CLA-2 RR:CTF:TCM W967693 TPB
Mr. James F. O’Hara
Stein, Shostak, Shostak, Pollack & O'Hara, LLP
865 S. Figueroa St
Suite 1388
Los Angeles, CA 90017
RE: Pioneer Flat Panel Modules; Revocation of NY K83248 and NY K83886
Dear Mr. O’Hara:
This is in regard to your request of April 26, 2005, on behalf of your client, Pioneer Electronics Technology (“PET”) for a binding ruling concerning the tariff classification of plasma display panel modules for color television displays under the Harmonized Tariff Schedule of the United States (“HTSUS”). We note that in a letter to the National Commodity Specialist Division, New York, dated September 23, 2004, you indicated that PET had previously been issued rulings by U.S. Customs and Border Protection (“CBP”) and that the panels “which are the subject of this request are identical in all material respects to the Plasma Modules which were the subject of those rulings except for part number designations.” To that end, rather than issue new prospective rulings, we decided to reconsider the previous rulings issued to you. Those rulings are identified as NY K83248, dated February 20, 2004 and NY K83886, dated March 9, 2004. In both rulings, CBP determined that the imported plasma modules were classified under subheading 8529.90.53, HTSUS, which provides for flat panel screen assemblies for the apparatus of subheadings 8528.12.62, 8528.12.64, 8528.12.72, 8528.21.55, 8528.21.60, 8528.21.65, 8528.21.70, 8528.30.62, 8528.30.64, 8528.30.66 and 8528.30.68.
Pursuant to section 625(c), Tariff Act of 1930, (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed revocation of certain plasma modules was published on December 21, 2005, in the Customs Bulletin, Volume 39, Number 52. Comments from seven interested parties were received on this proposal. While all of the comments agreed with the proposed classification of the subject plasma modules, three of the comments disagreed with CBPs view with regard to what constitutes “drive” and “control” electronics as they pertain to flat panel screen assemblies. A discussion of the comments and CBPs reasoning are found in the “Law and Analysis” section below.
Based upon our analysis of the issue and for the reasons set forth below, CBP considers the plasma modules to be classified under subheading 8529.90.89, HTSUS, which provides for: “Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528: Other: Other: Of television receivers: Subassemblies, for color television receivers, containing two or more printed circuit boards or ceramic substrates with components assembled thereon, except tuners or convergence assemblies: Other.” In reaching our decision, we also considered the information provided by you in our meeting of August 5, 2005. Consequentially, NY K83248 and NY K83886 are revoked.
FACTS:
The merchandise described in NY K83248 is as follows:
The item in question is a plasma module denoted as part number PDU-5003/T/WL. The module is to be used in the manufacture of a Television Plasma Monitor, model number PDP-504PU. This particular model is a 50-inch gas plasma television monitor designed for television viewing.
The module in question (descriptive literature provided) is in fact the gas plasma screen for the monitor. It consists of a 50-inch diagonal glass sandwich containing the necessary gas typical of such flat panel gas plasma monitors. It also contains electronic assemblies described as the address assembly, the scan A & B assemblies and various connector assemblies.
The merchandise described in NY K83886 is as follows:
The items in question are plasma modules denoted as part numbers PDU-M5003/T/WL and PDU-M4303/T/WL. Model PDU-M5003/T/WL is the 50 inch diagonally measured unit and model PDU-M4303/T/WL is the 43-inch diagonally measured unit. Each module is to be used in the manufacture of a gas plasma television monitors.
Each of these units is actually the gas plasma screen for the appropriate television monitor. They each consist of a glass sandwich, of their respective diagonal screen size, and the necessary gas typical of such flat panel gas plasma monitors. They also contain electronic assemblies and various connector assemblies.
