CLA-2 RR:TC:MM 959073 RFA
Mr. William D. Outman, II
Baker & McKenzie
815 Connecticut Avenue, NW
Washington, D.C. 20006-4078
RE: Projection Television Module; Cathode-Ray Tubes (CRTs);
Additional U.S. Notes 5 and 6 to Chapter 85; NAFTA
"originating goods"; Headings 8528 and 8540
Dear Mr. Outman:
This is in response to your letter dated March 22, 1996, on
behalf of Mitsubishi Consumer Electronics America, Inc.,
concerning the tariff classification of projection television
modules under the Harmonized Tariff Schedule of the United States
(HTSUS). In preparing this ruling, we also considered arguments
provided in our meeting on September 13, 1996, and in your letter
of October 23, 1996.
FACTS:
The merchandise, labeled as projection television (PTV)
modules, consists of all of the parts of a complete, color, non-high definition projection television, except for the cabinet,
back cover, screen and reflecting mirrors. A PTV uses three
separate monochrome cathode-ray tubes (CRTs) each with a
different color so that it can project a full-color image for
viewing. The PTV modules will be assembled in Mexico from U.S.,
Japanese, Singapore, and Malaysian components. The PTV modules
will contain Japanese-origin CRTs. At the time of importation,
the PTV module contains the following components: three separate
monochrome CRTs; video intermediate (IF) amplifying and detecting
systems; video processing and amplification systems;
synchronizing and deflection circuitry; tuners and tuner control
systems; audio detection and amplification systems; and a power
supply. After importation into the United States, the cabinet,
back cover, screen and reflecting mirrors will be added to
complete the PTV.
ISSUES:
I. Are cathode-ray picture tubes classified separately when
incorporated into incomplete projection televisions under the
HTSUS?
II. Is the subject merchanidise eligible for preferential duty
treatment under the North American Free Trade Agreement (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.
I. Classification:
The subject merchandise is an unfinished PTV which is
provided for under chapter 85, HTSUS. Additional U.S. Note 5 to
chapter 85, HTSUS, provides that:
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--
(a) incorporated into complete television
receivers, as defined in additional U.S. note 6 below;
(b) incorporated into fully assembled units such
as word processors, ADP terminals, or similar articles;
(c) put up in kits containing all the parts
necessary for assembly into complete television
receivers, as defined in additional U.S. note 6 below;
or
(d) put up in kits containing all the parts
necessary for assembly into fully assembled units such
as word processors, ADP terminals, or similar articles.
Additional U.S. Note 6 to chapter 85, HTSUS, states that:
"[f]or the purposes of additional U.S. note 5 above the term
complete television receivers' means television receivers, fully
assembled in their cabinets, whether or not packaged or tested
for distribution to the ultimate purchaser(s)."
The subject merchandise does not meet the terms of a
"complete television receiver" because it is missing the cabinet,
back cover, screen and reflecting mirrors. Because the PTV is
not a "complete television receiver", we must determine whether
the picture tubes are to be classified separately from the PTV
module or whether the entire merchandise must be classified under
heading 8540, HTSUS.
In Rico Import Co. v. United States, 16 CIT 770, 797 F.Supp
1028 (1992), the court stated that "[i]t is well settled that
tariff acts must be construed to carry out the intent of the
legislature." See Nippon Kogaku (USA), Inc. v. United States, 69
CCPA 89, 92, 673 F.2d 380, 382 (1982)(citing Sandoz Chem. Works,
Inc. v. United States, 43 CCPA 152, 156, C.A.D. 623 (1956)). The
first place to look to establish the intent of Congress is the
language of the statute itself. Consumer Prod. Safety Comm'n v.
GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). The court may
resolve ambiguities in the plain language of a statute by
resorting to legislative history and other extrinsic sources.
Sandoz Chem. Works, 43 CCPA at 156.
According to the legislative history for the above-referenced Additional U.S. Notes 5 and 6, Congress "intended to
prevent importers from taking advantage of what the Committee
believes to be a loophole in the TSUS [Tariff Schedules of the
United States--the precursor to the HTSUS]. . . . The Committee
believes that the picture tube portion of the entry should
receive the . . . duty rate applicable to color television
picture tubes." H.Rep No. 40, 100th Cong., 1st Sess. 217(1987) at
218. It is clear from the legislative intent that the picture
tubes in incomplete assemblies must be classified separately from
the rest of the merchandise. Therefore, we find that the three
separate monochrome CRTs, each with a different color, are
classifiable under subheading 8540.12.50, HTSUS, which provides
for monochrome, non-high definition cathode-ray television
picture tubes. Because the picture tubes are classified
separately, we find that the remaining portion of the PTV module
is classifiable under subheading 8528.12.08, HTSUS, which
provides for incomplete or unfinished color reception apparatus
for television, not incorporating a cathode-ray tube, flat panel
screen or similar display device.
II. NAFTA Applicability:
You contend that the PTV module, which is classified without
the Japanese-originated CRTs, is eligible for duty-free treatment
under the NAFTA. 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), HTSUS, state:
[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 PTV module contains parts from countries other
than Mexico, Canada, and/or the U.S., General Note 12(b)(i),
HTSUS, does not apply. Therefore, we must resort to General Note
12(B)(ii)(A), HTSUS. General Note 12(t)85.91, HTSUS, states
that: "[a] change to tariff items 8528.12.04 or 8528.12.08 from
any other heading, except from tariff items 8529.90.43,
8529.90.46 or 8529.90.49."
Based upon this rule, any non-originating materials of the
PTV module must come from a tariff heading other than heading
8528 or subheadings 8529.90.43, 8529.90.46 or 8529.90.49, HTSUS.
We have examined the bill of materials which lists all of the
components used in making the PTV module and find that the non-originating components are from headings other than heading 8528
and do not fall under any of the three subheadings listed
earlier. Therefore, the PTV module incorporating non-originating
components are eligible for preferential tariff treatment under
the NAFTA.
HOLDING:
Based upon Additional U.S. Note 5 to Chapter 85, HTSUS, the
cathode-ray tubes are classifiable under subheading 8540.12.50,
HTSUS, which provides for: "[t]hermionic, cold cathode or
photocathode tubes (for example, vacuum or vapor or gas filled
tubes, mercury arc rectifying tubes, cathode-ray tubes,
television camera tubes); parts thereof: [c]athode-ray television
picture tubes, including video monitor cathode-ray tubes: [b]lack
and white or other monochrome: [o]ther: [n]on-high definition. .
. ." The general, column one rate of duty is 5.2 percent ad
valorem.
The PTV module is classifiable under subheading 8528.12.08,
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: [i]ncomplete or
unfinished (including assemblies for television receivers
consisting of all the parts specified in additional U.S. note 10
to this chapter plus a power supply), not incorporating a
cathode-ray tube, flat panel screen or similar display device:
[o]ther. . . . " The general, column one rate of duty is 3
percent ad valorem. The PTV module is eligible for preferential
tariff treatment under the NAFTA.
Sincerely,
John Durant, Director
Tariff Classification Appeals Division