CLA-2 RR: CR: GC 966383 TPB
Corey Munderloh
Sr. Analyst – Import/Export
Gateway, Inc. 610 Gateway Drive
North Sioux City, SD 57049
RE: Gateway 42-inch plasma monitor
Dear Mr. Munderloh:
This is in reference to your letter dated March 6, 2003 to the Director, National Commodity Specialist Division, New York requesting a binding ruling as to the classification of Gateway’s 42-inch plasma monitor (Gateway part #7004213) under the Harmonized Tariff Schedule of the United States (“HTSUS”). That request was referred to this office for reply. In reaching our decision, we took additional information provided by Gateway into consideration.
You have indicated that Gateway has made importations of the monitors through the ports of Los Angeles and Chicago, which will be mailed copies of this ruling.
FACTS:
The merchandise at issue is a 42-inch gas plasma color monitor. It is imported separately and not accompanied by any other computer or video equipment. As imported, it cannot function as a television or a video display because it lacks a television tuner and the connectors necessary for the reception and display of video and/or broadcast standard signals. The display comes with the following connectors already installed: RGB input and output, RS-232 and DVI (a newer computer display connector).
The display is not offered for sale in its imported condition. After importation, the monitor is subjected to further processing by either Gateway or a third party manufacturer. The monitor undergoes a multi-step process that installs a television tuner and connectors necessary for the reception and display of video and/or broadcast television signals. The display comes equipped with two decoder chips that take standard NTSC video and convert it to progressive scan component YPrPb video, thus allowing proper conversion of two independent video inputs simultaneously for picture in picture and side-by-side video windows. There are also internal connectors in the monitor as imported that would be able to accept video or NTSC signals. You note that when imported, these connectors are covered by a metal plate that is held in place by three screws and that the chips are not utilized in the display until it is configured. The monitor also contains internal speakers, but as there are no audio inputs no use can be made of them as imported.
ISSUE:
Whether the Gateway 42-inch Plasma Monitor is classifiable as an automatic data processing (“ADP”) unit under heading 8471, HTSUS, or as a video monitor under heading 8528, HTSUS?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). 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 GRIs may then be applied.
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor 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.
The HTSUS provisions under consideration are as follows:
Automatic data processing machines and units thereof…
Input or output units, whether or not containing storage units in the same housing:
Other:
Other:
Other:
8471.60.4580 Other.
Reception apparatus for television; … video monitors and video projectors:
Video monitors:
Color:
With a flat panel screen:
Other:
8528.21.70 Other.
You claim that the display, in its condition as imported, is a unit of an ADP system, and should therefore be classified under heading 8471, HTSUS. Gateway indicates that although the product is a component of a yet to be finished good, Customs must classify it according to its condition as imported. See United States v. Citroen, 233 U.S. 407, 32 S.Ct. 256, 56 L.Ed. 486 (1911). To be classified as an ADP output unit within heading 8471, HTSUS, the subject merchandise must meet the terms of Legal Note 5(B) to Chapter 84, HTSUS, which provides that:
5. (B) Automatic data processing machines may be in the form of systems consisting of a variable number of separate units. Subject to paragraph (E) below, a unit is to be regarded as being a part of a complete system if it meets all the following conditions:
(a) It is of a kind solely or principally used in an automatic data processing system;
It is connectable to the central processing unit either
directly or through one or more other units; and
It is able to accept or deliver data in a form (codes or
signals) which can be used by the system.
In your submissions, you have indicated to us that the plasma monitor has the following connectors at the time of its importation: SUB-D, DVI and RS-232, which you claim are standard in the industry for computer displays. This meets the requirements of Note 5(B)(b) to Chapter 84, above. You have indicated to us that these connectors cannot be used by standard “video” equipment and are incompatible with NTSC signaling. The internal connectors that would be able to accept video or NTSC signals are specifically fitted for the tuner and are covered by a removable metal plate.
