CLA-2 RR:CR:GC 960282 RFA
Ms. Andrea E. Migdal
Gray Cary Ware & Freidenrich
4365 Executive Drive, Suite 1600
San Diego, CA 92121-2189
RE: Multimedia Monitor; Video Monitor; ADP Output Unit; Headings
8471 and 8528; Composite Machine; NAFTA; Legal Note 3 to
Section XVI; GRI 3(c); EN 84.71(I)(D); General EN (VI) to
Section XVI; General Note 12(t)/85.92C
Dear Ms. Migdal:
This is in response to your letter dated April 21, 1997, on
behalf of Hitachi Home Electronics (America), Inc. [hereinafter
referred to as "Hitachi"], concerning the tariff classification
of a 36 inch data display monitor under the Harmonized Tariff
Schedule of the United States (HTSUS). In preparing this ruling,
we also considered the information provided with your letters of
May 8 and October 16, 1997. We regret the delay.
FACTS:
The merchandise is described as a 36 inch color CRT display
monitor with stereo speakers, I2C bus controls, and DPMS
low-power mode. It is a processor controlled multi-sync,
auto-synchronizing horizontally at 31.5 kHz, and vertically at 60
Hz and 70 Hz. The monitor is for use in 640 x 480 VGA [a
computer industry display standard] non-interlaced, underscanned,
overscanned modes of operation. The CRT dot pitch is 0.8mm at
the center of the screen. The video bandwidth of the monitor is
17.5 MHZ.
The monitor will be enhanced TV grade, utilizing a Dynamic
Focus or Dynamic Beam Forming picture tube, capable of displaying
high quality text, graphics and video. No tuner will be
included. The monitor processes a standard NTSC television
signal through the computer and converts the signal from an
interlaced signal (every other line scanned) to an non-interlaced
configuration (every line scanned). Computers use non-interlaced
scanning (it eliminates the 'flicker' of interlaced television
scanning).
The monitor will house Infrared (IR) circuitry. Connected
to the IR circuitry on the front panel of the monitor will be
buttons labeled as follows: "Channel ^", "Channel v", "Volume ^",
"Volume v", "TV Setup", "Enter", and "Power". The monitor will
use VESA DDC2B to control brightness, contrast, horizontal size
and position, vertical size and position, side pincushion, tilt,
volume, balance, color temperature, service controls, and
degauss.
ISSUE:
Is the 36 inch monitor classifiable as an automatic data
processing (ADP) display unit or as video monitor under the
HTSUS?
Does the 36 inch monitor qualify for preferential 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.
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 is a machine adapted for the purpose of
performing two or more complementary or alternative functions
(e.g., displaying computer images and television/video 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 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 monitor can be fitted with ADP
connectors, its display pitch size exceeds the 0.41mm standard
cited in the ENs. The monitor also has control buttons on the
front for channels and volumes which are typically found on
televisions. 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/video 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 video monitor. It is classified under
subheading 8528.21.39, as other television video monitors.
NAFTA Eligibility:
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 monitor 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)/85.92C, HTSUS, states that:
A change to tariff items 8528.21.34 or 8528.21.39 from
tariff items 8528.21.05 or 8528.21.10 or any other
heading, except from tariff item 8540.11.10 or more
than one of the following:
(A) tariff item 7011.20.10,
(B) tariff item 8540.91.15.
Based upon this rule, any non-originating materials of the
monitor must come from any other tariff heading other than
subheadings 8540.11.10 (cathode-ray television picture tubes),
7011.20.10 (cones for cathode-ray tubes), or 8540.91.15 (parts of
cathode-ray tubes, front panel assemblies), HTSUS. According to
the information provided, the cathode ray tube ("CRT") and the
front panel assembly will both be manufactured in the United
States. The importer has provided a Country of Origin
certificate indicating that the CRTs are originating materials in
the U.S. Assuming that the CRTs are originating materials, the
subject merchandise would be eligible for preferential tariff
treatment under the NAFTA.
HOLDING:
The 36 inch display monitor is classifiable under subheading
8528.21.39, 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: [v]ideo monitors: [c]olor:
Non-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. . . . ." The general,
column one rate of duty is 5 percent ad valorem.
The 36 inch display monitor is eligible for preferential
tariff treatment under the NAFTA.
Sincerely,
John Durant, Director
Commercial Rulings Division