CLA-2 RR:CR:GC 962557 GOB
Area Port Director
U.S. Customs Service
Los Angeles/Long Beach Seaport Area
300 S. Ferry Street
Terminal Island, CA 90731
RE: Protest 2704-99-100036; Monitors
Dear Sir:
This is our decision regarding Protest 2704-99-100036, filed on behalf of Chun Yun USA, Inc. (“protestant”) concerning the classification, under the Harmonized Tariff Schedule of the United States (“HTSUS”), of certain monitors.
FACTS:
The three entries at issue were filed between March 2, 1998 and April 11, 1998 and were liquidated between September 25, 1998 and October 2, 1998. The protest was filed on December 21, 1998.
The merchandise was entered under subheading 8471.60.35, HTSUS, and was liquidated under subheading 8528.21.49, HTSUS.
The file indicates that the three models of monitors are large screen cathode ray tube types of monitors, ranging in screen size from 29 inches to 38 inches. They range in cost (entered value) from $730 per monitor to $1,700 per monitor. The monitors have a pixel resolution of either 1024 x 768 or 800 x 600 (SVGA and XGA). They have a dot pitch of 0.78mm for the DM-7748D, 0.74mm for the DM-5948D, and 0.92mm for the DM-6938V. The horizontal scanning frequency ranges from 31 khz to 52 khz for two of the models; the range of the DM-6938V is 31 khz to 38 khz auto sync. All three
models are compatible with the NTSC, PAL, and SECAM video systems.
The protestant describes the subject merchandise as follows:
The DM-7748D, DM-5948D and DM-6938V monitors were designed, intended, and dedicated to use with computers, and are particularly used to facilitate computer-based presentations to large groups of individuals. The monitors are sold through computer dealers to commercial end-users. The monitors are a product of Taiwan and they are entered at a cost of $1,700 per unit for the DM-77480, $730 per unit for the DM-59480, and $1,200 per unit for the DM-6938V. This cost precludes their economic and efficient use as video monitors. The cost of similarly sized televisions is one-fourth of this amount.
The monitors are bought and sold in the marketplace as computer monitors …
The principal use, and therefore the controlling use, of the subject computer monitors is to display computer-generated images. The cost and design of these monitors make it clear that the ability to display computer-generated imagery is the principal purpose of the monitors. The monitors accept images and signals from the computer and display them. They have a very high resolution of 1024 x 768, and they have a dot pitch of 0.78mm for the DM-77480, 0.74mm or 0.6mm for the DM-59480, and 0.92mm for the DM-6938V.
ISSUE:
Are the subject articles provided for in heading 8471, HTSUS, or in heading 8528, HTSUS?
LAW AND ANALYSIS:
We note initially that the protest was timely filed under the statutory and regulatory provisions for protests, 19 U.S.C. 1514(c)(3)(A) and 19 CFR 174.12(e)(1).
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI’s”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI’s may then be applied.
The Harmonized Commodity Description and Coding System Explanatory Notes (“EN’s”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s 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.
The competing provisions are as follows:
8471 Automatic data processing machines and units thereof ...
8471.60 Input or output units, whether or not containing storage units in the same housing:
Other:
Other:
8471.60.35 With color cathode-ray tube (CRT)
* * * *
8528 Reception apparatus for television … ; video monitors
and video projectors:
Reception apparatus for television ...:
8528.12 Color:
Non-high definition, having a single picture tube intended for direct viewing (non-projection type), with a video display diagonal exceeding 35.56 cm:
8528.12.32 Other
Video monitors:
8528.21 Color:
Non-high definition, having a single picture tube intended for direct viewing (non-projection type), with a video display diagonal exceeding 35.56 cm:
8528.21.39 Other
Legal Note 3 to Section XVI, HTSUS, which covers the goods of chapters 84 and 85, provides: “Unless 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 EN to Legal Note 3 to Section XVI, HTSUS (EN (VI)), provides in pertinent part:
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 Interpretive Rule 3 (c) …
Customs has reconsidered the uses of goods such as monitors and projectors and the evidentiary requirements of Legal Note 3 to Section XVI. The courts have provided factors, which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. They include: 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 merchandise, and recognition in the trade of such use. See U.S. v. Carborundum Co., 63 CCPA 98, 102, 536 F. 2d 373, 377 (1976), cert denied, 429 U.S. 979 (1976). We note that in Lenox Collections v. U.S., 19 CIT 345, 347 (1995) and Kraft, Inc. v. U.S., 16 CIT 483, 489 (1992) the court applied the Carborundum factors to principal use. See also G. Heileman Brewing Co. v. U.S., 14 CIT 614, 620 (1990).