You have also indicated that in their condition as imported, the monitors are capable of accepting VGA, SVGA and XGA input signals from a CPU. This meets the terms of Note 5(B)(c) to Chapter 84.
The only question that we are left with is whether the monitor meets the terms of Note 5(B)(a), that it is “of a kind solely or principally used in an automatic data processing system.”
In order to determine the kind of goods to which an article belongs, we must examine all pertinent factors, which may include: (1) the general physical characteristics of the merchandise; (2) the expectation of the ultimate purchasers; (3) the channels of trade in which the merchandise moves; (4) the environment of the sale (e.g. the manner in which the merchandise is advertised and displayed). See United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, cert denied, 429 U.S. 979, 50 L.Ed. 2d 587. 97 S.Ct. 490 (1976).
The general physical characteristics of the monitor are that of a large video display. While the size and technology employed with the monitor are designed generally to facilitate a more enjoyable home theatre experience, there have been instances where a large screen gas plasma display could be employed with ADP machine systems, such as in airports and hospitals. Since the monitor is not available for commercial sale in its condition as imported, we do not consider the expectation of the ultimate purchaser, although we note that as the monitor is ultimately sold as a large screen television. The monitor is sold exclusively through Gateway, whose goal is to provide the latest technology at the best values in the industry in a one-stop shopping experience which includes not only computers, but plasma TV’s, home theatre options and other digital media products. You could not provide literature on the merchandise in its imported condition, as it is an unfinished good, but brochures and advertisements you provided of the finished monitor indicate that it is a 42-inch gas plasma TV which is connectable to an ADP system.
Based on the information provided to Customs from Gateway, there is insufficient evidence to show that the monitor is of a kind principally or solely used with an ADP system. You indicated in your submission that despite their large size, these monitors are no different than other, smaller monitors that are employed as displays for multimedia computers. However, Customs has consistently held that multimedia displays that contain the components necessary to display video signals fall to be classified under heading 8528, HTSUS. See HQ 960282, dated October 22, 1998; HQ 962557, dated October 12, 2000; HQ 966270, dated June 3, 2003. Although you indicate that the tuner and connections to display television and video signals are not present at the time of importation, the addition of the tuner post importation does not add any other electronics or components besides those necessary for television reception and connection to external audio/video sources. Electronic components that can accept video signals, such as the decoder chip, are already present in the display at the time of its importation.
For those reasons, we do not believe that the monitors meet the terms of note 5(B) and cannot be classified under heading 8471, HTSUS. You have stated that the imported monitors are “components of a good yet to be finished.” GRI 2(a), which deals with incomplete or unfinished articles, reads as follows:
Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as entered, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), entered unassembled or disassembled.
The plasma monitor at issue is not offered for sale in its condition as imported and is therefore not an article of commerce at that time. It is an unfinished good. After importation, the monitor is taken for further processing by adding a tuner to receive television signals and the inputs/outputs necessary to connect it to audio and video sources. The monitor already contains the plasma display panel, bezel, and the components necessary to display a video signal. As such, the monitor has the essential character of a video monitor upon importation. For that reason, the monitor is properly classified under heading 8528, HTSUS, specifically, under subheading 8528.21.70, HTSUS, which provides for other color video monitors with flat panel displays.
It should be noted that Customs has previously ruled on finished multifunctional gas plasma displays where the importers have claimed possible classification under heading 8471, HTSUS and has consistently held that this type of merchandise is classifiable under heading 8528, HTSUS. See HQ 961466, dated April 6, 1999; HQ 962677, dated September 23, 1999, aff’d. in HQ 963314, dated July 30, 2001.
HOLDING:
For the reasons stated above, by application of GRI 2 (a), the Gateway 42-inch gas plasma monitor is classified under subheading 8471.21.70, HTSUS, which provides for display units for: “Reception apparatus for television, whether or not incorporating radiobroadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors: Video monitors: Color: With a flat panel screen: Other; Other.”
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division