP Display Unit consists of the following
components: ADP cathode-ray tube assembly (12" white phosphor
monochrome or RBG color), video circuits, analog circuits, power
supply, fan chassis, analog/RF shielding, signal interconnect
cables and bezel. This Display Unit is a fully assembled unit
(functional) designed for incorporation into the PS/2 Model 25
ADP System (a demonstration was provided).
The IBM 3180 Display Subassembly consists of the following
components: 15" green phosphor monochrome ADP cathode-ray tube,
chassis, mounting bracket, video circuits, yoke assembly. yoke
connector, analog circuits, analog shield, AC harness, keylock
and bezel. It only requires the addition of a power supply, fan,
housing and knobs. In its condition as imported, it is
functional (a demonstration was provided).
ISSUE:
What are the classifications of the IBM PS/2 Display Unit and
the IBM 3180 Display Subassembly, under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA)?
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) to the HTSUSA
govern the classification of goods in the tariff schedule. GRI 1
states, in pertinent part:
...classification shall be determined according to the terms
of the headings and any relative section or chapter notes...
Note 5(B) of Chapter 84, HTSUSA, states:
(B) Automatic data processing machines may be in the form of
systems consisting of a variable number of separately housed
units. A unit is to be regarded as being a part of the
complete system if it meets all of the following conditions:
(a) It is connectable to the central processing unit
("CPU") either directly or through one or more other
units; and
(b) It is specifically designed as part of such a
system (it must, in particular, unless it is a power
supply unit, be able to accept or deliver data in a
form (code or signals) which can be used by the
system).
Such units entered separately are also to be classified
in heading 8471.
The instant Display Unit and Display Subassembly are
connectable to the CPU, are specifically designed as part of such
system and are capable of accepting or delivering data. The
Display Unit and Display Subassembly clearly meet the
requirements of Chapter 84, Note 5(b) and are therefore properly
described as ADP "units."
Chapter 85, HTSUSA, Additional U.S. Note 5(b), provides, in
pertinent part:
Picture tubes imported in combination with, or incorporated
into, other articles are to be classified in subheadings
8540.11 through 8540.12, inclusive, unless they are--
(b) incorporated into fully assembled units such as
word processors, ADP terminals, or similar articles;
The instant Display Units and Display Subassemblies are
"fully assembled" units since they are functional. The Display
Units and Display Subassemblies, in their condition as imported,
are capable of displaying the output of a compatible signal when
electricity is supplied.
Additional U.S. Note 6, Chapter 85, HTSUSA, states:
For the purposes of additional U.S. note 5 above the term
"complete television receivers" means television receivers,
fully assembled in their cabinets....
Thus, a clear distinction has been drawn between "complete"
and "fully assembled" in that the term "complete" only refers to
television receivers and requires them to be "fully assembled"
and "in their cabinets." Note 5 does not require that ADP units
be "complete," but only that they be "fully assembled."
Therefore, the term "fully assembled" does not require the same
degree of completion as "complete." It is Customs position that
units that are functional, are "fully assembled."
Furthermore, the HTSUSA contemplated that an ADP unit may be
either for physical incorporation into another ADP machine or
unit, or a separately housed unit, by specific 8471 subheadings
for "units suitable for physical incorporation into ADP machines
or units" under the subheadings for Other Input or Output Units,
Storage Units and Other Units. Therefore, absent specific
language distinguishing between "for physical incorporation"
versus "separately housed," an 8471 subheading then may cover
both units for physical incorporation into other ADP machines or
units and those units designed to be separately housed. See HQ
085541 (January 10, 1990) and HQ 085392 (November 22, 1989) for
similar holdings on similar merchandise.
HOLDING:
The IBM PS/2 Model 25 System Display Unit with cathode-ray
tube and the Display Subassembly with cathode-ray tube, for the
Model 3180 Display Station, are classifiable under 8471.92.40,
HTSUSA, which provides for: "[a]utomatic data processing machines
and units thereof; [i]nput or output units, whether or not
entered with the rest of a system...: [o]ther: [d]isplay units:
[o]ther." The rate of duty is 3.7% ad valorem.
Sincerely,
John Durant, Director
Commercial Rulings Division