In your letter of April 26, 2005 and at our meeting on August 5, 2005, you further described the merchandise at issue. Additionally, you went into detail as to what electronic assemblies and connectors are on the panel at the time of its importation:
Panel: The panels at issue come in two variations: a 50-inch model and a 43-inch model. In both cases, the panel consists of front and rear glass plates sandwiching a honeycomb of thousands of tiny cells or pixels. Each cell or pixel is subdivided into 3 sub cells whose walls are coated with red, green and blue phosphor, respectively. Each cell is filled with discharge gas as well. Long electrodes are also sandwiched between the glass plates, on both sides of the cells. The address electrodes sit behind the cells, along the rear glass plate. The transparent display electrodes, which are surrounded by an insulating dielectric material and covered by a magnesium oxide protective layer, are mounted above the cell, along the front glass plate. The display electrodes are arranged in horizontal rows along the screen and the address electrodes are arranged in vertical columns. Thus, the vertical and horizontal electrodes form a basic grid. To ionize the discharge gas in a particular cell, the modules’ Scan and Address Assemblies charge the electrodes that intersect at that cell. When the intersecting electrodes are charged (with a voltage difference between them), an electric current flows through the gas in the cell. By varying the pulses of current flowing through the different cells, the intensity or brightness of each sub cell color can be manipulated to create different combinations of red, green and blue to produce colors across the entire spectrum. The 50-inch panel has 983,040 (1280x768) cells and the 43-inch panel has 786,432 cells (1024x768) cells. The panel is where the image is displayed for viewing;
Scan Assemblies (A and B): these printed circuit assemblies (PCAs) select vertically which pixels should receive an electrical charge according to the control signals from the Y Drive Assembly. The Scan Assemblies also provides power from the Y Drive Assemblies;
Address Assemblies: these PCAs select horizontally which pixels should receive an electrical charge according to the control signals from the Digital Video Assembly (“DVA”). They also provide power from the DVA;
X Connector Assemblies: these are the physical link between the X Drive Assemblies and the panel;
Metal chassis: structural support for the assemblies
After importation, PET assembles the following components at its factory in Pomona, California:
X Drive Assemblies: coupled with the Y Drive Assemblies, these PCAs generate driving pulses to make the panel emit light and send the pulses to the cells on the panel;
Y Drive Assemblies: coupled with the X Drive Assemblies, these PCAs generate driving pulses to make the panel emit light and send the pulses to the cells on the panel through the Scan Assemblies;
Digital Video Assembly (“DVA”): contains control electronics circuitry and a digital signal processor (microcomputer); converts conventional digital Red-Green-Blue (RGB) signals into driving and timing instructions suitable for plasma display. The instructions are sent to the X and Y Drive Assemblies and the Address Assemblies.
Power Supply Unit: the power supply unit has three main functions: 1) isolates power from primary to secondary;
2) converts AC (alternating current) into DC (direct current); and
3) provides all components in the plasma display with DC power;
“Fukugo” Assembly: this is a complex assembly that contains a number of PCAs:
Panel Interface Assembly: for plasma models that operate with a Media Receiver, this assembly receives scrambled digital signals from the Media Receiver (the Media Receiver being a part of a plasma display system and performs the television reception function as well as decoding functions for video images such as composite and S-video signals) and descrambles them;
LED Assembly: contains red and green LEDs;
Front Key Assembly: Switches for power on/off, volume up/down, etc.;
Key Control Assembly: contains a key scan microprocessor connected to the Front Key Assembly;
Panel IR Assembly: contains infrared (IR) receiver for the remote control.
Audio Assembly: amplifies audio signals (e.g., sent from a Media Receiver) and transmits the signals to the speakers.
ISSUE:
What is the proper classification of the plasma modules under the HTSUS?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, 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 2 through 6 may then be applied in order.
When the subheadings, rather than the headings are at issue, GRI 6 is applied. GRI 6 provides in pertinent part that: “the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes, and mutatis mutandis, to [rules 1 through 5] on the understanding that only subheadings at the same level are comparable for the purposes of this rule and the relative section and chapter notes also apply, unless the context otherwise requires.”
The modules are component parts that are used in the manufacture of finished flat panel screen televisions or a flat panel screen video monitor of heading 8528, HTSUS. Note 2 to Section XVI, provides, in pertinent part, that:
Subject to note 1 to this section, note 1 to chapter 84 and to note 1 to chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules:
Parts which are goods included in any of the headings of chapters 84 and 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8485, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings;
Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;
Because the modules are not included in any of the headings of chapters 84 and 85, classification cannot be determined by application of Note 2(a) to Section XVI. According to the information you submitted in your letter of April 26, 2005, the modules are designed to be solely or principally used in the manufacture of finished televisions, which are classified in heading 8528, HTSUS. Based on the application of Note 2(b) to Section XVI, we find that the modules meet the terms of heading 8529, HTSUS, as parts suitable for use solely or principally with the apparatus of heading 8528.