The protestant states that the monitors do not contain a tuner and are principally used to display computer-generated images. However, information obtained from the MoniVision/Chun Yun USA, Inc. Internet website in February 1999 provides, in pertinent part, as follows:
These types of monitors are most useful for presentations, training, tradeshows, video conferencing, education, and if you really want to go all the way, for your living room at home! Although a few large monitors do exist, to date none of them have exceeded 640 x 480 in display resolution. Monivision/Chun Yun USA has changed all that with its Monivision line of digital SVGA monitor/TV combos. The Monivision displays are offered in sizes from 29” to 38’ wide – and at very reasonable prices. They are super flat monitors, which provide a maximum of either 800 x 600 or 1024 x 768 NON-INTERLACED resolution, depending on the model. All the models also have a built-in TV-tuner, remote control, and EPA power management, as well as built-in 5W stereo speakers. Monivision also offers the visionbox to go along with the monitors, which supports inputs from both PC’s and Macintoshes, as well as NTSC, PAL, composite video, and S-Video inputs, on-screen display, and on/off and sleep timer setting … Now, understand that if you plan to use this monitor in your home, it really is meant to be more for your living room than your desktop. Besides the fact that your desk may collapse, the monitor is so large that you must be several feet back to truly take it all in.
Information obtained from the MoniVision/Chun Yun USA, Inc. Internet web site in September 2000 provides, in pertinent part, as follows:
Our video bandwidth of 64 MHz provides crisp, sharp text and graphics in computer images. The built-in line doublers enhance resolution from a variety of video sources like VCR and DVD. Digital TV-ready at 480p, 1080i and also 720P resolution and RGBHV formats … These monitors are true XGA hi-resolution monitors and feature a[n] optional Video/TVideo function on all monitors.
…
Monivision 29”-70” (Hi-resolution Multi-Media Convergence Monitor)
… In addition to normal computer data input they are also multimedia functioning. With the purchase of a[n] optional cable ready TV tuner (vision box) you can take advantage of these options: s-video, stereo audit, front/rear 2 switchable PC inputs, off timer, wireless remote control and a built-in video line doubler that provides high-quality images from any standard video source such as VCR, DVD etc.
The following information was on the MoniVision/Chun Yun USA, Inc. Internet web site in both February 1999 and September 2000:
Applications for these hi-tech presentation tools are limited only by the imagination; we’ve seen our monitors used for videoconferencing, airport information systems, group briefings and presentations, computer training, education systems trade shows, and kiosk information systems in conference and visitors’ centers, to name just a few. You as customers undoubtedly represent a myriad of other industries, your common thread being the desire to present a clear, high-quality video message for a reasonable price. With the explosive growth of the video technology market, MoniVision is at the forefront of the industry and continues to expand and enhance product lines establishing Product Overview MoniVision as a leader in Video and computer monitor technology.
After a careful consideration of all of the available information, we find that we are unable to determine the principal function of the subject monitors. Accordingly, Legal Note 3 to Section XVI does not resolve the classification of the monitors. As a result, we are of the view that the monitors cannot be classified based upon GRI 1. GRI 2 is not applicable here. GRI 3 provides as follows:
When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
EN (VIII) for GRI 3(b) provides:
The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.
At GRI 3(a), neither of the two competing headings provides a more specific description than the other. Pursuant to GRI 3(b), the monitors are a composite good meeting technical specifications for use as goods of both headings. See EN 84.71 (I) (D) and EN 85.28 (6). There is no essential character to the monitors because both functions (use as an automatic data processing monitor and as a video monitor) are equally important. Accordingly, we proceed to GRI 3(c), i.e., the good shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. See also the EN to Legal Note 3 to Section XVI, HTSUS (EN (VI)), excerpted above.
Therefore, we find that the subject monitors are provided for in heading 8528, HTSUS, and are classified in subheading 8528.21.39, HTSUS. This classification is based upon our belief that the monitors were imported without vision boxes and tuners. The information provided by both the protestant and your office indicates this to be the case. However, we note that if the monitors were imported with vision boxes or tuners, they would be classified under subheading 8528.12.32, HTSUS. See HQ 960354 dated October 22, 1998.
The subject entries were liquidated under subheading 8528.21.49, HTSUS, which carries the same rate of duty (and carried the same rate of duty in 1998, the year the entries were filed) as subheading 8528.21.39, HTSUS.
This determination is consistent with our determinations in HQ 960282 dated October 22, 1998, and HQ 960354 dated October 22, 1998. In those rulings we classified monitors in heading 8528, HTSUS, based upon GRI 3(c) where there was no satisfactory documentary evidence with respect to the principal function of the projectors. See also HQ 964043 dated July 25, 2000, and HQ 964159 dated July 25, 2000, where we classified LCD projectors in heading 8528 based upon GRI 3(c).
HOLDING:
The monitors are provided for in heading 8528, HTSUS, and are classified in subheading 8528.21.39, HTSUS.
You are instructed to DENY the protest.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations
and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.treas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division