The subheadings under consideration are as follows:
Parts suitable for use solely or principally with the apparatus of heading 8525 to 8528:
Other:
8529.90.53 Flat panel screen assemblies for the apparatus of subheadings 8528.12.62, 8528.12.64, 8528.12.68, 8528.12.72, 8528.21.55, 8528.21.60, 8528.21.65, 8528.21.70, 8528.30.62, 8528.30.64, 8528.30.66, and 8528.30.68
Other:
Of television receivers:
Subassemblies, for color television receivers, containing two or more printed circuit boards or ceramic substrates with components assembled thereon, except tuners or convergence assemblies:
8529.90.89 Other [than the components enumerated in additional U.S. note 4 to this chapter] . . . .
Subheading 8529.90.53, HTSUS, was added to the tariff as part of the North American Free Trade Agreement (NAFTA) Implementation Act (Pub. L. 103-182, 107 Stat. 2057) on December 8, 1993. This subheading was created to implement the NAFTA rules of origin (ROO). Under these rules, preferential tariff treatment is not afforded a finished television, video monitor or projector if it is produced from a non-originating flat panel screen assembly of subheading 8529.90.53, HTSUS. Conversely, the rule requires that some portion of the flat panel screen assembly be manufactured within the NAFTA territories in order for the final television, monitor or projector to qualify for NAFTA preference.
However, the NAFTA does not provide a definition or description of “flat panel screen assemblies.” As this term appears in each NAFTA party’s domestic tariff schedule, and pursuant to Article 513 of the NAFTA, the NAFTA Customs Subgroup held extensive discussions on this matter which resulted in a document entitled Clarification of TV Technologies: Flat Panel Screen Assemblies, on August 4, 2004, (hereafter “the Clarification”) which memorializes the assent of the NAFTA parties to its common interpretation of this tariff term:
“For purposes of tariff item 8529.90.ee [footnote 2], the phrase ‘flat panel screen assemblies’ means an assembly consisting of at least drive electronics, control electronics and a display device, other than LCD technologies.”
“[footnote 2] If at least one of the components of the definition of ‘flat panel screen assemblies’ is not incorporated, such assembly shall not be classifiable within tariff item 8529.90.ee.”
The Clarification does not further expand upon the terms “drive” or “control” electronics. Two of the commenters correctly pointed out that neither “drive” electronics nor “control” electronics were terms that appear in the HTSUS and objected to their characterization as “tariff terms.” CBP agrees that the terms do not appear in the tariff. Nor do they appear in the Explanatory Notes to the HTSUS. However, the terms are relevant to the classification of the subject merchandise in light of their use in the Clarification, which reflects the parties understanding of the scope of subheading 8529.90.53, HTSUS. Accordingly, CBP seeks to apply these terms so as to effectuate the intention of the NAFTA parties.
Absent specific definitions in the Clarification, as with tariff terms, it is appropriate to resort to the common and commercial meaning of the terms at issue. See Nippon Kogaku (USA), Inc. v. United States, 69 CCPA 89, 673 F2d. 380 (1982). Common and commercial meaning may be determined by consulting dictionaries, lexicons, scientific authorities and other reliable sources. See C.J. Tower & Sons v. United States, 69 CCPA 128, 673 F2d. 1268 (1982).
Flat panel displays utilize a number of sophisticated electronics, including microcomputers to process signals; thus we find it appropriate to examine the meaning of these terms from a technical viewpoint. Alan Freedman’s Computer Glossary (9th ed.) defines “driver” as follows:
(2) a device that provides signals or electrical current to activate a transmission line or display screen.
Merriam-Webster’s Collegiate Dictionary (10th ed.) offers the following definition:
drive (n.): 5 a: the means for giving motion to a machine or machine part.
Based upon CBPs discussions with industry and our own research, CBP finds that “drive” electronics, as they pertain to flat panel assemblies, energize and de-energize the appropriate cell on the display in order to create an image.
Similarly, the meaning of the term “control” electronics was examined through the use of various technical dictionaries. Freedman’s Computer Glossary defines “control unit” as:
(2) Within the computer, a control unit, or controller, is hardware that performs the physical data transfers between memory and a peripheral device, such as a disk or screen, or a network.
The Dictionary of Multimedia – Terms and Acronyms (1999 ed.) provides the following definition:
controller (n). 1. In computer hardware, a processing component that manages the flow of data between the computer and peripheral devices.
Finally, the IBM Dictionary of Computing (1994) defines “control” as follows:
(1) The determination of the time and order in which the parts of a data processing system and the devices that contain those parts perform the input, processing, storage and output functions.
Thus, although the term “control” may encompass a number of functions when it comes to a data processing system, or, for that matter, a complete flat panel television or video monitor, with respect to flat panel screen assemblies CBP believes that “control” electronics manage the data (timing and order), which is used to ultimately create an image on the display.
Therefore, “control” electronics direct video signals and timing instructions to the “drive” electronics. The “drive” electronics take the information from the “control” electronics and energize and de-energize particular cells on the display in order to create an image for viewing.
Among the comments received by CBP during the notice and comment period, some questioned the correctness of the definitions used by CBP in determining the meaning of “drive” and “control” electronics with regard to flat panel displays.
One commenter indicated that:
[E]ven if resort to the dictionary (rather than to the common meaning in the industry and in commerce) is warranted, the dictionary definition of ‘drive’ includes timing and ordering functions, as in:
4 a : to direct the motions and course of (a draft animal) b : to operate the mechanism and controls and direct the course of (as a vehicle)
Merriam-Webster Online Dictionary. And, by far the most common use of the word ‘drive’ in the United States is in reference to driving a car, when the ‘driver’ consistently performs timing and ordering functions.
CBP notes that the above definition applies to the verb, “drive” while the definition in Proposed Revocation of December 21, 2005, referred to the noun, “drive.” After giving due consideration to the above arguments, CBP is not persuaded that “drive” electronics should be construed to include timing and ordering functions as the submission contends.
Another commenter proffers the following reasons why CBP has misapplied the definitions for “drive” and “control” electronics in the December 21, 2005, Proposed Revocation:
It is inappropriate to apply technical dictionaries which relate strictly to computer functions within the computer industry to flat panel assemblies within the plasma display panel industry;
The proposed definition for “control electronics” and “drive electronics” as applied to flat panel assemblies is not directly based or referenced to any reliable source. CBP is unable to cite to any reliable source for its independent determination of either “control electronics” or “drive electronics” as applied to flat panel assemblies;
The proposed definitions are overly broad, too simplistic and difficult to apply. The proper definitions should promote certainty and predictability in its application;
The industry requires and deserves definitions which directly apply and relate to flat panel screen assemblies for televisions, video monitors and video projectors. Such definitions should be based upon recognized industry standard, design and function;
To remain competitive, the plasma display panel industry requires definitions which are clear and concise.
In order to assist CBP, the commenter includes definitions for “drive” and “control” electronics that it believes are acceptable.
CBP has given consideration to the arguments set forth in the submission and offers the following replies:
CBP referred to a number of sources in its research, including computer glossaries and dictionaries, multimedia dictionaries and general use dictionaries. CBP does not believe that because the item before us is not a “computer” that these reference sources cannot be used. Indeed, the reference sources themselves deal with a number of entries which may not be strictly considered “computer” entries. What is clear to CBP is that flat panel televisions, monitors and projectors contain very sophisticated circuitry and electronics (including microcomputers, as per Pioneer’s submission) that justify the use of such sources.
As indicated above, CBP cited to a number of reliable sources in its Proposed Revocation. The objection of this particular comment appears to be that none of the sources dealt specifically with flat panel assemblies. Interestingly, the commenter does not reference any sources which it would accept as “reliable.” Indeed, it was the observation of an expert who commented in one submission that “[c]ontrol electronics does not have a single, universally agreed upon meaning in the art, and its definition depends on the context and supporting descriptions.”
The definitions proposed by CBP refer to the function of the electronics, rather than any name that they may be referred to. This will result in greater certainty and predictability in its application. The definitions serve to support the intent of the drafters of the August, 2004 NAFTA Customs Subgroup Clarification.
The definitions set forth by CBP take into consideration a number of different views expressed by industry as well as lexicon sources that ultimately result in administrable definitions for both the trade and CBP for the goods of subheading 8529.90.53, HTSUS.
CBPs definitions, as noted above, are based upon function, which is both clear and concise. After due consideration, CBP does not find that the definitions proposed by the commenter offer greater clarity or understanding than do those proposed by CBP.
To summarize, the purpose of the NAFTA Clarification on Flat Panel Screen Assemblies of August 4, 2004 was to clarify the meaning of the subheading term “flat panel screen assemblies.” The Clarification states that in order to have a flat panel screen assembly of subheading 8529.90.53, three elements must be present: 1) a display device (other than LCD); 2) drive electronics; and 3) control electronics. The parties clearly made a distinction between “drive” and “control” electronics as they pertain to finished “flat panel screen assemblies” of subheading 8529.90.53, HTSUS. CBP has determined that as used in the clarification, control electronics direct video signals and timing instructions to the drive electronics. The drive electronics take these instructions and energize and de-energize the appropriate pixels of the display device in the correct sequence, so as to produce a video image on the display.
The definition for “control” electronics provided by one commenter may indeed describe actions that can be described as “control.” However, these “control” functions are more associated with “control” of a television or video monitor. They take information from an outside source and ultimately deliver this information to the “drive” electronics which produce an image on the display. For the purposes of the Clarification, we are only concerned with the “drive” and “control” electronics associated with the flat panel screen assembly; i.e., the three items the Clarification indicated that needed to be present to have an article of 8529.90.53, HTSUS. Accepting the commenters definition of “control” would expand the scope of that provision to include the components necessary to turn a flat panel screen assembly into a complete television or video monitor.
With the foregoing understanding of the terms in the Clarification, we next examine the products at issue before us, as imported into the United States.
The Panel
The panel fulfills the requirement of a “display device” set forth in the clarification. As described in the “Facts” section above, the display contains thousands of cells which are energized to create a viewable image.
Scan Assemblies
As indicated in the “Facts” section above, the Scan Assemblies select vertically which pixels should be on and off according to the control signals from the Y Drive Assemblies. The Scan Assemblies also provide power from the Y Drive Assemblies.
PET contends that the Scan Assemblies are neither “drive” nor “control” electronics. However, CBP believes that the Scan Assemblies fall within the scope of the term “drive electronics.” The Scan Assemblies send drive pulses generated from the Y Drive Assemblies to instruct the panel to emit light.
Address Assemblies
Similarly, CBP views these boards as “drive” electronics. They receive a control signal provided by the DVA and energize the appropriate cell, ultimately producing a video image.
X Connector Assemblies
The X Connector Assemblies are a physical link or connection between the X Drive Assemblies and the panel.
Metal chassis
This is a structural support for the above components.
In light of the foregoing, CBP concludes that the modules at issue do not meet the terms of the phrase, as they only contain two of the three required elements for “flat panel screen assemblies,” i.e., the display device and drive electronics. The panels, as imported, do not contain “control” electronics, that is, electronics that send data, such as timing and order signals, to the drive electronics. Therefore, the modules cannot be classified under subheading 8529.90.53, HTSUS. The modules are subassembly parts of television receivers consisting of two or more printed circuit board assemblies and none of the components listed in Additional U.S. Note 4(a) to Chapter 85. Thus, we find that the modules are classified in subheading 8529.90.89, HTSUS, as other subassemblies for color television receivers.
HOLDING:
For the reasons set forth above by application of GRIs 1 and 6, the subject plasma modules are classified under subheading 8529.90.8900, HTSUSA, as: “[p]arts suitable for use solely or principally with the apparatus of heading 8525 to 8528: [o]ther: [o]ther: [o]f television receivers: [s]ubassemblies, for color television receivers, containing two or more printed circuit boards or ceramic substrates with components assembled thereon, except tuners or convergence assemblies: [o]ther [than the components enumerated in additional U.S. note 4 to this chapter] . . . .” The 2006 column one, general rate of duty is free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the Internet at www.usitc.gov/tata/hts.
EFFECT ON OTHER RULINGS:
NY K83248 and NY K83886 are revoked. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division